Small Screen: Disney's 1Q FY23 Earnings Beat Expectations

Key Takeaways:

• Disney’s 1Q FY23 earnings exceeded street estimates on EPS, revenue, andDisney+ total subscriptions. In response to an activist and weak FY4Q22 results,Disney announced a reorganization in its various arms, ~7000 job cuts and plans to cut costs by $5.5bn

  • Streaming remains unprofitable, losing $1.1bn in the quarter, despite stable QoQ user growth in 1Q FY23 per ST Estimates: ST MAUs Disney+ on (including Star+) increased 3% QoQ (24% YoY) vs reported Disney+ core subscribers* up 1% QoQ (24% YoY)

• Following a Dec’22price increase to its domestic Disney+ plan as well as itsbundled offerings , user churn is up 5pps and 3pps MoM, respectively, onDisney+and Hulu in Jan’23, per Sensor Tower Churn Analysis Data. Other streaming services also exhibited volatility in user churn rates in the new year, primarily attributable to live sports streaming and the return to normal viewing routines post -holidays

  • Netflix saw MoM US user churn tick up 2pps in Jan’23, vs +6pps on Amazon Prime Video. Prime Video’s higher churn rate in Jan’23 was likely driven upwards by the conclusion of Thursday Night Football in Dec’22

  • Peacock also experienced higher rates of user churn upon the conclusion of its tentpole live sports offering with the World Cup concluding in Dec’22 and user churn rising 7pps shortly thereafter in Jan’23

  • Alternatively, Paramount+ saw US user churn decrease 5pps in Jan’2 3, benefitting from a historic boost in viewership due to the NFL AFC championship game which prompted users to flock to the platform

• Per ST estimates, DAUs on Paramount+ surged 18% WoW for the week beginning January 23, likely driven by the access to stream theNFL on CBS AFC Championship game on the app

For more information, request the full report from reports@sensortower.com.