Disney stock is dropping after its all-important streaming service lost more subscribers

If you’re an investor in the Walt Disney Company, today isn’t off to a great start. At the time of this writing, Disney stock (ticker: DIS) is down almost 6% to $95.23 per share in premarket trading. The drop comes the morning after Disney announced its Q2 2023 results, in which its flagship streaming service took a major hit. Here’s what you need to know:

• What’s happened? Yesterday Disney released its second-quarter numbers for its 2023 fiscal year. Though revenues for the quarter grew 13%, Disney had pretty bad news for its flagship streaming service, Disney Plus. For the second quarter in a row, Disney Plus lost subscribers—this time it shed 4 million of them. That’s up from last quarter’s loss of 2.3 million subscribers.
• Why dd Disney Plus lose so many subscribers this quarter? Disney Plus declined from 161.8 million subscribers in Q1 2023 to 157.8 million in Q2 thanks primarily to a loss of subscribers for its Disney+ Hotstar, notes Variety. Disney+ Hotstar is a version of Disney Plus available in India and parts of Southeast Asia. Its content targets entertainment popular in the region, such as Bollywood films. The service also offers access to the Indian Premier League (IPL) cricket matches—a big draw for subscribers.
• What about Disney Plus subscribers in the United States? News also wasn’t great for Disney Plus in the North American market. The service lost 300,000 subscribers in the United States and Canada in Q2.
• Was there a specific reason for the U.S. Disney Plus losses? Not particularly, but as inflation and economic worries bite—and there’s no shortage of streaming services available—consumers are looking to cut unnecessary costs. Clearly lots of now-former subscribers in the U.S. and Canada felt their monthly Disney Plus subscription was no longer worth it.
• What else did Disney say about Disney Plus? In another consumer-unfriendly move, Disney said it would be raising prices of Disney Plus later this year. The price hikes will impact its ad-free tiers, though Disney did not say how much the monthly price would increase by. However, in order to make Disney Plus a more attractive option to subscribers, the company announced it will incorporate Hulu content into its Disney Plus service. Disney is clearly hoping that more content will mean more subscribers will see increased value in the service, even if the prices go up.
• Was there any good news about Disney Plus in Q2? Though the streaming service still had losses of $400 million, those losses were down 26% year-over-year.