Disney Confirms Streaming Profitability Guidance Through 2024; CEO Bob Iger calls the company “my No. 1 priority” but vows not to “abandon” theaters or linear TV.

Disney CEO Bob Iger on Wednesday reiterated the company’s long-held expectation to investors that its streaming business would be profitable by the end of fiscal 2024.

On the company’s quarterly conference call, Iger called streaming “my #1 priority” and said he has “deepened every facet of our streaming business” since returning as CEO last November.

During the call, analysts pressed Iger repeatedly about how he will balance declining linear TV networks and streaming offerings, whose economic models are still in the picture. Last September, while still an independent media figure and not yet back in the Burbank corner office, Iger drew attention with a televised vision laid out at the Code conference. “Linear TV and satellite are marching toward a great divide and it’s being pushed away,” he said, adding, “I can’t tell you when, but it’s going away.”

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The executive addressed the issue today, telling analysts that he’s been “monitoring it very closely for a long time. What I’m saying is that the impact of technology is actually causing a massive shift in authority from the manufacturer and distributor to the consumer . Unlike the paid bundles that have prevailed for decades, streaming allows customers to sign up and pay a small fee for just a single clip, then cancel their subscription. “This is a big change,” said Iger said.

Given a difficult economic climate last year and the uptake of its large content spend and loss of cricket rights in India, the company lowered its target for subscribers to the flagship Disney+ last year. The updated number is between 215 million and 245 million, from 230 million to 260 million. It reiterated its plan to turn a profit by the end of fiscal 24, but many Wall Streeters began to openly doubt whether the company would meet that goal. In the quarter that ended last October, operating losses at the streaming unit totaled $1.5 billion, a number that stunned many analysts.

Iger reiterated the earnings plan, saying that Disney “like many of our competitors” will stop providing subscriber forecasts given the increased emphasis on profitability and other metrics. (Netflix made a similar move last month, starting with its earnings report.)

Stream losses narrowed to $1.1 billion for the quarter ended Dec. 31, allowing the company’s overall financial performance to beat Wall Street analysts’ forecasts. However, the total number of subscribers to Disney+ fell for the first time since the service was launched in 2019. Partly due to the loss of cricket in India, which used to be a centerpiece of Disney+Hotstar offerings, subscribers fell by 2.4 million year-on-year. quarter and amounted to 161.8 million. Excluding bundled Hotstar subscribers, Disney+’s core business grew 1% sequentially to 104.3 million.

In pursuit of his streaming goals, Iger said, “We will be even more focused on our core brands and franchises, which have consistently delivered superior returns. Other priorities include pricing, local content and promotions.” The company, he said, is “probably too aggressive” in marketing its streaming services, the CEO said, although attracting subscribers will remain a priority going forward as long as they “Quality Subs,” which he defined as more loyal people who might be more vulnerable to price increases. Disney’s initial decision to lower the cost of acquiring accelerators came amid an “arms race” involving both media and tech companies such as Amazon and Apple, and came at a time when subscribers — not profitability — on the game was the most important thing for Wall Street.

Disney was “eyes wide open” as linear TV subscriber numbers eroded, Iger claimed. “We’re in a very interesting transitional period moving inevitably towards streaming.” However, the company will “rebalance” its efforts as traditional outlets such as linear TV and cinemas “still give us a significant amount of revenue as well as marketing power and … amortization of content spend”. Abbot Primary Schoolfor example, draws an audience that averages around 60 years old when it airs on ABC compared to Hulu viewers who are in their 30s.

Hulu and ESPN+, two of the three pillars of Disney’s streaming bundle, are two key variables in the company’s overall financial guidance for direct sales. As for the streaming future of ESPN, whose footprint on linear TV is impressive but shrinking, Iger said the company found ESPN+ “growing well” to nearly 25 million subscribers nearly four years after launching. “We will continue to look at it as a potential pivot for ESPN away from the linear business, but we won’t rush it, we won’t do it until it makes commercial sense,” he said.

Hulu, meanwhile, is at a crossroads a year from now as a deadline for the service’s future approaches. Formed as a joint venture and operated solely by Disney since 2019, Hulu still owns a one-third stake in Comcast, of which NBCUniversal was an initial partner.

Chief Financial Officer Christine McCarthy reiterated Iger’s profitability outlook, but noted that the target is based on a number of assumptions, including broader global economic conditions. She also noted that the addition of Disney+’s ad-supported tier last December won’t have a noticeable impact on results until the end of the current fiscal year.

Peter White contributed to this report.