What just happened?

Disney delivered strong financial results in its Q1 2025 earnings report (fiscal quarter ending 28 December 2024), riding Moana 2’s global box office wave to generate $1.7bn in total Entertainment segment profit, up 95% from the year prior. In addition to making a splash at the box office, direct-to-consumer (DTC) streaming services specifically saw profits grow to $293m, after first officially achieving profitability halfway through 2024, in line with Ampere’s earlier prediction.  Disney's success is set to continue in 2025 with its Scripted commissioning across movies and TV up 55% year-on-year in Q4 2024. 

Streaming profitability came primarily from raising prices on its DTC services – Disney+, Hulu, and ESPN+ - amid stagnant subscriber levels. Indeed, Disney+ shed 700k total subscribers to land at 124.6m, with international territories accounting for a loss of 1.5m subscribers and domestic (US + Canada) adding 800k. In the US only, Hulu saw the biggest gain of 1.6m subs to 53.6m, with Hulu + Live TV remaining steady at 4.6m. ESPN also dipped by 700k subs to 24.9m. Across all streaming services, Disney now stands at 203.1m subscribers. 

Reflecting another wide shift with an industry that has fallen in love again with windowing, Disney’s licensing revenue was also up strongly, growing 34% in the year to reach $2.18bn. The picture for advertising was more mixed. Overall direct-to-consumer ad revenue fell 2%, but with the removal of recently deconsolidated Star+ operations in India, grew an impressive 16%.

How will box office smash Moana 2 benefit Disney+?

In contrast to the latest results from Netflix,  which added 19m subscribers to pass over 300m in total, Disney had no major subscriber milestone to share. While Netflix’s strong growth can be attributed partially to the major Mike Tyson vs. Jake Paul live fight, Ampere SVoD Economics data suggests major film releases on Disney+ do relatively little to draw in new subscribers—yet they keep churn rates low. 

For example, when the biggest box office film of 2024, Inside Out 2, was released on Disney+ at the end of September, sign-up rates for the platform remained steady compared to the week prior when no major release occurred. However, for those who signed-up within the first three days of Inside Out 2 being available, 93.5% remained customers after one month. So while the addition of Moana 2 on Disney+ may not bring in many new subscribers, it’s the type of content that – unlike a live sports event – will keep families subscribed to the platform month after month.  

The importance of pricing strategy was also seen with the peak of 250k subscriber additions for Disney+ in the US as the result of a Black Friday deal on 29 November, allowing new customers to secure Disney+ and Hulu with ads for $2.99/month for one year (a 72% discount). Likewise bundles are increasingly key: As of December 2024 nearly two-thirds of all Disney+ subscribers are signed-up as either part of a Disney bundle or Max bundle, up from 60% a year prior – emphasising that cost-savings are increasingly important to many consumers. 

What comes next for ESPN, Hulu, and Fubo?

In terms of sports in 2025, Disney is focusing on the launch of what the company has deemed ’ESPN Flagship’, a fully streaming-centric ESPN platform that shutters the traditional cable channel.  When ESPN Flagship ultimately debuts, with Disney promising even more integration in the main Disney+ app for bundle subscribers, it would not be surprising if more one-off live sports events become major streaming events. 

Although the current iteration of ESPN+ has plenty of live sports, by dismantling the ESPN cable channel (and foregoing the now-shelved Venu sport streamer), Disney has more power to create similar marquee events, unrestricted by cable operator channel availability and bolstered by the commercial appeal of the Disney bundle. One lesson from the success of Netflix’s Tyson/Paul fight, is that ESPN Flagship should work with a sports league or franchise to produce a one-time, streaming-only sporting event to coincide with its launch to boost interest and sign-ups. 

In addition, former legal foe Fubo is now in the process of being acquired by Disney, augmenting what is already the second largest virtual multichannel video programming distributor (vMVPD) in the US, Hulu + Live TV. While Disney admits that Live TV has not been central to Hulu’s strategy and growth, the integration of Fubo, which specialises in regional sports network availability, will prime the new service to compete more directly with current market leader YouTube TV. The result is a more robust spread of streaming products for customers to choose from, bundled or not.  This continues to be the major difference for Disney compared to rivals such as Netflix and Max, whose subscribers pretty much get all content or nothing.