Disney’s latest fiscal results offer a promising outlook for the streaming industry, showing that streaming services like Disney+, Hulu, and ESPN+ are turning into more profitable businesses. According to Disney’s CFO, Hugh Johnston, the company projects an $875 million increase in direct-to-consumer operating income in fiscal year 2025, offsetting the decline in revenue from traditional linear TV.
This marks a significant shift in how streaming is perceived, especially after Warren Buffett’s skepticism toward the streaming model. Buffett had questioned the sustainability of streaming, noting that media companies had struggled financially. However, Disney’s earnings show that its streaming division is thriving, with $321 million in operating income in the fiscal fourth quarter. The company’s streaming platforms (Disney+, Hulu) are expected to generate over $1 billion in operating income in the next fiscal year.
A key factor in this turnaround is streamlined content spending and the steady growth in subscriber numbers across Disney’s streaming services. This progress suggests streaming may not only replace the profits from traditional TV but could outpace it. Unlike the stability of traditional TV, where companies received monthly payments regardless of viewing habits, streaming services face higher churn rates, as customers can easily cancel services. However, Disney believes future bundles or content consolidation could help mitigate churn.
The results come after Warner Bros. Discovery also reported strong streaming earnings, with Max adding 7.2 million global customers, signaling that streaming may be the future of entertainment. Despite challenges, Disney’s positive earnings show that streaming is increasingly becoming a more sustainable and profitable industry. This shift is reflected in Disney’s stock price, which rose 6.2% after the announcement.
Disney’s earnings suggest that streaming can successfully replace linear TV, transforming the media landscape and proving that the future of entertainment lies in digital streaming.
