Disney+ has reported a 1.3 million drop in global subscribers in the final three months of 2023.

The Walt Disney Company’s streaming platform—which includes brands like Pixar, Marvel, Star Wars, and National Geographic—lost about 400,000 subscribers in the U.S. and Canada alone, per a press release. Its losses were even greater internationally, amounting to 900,000.

In total, subscriptions decreased from 112.6 million to 111.3 million at the close of its first fiscal quarter, which ended on Dec. 30 (The Walt Disney Company’s fiscal year ends on the Saturday closest to Sept. 30, per the Securities and Exchange Commission.)

Disney+ partially attributed the losses to the “substantial price increase” it implemented that same quarter. On Oct. 12, the company raised the price for its ad-free Disney+ Premium plan by $3, bringing the cost of commercial-free watching from $10.99 to $13.99 per month. The price of Disney+ Basic, which includes ads, remained the same at $7.99 per month. 

The change represents a more than 27 percent increase. To put this into perspective, Disney+’s ad-free plan was originally only $6.99 when the platform launched in 2019, per Yahoo Finance.  

In comparison, Netflix’s Standard ad-free plan is $15.49 but has far more subscribers, boasting about 260 million members, per Statista.

Hulu, another Disney-owned streaming platform, also introduced a $3 increase on its ad-free plan, raising the price from $14.99 to $17.99. However, unlike Disney+, Hulu managed to secure a 1.2 million boost in subscribers.

Disney+ Hotstar,  the company’s Indian subscription streaming service, saw a 700,000 million increase in subscribers from the previous quarter.

Disney+ Struggles to Turn a Profit

Disney+ reported a 7 million increase in subscribers in the fourth quarter of its last fiscal year, which ended on Sept. 30, per a press release.

The company’s chief executive officer, Bob Iger, told CNBC at the time that the surge was “the result of great content.” In particular, he highlighted “three strong movies”—“Guardians of the Galaxy Vol. 3,” “Elemental,” and Disney’s live-action remake of “The Little Mermaid.”

Despite its recent dip in subscribers, the company is eyeing a rebound from its first quarter. It expects to acquire between 5.5 and 6 million additional subscribers by the end of its current quarter, which runs from January to March.

Disney+ also believes it is on track to reach profitability by the end of its current fiscal year. However, the company has not been able to turn a profit since its founding.

The streaming company was able to cut its operating losses from $420 million as of September 30 to $138 million as of December 30.

Disney+ also reported $500 million in cost reductions in its first quarter and noted that it’s “on track to meet or exceed [its] $7.5 billion annualized savings target by the end of fiscal 2024.”

Disney Tries to Boost Profitability

To help boost profitability and the company’s overall number of subscribers, Disney+ revealed it is cracking down on shared passwords this year, per The Verge. The ban already took effect for new customers and will impact existing customers on March 14.

It mirrors the password-sharing ban Netflix passed last year. After implementing the rules in the United States in May, Netflix reportedly had nine million new subscribers by the close of its third quarter, according to Forbes. It also garnered $8.5 billion in revenue, which represents an eight percent increase compared to the previous year.

Disney+ will also be the exclusive home for the streaming version of the “Taylor Swift: The Eras Tour” film, which debuted in theaters in October 2023. It will be available to stream on March 15, per a press release.

Aside from its Disney+ content,  Mr. Iger told CNBC on Feb. 7 that Disney had “entered into a strategic relationship” with Epic Games, a video game software company and maker of “Fortnite.”

He noted that Disney took a minority stake in the company—a $1.5 billion investment—which will go toward creating a “huge Disney universe” that will be “interconnected” with the popular game. Mr. Iger said the deal was Disney’s “biggest foray into the game space ever.”

“[W]e think we can turn this into a good, solid business in terms of the bottom line,” he continued.

He noted that it was “not only timely but an important step,” citing current Gen Alpha, Gen Z, and millennial demographic trends in gaming. A 2023 Global Gamer Study by Newzoo, a games market data research firm, found that Gen Alpha spends the most time gaming compared to the other two groups, allocating 22 percent of their entertainment time to playing games and 16 percent to watching broadcast television. Gen Z was close behind, spending 19 percent of their time engaging in video games and 14 percent watching TV, while millennials spent 18 percent and 16 percent, respectively.

“It’s pretty dramatic, in terms of the amount of time spent in games, in fact, almost equal to—in some demographics—equal to or greater than how people are spending their time on movies and television,” he said.

Disney is also investing heavily in sports content. The company aims to launch a flagship ESPN streaming service in 2025, which will be separate from its ESPN+ sports streaming service. Mr. Iger said it will be the “sport lovers’ delight” and “have features like integrated betting, fantasy, much more personalization, [and] customization” as well as shopping and “deeper” statistics.

Disney will have a stake in an upcoming sports-streaming bundle, which is a joint venture made with Fox and Warner Bros. Discovery, per SportsPro Media.