Disney ups streaming forecast amid international push

Disney has reported a 6% uptick in streaming revenues in Q3 and increased its full-year forecast for the division, with chief exec Bob Iger talking up increased spending on content for international markets and a global roll-out for Hulu.

Growth at the US giant’s streaming division, as well as its parks and experiences operations, were the highlights of a quarter that saw generally solid numbers, although a 2% overall revenue increase to $23.7bn (£17.7bn) was slightly behind expectations.

Shares slid 3% in after-hours trading, while the company also said it would stop reporting subscriber numbers for Disney+, Hulu, and ESPN+ in its Q1 2026 report, following a similar move from Netflix.

The company also confirmed that Hulu will be fully integrated into the Disney+ app in 2026, and, starting this autumn, will replace the Star tile on Disney+ internationally, after Disney acquired Comcast’s 33% share in the streamer last month.

International expansion

Disney reflected growing confidence in its streaming operations by saying that it now expects to record $1.3bn (£972.3m) of operating income from its direct-to-consumer streaming business this year (ending September), up from $1bn (£748m) previously.

Chief exec Bob Iger also doubled down on comments made earlier in May around international expansion, with plans to increase spending on content outside of the US.

In an earnings call following the results, Iger said that there was not a “need to increase the spend on content significantly” in the US, but that “where we believe we should be investing is to grow our international businesses”.

He said the move to replace Star with Hulu would be one prong of the strategy, along with “technological advancements” around recommendations and the ability to access FAST channels.

He added that Disney “probably will invest in very selected markets internationally where we really feel there’s a potential to grow our bottom line, to grow subs, to grow advertising revenue and to grow our bottom line”.

No further detail was given on the international investment plans, but chief financial officer Hugh F. Johnston said there was “a significant penetration opportunity” to grow outside the US.

“As we grow engagement and reduce churn in the US, that presents opportunities from a marketing spend perspective some of which can be basically reinvested into international content,” he said.

“And our intent is to do that through a rifle-shot approach with specific markets. We intend to be deep rather than broad in terms of the way that we do that in a number of markets around the world.”

The comments came off a solid Q3 for Disney’s streaming operations, with revenue for the period ending 28 June climbing 6% year-on-year to $6.2bn (£4.6bn). A $346m (£258.8m) profit was booked, compared to a $19m loss one year ago.

Global Disney+ subscribers increased 1% or by 1.8m over Q2 to 127.8m. Factoring in Hulu, members gained 2.6m over Q2 to reach 183m.

Streaming profit gains were attributed to price increases, subscriber growth, and the absence of Star India subscription revenue after Disney and Reliance’s JioCinema created a stand-alone joint venture in an $8.5bn merger in November 2024.

A drop in programming and production costs also played a role in the profit increase, in part because in the year-ago period Star India-owned Disney+ Hotstar carried International Cricket Council (ICC) programming.

Linear decline

Operating income across the Entertainment segment - encompassing streaming, studios and linear TV – amounted to $1bn, marking a $179m year-on-year drop.

Studio operating income fell by $275m to a $21m loss compared to one year ago when Inside Out 2 was in its early days and racing towards the $1.7bn global box office. However, Iger noted “renewed momentum” at the studio after shifting the focus to quality over quantity.

The Disney chief namechecked the studio’s $1bn performer Lilo & Stitch, a live-action adaptation of an animated property that has seen a 70% rise in merchandise and is the second-highest merchandise seller this year behind Mickey Mouse.

At the linear networks, operating income fell 14% against the year-ago period to $587m, which Disney executives attributed to a decline in advertising revenue due to lower viewership and rates, and the Star India transaction.

Experiences and sports

Revenue at the domestic Parks & Experiences segment increased by 10% to $6.4bn and gained 6% internationally to reach $1.7bn. Domestic operating income grew by 22% to $1.7bn while international fell 3% to $422m.

In the Sports segment there has been a lot of activity around ESPN as media titans vie for significant landgrabs.

On Tuesday, Disney said ESPN and the NFL (American Football’s National Football League) had struck a deal to bring NFL programming to ESPN’s upcoming enhanced stand-alone streaming service as well as to Disney+ that will see NFL take a 10% ownership stake in ESPN.

The streaming service will launch on August 21 at $29.99 a month for the unlimited plan (and will be bundled with Disney+ and Hulu with ads for an initial $29.99, rising to $35.99 after one year) and includes betting and multi-view options, among other enhancements. Disney is looking at potential bundles with other sports offerings.

Domestic revenue at ESPN gained 1% to $3.9bn and international climbed by 2% to $379m. Domestic operating income fell 7% to $1bn due to an increase in programming and production costs.

Across all segments, adjusted earnings per share increased 16% to $1.61 from $1.39 one year ago. Operating income grew 8% to $4.6bn from $4.2bn a year ago.