• by Wayne Friedman , April 10, 2025

Although profits continue to improve at Disney’s direct-to-consumer (D2C) business, there are continued concerns about near-term subscriber and revenue growth, according to Bernstein Research.

“Decelerating DTC growth has become a concern for investors,” said Laurent Yoon, media analyst at the equity research company.

While promotions have seen net subscribers gains from time to time “the tailwind from the paid sharing crackdown will eventually fade, and the net adds from promotions will dilute the ARPU [average revenue per user] and are not sustainable.”

Since 2022, Disney has offered up 12 different promotions -- for its cheapest advertising-supported tier -- for Disney+, Hulu, and the Disney+Hulu Bundle. The most recent is for the Disney+Hulu Bundle --$2.99/month for four months, following $2.99/month for one year.

Overall net additions for Disney+ domestically have not fared as well as for Hulu -- especially from its promotions.

Disney+ has posted just a 400,000 subscriber decline in the first quarter of 2024 and a 800,000 gain for the third quarter of 2024, up 1.2 million (vs. Q4 2024) and 800,000 (vs. Q1 2025). Internationally, “markets have been slowing down and turned negative in recent quarters.”

Hulu has done better than Disney+ -- especially with its Black Friday promotions -- 1.2 million in the first quarter of 2024 and 1.6 million in the first quarter of 2025.

Good news: Operating profit margins are up 5% in the first quarter. The bad? Revenue growth rate have slipped to 6% from a high of around 15% in earlier periods.

In the first quarter 2025. Disney’s direct-to-consumer business had an operating profit of $293 million, versus a $138 million loss in the year-ago period. Revenue was up 6% to $6.1 billion.

Disney could be moving toward better bundling deals. For example, Disney+ Domestic did post a 7.9 million subscriber improvement due to a Charter Communications streaming/linear bundling deal in the second quarter of 2024. In addition, there was a new bundling deal with Warner Bros. Discovery’s Max in 2024.

“We are also encouraged by Disney’s bundling trends, especially with the impending 'ESPN Flagship' [streaming platform] that’s likely to reduce churn meaningfully," Yoon said.