Disney beat expectations in its most recent quarter as it forays into the lucrative gaming market with a $1.5bn (£1.2bn) investment in Fortnite studio, Epic Games.
The Mickey Mouse creator reported a rise in pre-tax profits to $2.8bn (£2.2bn), up from $1.7bn (£1.3bn) in the same quarter last year. It expects its streaming business to turn a profit by September this year.
But it said it lost 1.3m subscribers in the three months to 31 December, following a price hike in October.
“Disney+ raised its prices twice over the course of a year without adding any additional value. It’s no surprise they netted out with a subscriber loss this past quarter,” said Forrester VP and research director, Mike Proulx.
Disney boss Bob Iger has announced a flurry of moves this week as he looks to rescue Disney from a cheerless couple of years where shares hit a decade low.
In addition to the Epic Games investment, the company also plans to show an exclusive version of Taylor Swift’s Eras Tour concert movie on its streaming service Disney+.
It has also announced a $3bn share buyback programme for 2024 while increasing its July cash dividend by 50 per cent, to $0.45 per share, compared to the one just paid in January.
“Bob Iger’s strategy to turn around the ship seems to be working,” said Kathleen Brooks, research director at XTB.
“Part of the increase in profitability is down to brutal cost cutting, and there is only so much that you can do. If Disney + doesn’t see the subscriber growth that Iger hopes for, then it’s hard to see how the company’s streaming business can be a ‘key growth driver for the company’,” she explained.
It comes a day after Disney also revealed a joint venture with Fox and Warner Bros Discovery, as they team up to debut a new sports streaming service.