The Walt Disney Company reported meaningful momentum in its direct-to-consumer (DTC) segment during the second quarter of fiscal 2025, outlining a clearer path to sustained subscriber growth and long-term profitability.

Q2 Results

Disney’s Q2 performance reflects a strategic pivot toward bundling, personalization, and platform unification across its streaming portfolio.

• Adjusted earnings per share (EPS) rose to $1.29, up 20% year-over-year, surpassing analyst expectations. The company raised its full-year EPS guidance to $5.75, up from $5.30.

• DTC operating income reached $47 million, positive for the second consecutive quarter—an improvement from a $587 million loss in the same period last year.

• Total streaming subscriptions across Disney+, Hulu, and ESPN+ climbed to 221.5 million, up from 213.8 million in Q1.

  • Disney+ core (excluding Hotstar) added 6.2 million subscribers (a 9% quarter-over-quarter increase), reaching 76.0 million.

  • Hulu held steady at 50.2 million, with Disney attributing high engagement and low churn to bundling.

  • ESPN+ grew to 27.7 million, up from 26.9 million in Q1 FY25.

Strategic Levers

CEO Bob Iger credited the growing integration of Disney+ and Hulu—and the addition of live sports content—for improvements in retention and user activity.

“Not only is engagement up, but churn is down—and significantly,” said Iger.

The company is leaning on three strategic levers to accelerate streaming growth:

• Deeper Platform Integration
  Disney+ and Hulu are becoming more unified, creating a broader content experience. When ESPN’s direct-to-consumer service launches later this year, it will be fully bundled into this ecosystem—delivering a seamless tri-platform experience spanning entertainment, general content, and live sports.

• Technology Enhancements
  Hulu’s rollout of paid sharing is underway. Disney is also investing in personalization, customization, and ad-tech to enhance platform performance. Iger previewed a “significant” technology roadmap for the remainder of the year.

• Localized Content Investment
  International markets remain a key opportunity. Disney has begun increasing investment in local content abroad—efforts that may take time to impact the P&L but are aimed at long-term subscriber growth.

Also on deck: ESPN’s much-anticipated standalone streaming product. While branding and pricing have yet to be announced, Disney confirmed the new service will offer enhanced features like fantasy sports and betting integrations. For subscribers to the full Disney bundle, the experience will be unified across all three services.

Financial Context

CFO Hugh Johnston reaffirmed Disney’s long-term outlook, citing ongoing momentum and improved fundamentals. Full-year adjusted EPS guidance was raised to $5.75, and double-digit growth is still expected in FY26 and FY27.

While Disney+ advertising remains supply-constrained, ESPN’s performance stood out. Advertising revenue for ESPN rose more than 20% year-over-year, driven by strong demand around live sports.

INSIDER TAKE

Disney’s Q2 reveals a few critical takeaways:

• Bundling and integration work—when done right. Disney is creating a streamlined user experience across its platforms, increasing retention without adding complexity.

• Paid sharing enforcement is spreading. Disney’s expansion of this tactic to Hulu signals a broader trend. Early results suggest it’s having a measurable impact.

• A unified ecosystem is the next battleground. Combining top-tier entertainment, general content, and live sports under one roof offers a powerful retention advantage. Few competitors can match that breadth.

• Efficiency still matters. Despite tech and content investments, Disney continues to focus on cost discipline, particularly across marketing and operations.

• ESPN DTC is a strategic pivot. How the company prices and positions its standalone sports offering will be a bellwether for legacy media’s ability to make the full leap to streaming.

Disney’s Q2 performance highlights a broader industry shift: growth is no longer about acquiring as many subscribers as possible—it’s about creating platforms that are smarter, stickier, and built for lifetime value.