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Saturday, May 18, 2024

ESPN+ Loses Subscribers After Steady Growth, But Disney Still Optimistic

  • Streaming service shows first retreat in more than five years
  • Iger reiterates that full DTC version of ESPN is "not a matter of if, but when"
Christopher Hanewinckel-USA TODAY Sports

Disney took its first step backward in terms of ESPN+ subscribers in its most recent quarter — a concerning sign as the sports media giant deals with an accelerating decline in linear subscribers. 

But the company remains optimistic, partly due to its direct-to-consumer operations narrowing its overall losses.

During Wednesday’s quarterly earnings call, Disney said that ESPN+ had 25.2 million subscribers, down slightly from 25.3 million in the prior quarter. Though statistically negligible, the decline represents the first retreat from a steady growth pattern for ESPN+ since its debut more than five years ago. Average monthly revenue per user from ESPN+ also fell from $5.64 in the prior quarter to $5.45.

It’s more sobering news for the sports media giant, which grapples with the impact of recent layoffs. ESPN’s linear reach is down to 72.5 million homes according to Nielsen, down 28% from a peak of 100.1 million in 2011.

But Disney remains bullish on its direct-to-consumer business, in part due to a reduction of more than half of losses sustained year-over-year for a current total of $512 million. Disney is also implementing price increases across most of its streaming services to drive additional revenue.

Overall, revenue for the quarter grew 4% to $22.3 billion, while operating income remained flat at about $3.6 billion. Disney, however, did record a $2.65 billion impairment charge, heavily related to “content impairments” on its streaming services.

“While there is still more to do, I’m incredibly confident in Disney’s long-term trajectory,” said CEO Bob Iger.

‘Not If, But When’

Iger reiterated that the company remains firmly intent on offering a full, direct-to-consumer version of ESPN.

“Taking our flagship ESPN channels direct-to-consumer is not a matter of if, but when,” Iger said. “The team is hard at work looking at all components of this decision, including pricing and timing.”

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