Disney+ adds 1.4m subs as Iger promises aggressive SVoD investment in select non-US markets

Disney+ added 1.4 million subscribers in the second quarter to reach 126 million globally, as direct-to-consumer (D2C) profit improved and Disney CEO Bob Iger said the company would invest “more aggressively” in content in certain markets outside the US.

Bob Iger

Across its entertainment segment, which includes separate line items for linear networks, D2C and content sales/licensing, revenue was up 9% in Q2 compared with the previous year, at US$10.68bn.

Within that, D2C revenue climbed 8% to US$6.12bn, linear network revenue was down 13% at US$2.42bn and content sales/licensing and other was up 54% at US$2.14bn.

D2C profit hit US$336m in Q2, up from US$47m a year ago, while linear network profit rose 2% to US$769m and content sales/licensing was up at US$153m. Overall, its entertainment division turned a profit of US$1.26bn, up 61% from US$781m in the same period a year ago.

The increase in D2C revenue and profitability was driven in part by subscriber growth and pricing increases.

Of the 1.4 million Disney+ subscriber additions, one million were in the US and Canada while the remaining 400,000 came from outside of North America.

The overall number of Hulu subscribers also increased, by 1.1 million to 54.7 million overall, across its two main tiers (SVoD-only and Live TV plus SVoD).

In total, across all of Disney’s business verticals, spanning entertainment, sports and theme parks, revenue was up 9% at US$10.68bn in Q2, while profit grew by 15% to reach US$4.44bn.

During a call with analysts on Wednesday, Iger said Disney was intent on growing its content investment in select international markets.

A key pillar of the company’s strategy is “investment in content, particularly outside the United States, where we know that we need to invest more in local content, and we’ve already started that process,” he said.

Iger did not specify the markets to which he was referring, but he emphasised that the increased investment would be concentrated in select countries.

During an earnings call in November, Iger signalled that Disney was keen to begin investing in Europe, the Middle East, Africa and Asia Pacific, but only once it had figured out how to reduce its churn issues in those markets.

Previously, Disney had taken a bolder approach to international content spending, as it, like many of its peers, looked to gain international subscribers rapidly and compete with Netflix. It pulled back on that strategy in 2022 and 2023 as it reduced its commissioning levels when Wall Street began prioritising profits over subscriber growth.

It appears that Disney is now looking to begin accelerating its investment in markets outside the US but taking a more focused approach.

“It takes time and we don’t really end up booking those costs until the shows air, but we’re already starting to develop more aggressively in markets… in very, very targeted markets outside the United States,” said Iger.

Disney stock rose around 10% to US$102 per share following the release of its Q2 earnings.