Can Disney's Streaming Boom Unlock Room for More Subscriber Growth?

Disney DIS is riding high as its direct-to-consumer (DTC) streaming platforms — Disney+, Hulu and ESPN+ — reshape its growth trajectory. The integration of ESPN into the Disney+ app, followed by a full standalone launch later in 2025, is expected to capture a wider sports audience, giving Disney a unique edge in an increasingly competitive streaming market. This strategic initiative is already paying off; its streaming segment delivered $336 million in operating income in the second quarter, up dramatically from $47 million a year earlier. The turnaround builds on momentum gained last August, when ESPN+ helped propel Disney’s entire streaming business into sustained profitability.

Profitable streaming operations are enabling Disney to reinvest in blockbuster content like Moana 2 and Inside Out 2, which drive both streaming engagement and theatrical success. This content, in turn, amplifies revenues across merchandise, parks and cruises, leveraging the strength of the company’s core brands like Marvel, Pixar and Star Wars.

With profitability assured, Disney is in a position to shift from mere volume growth to building a sustainable, loyal customer base. Through bundles, international expansion, local content and its sports-driven strategy, its streaming boom seems well-positioned.

In the second quarter of fiscal 2025, Disney+ added 1.4 million subscribers, bringing its total to 126 million, while Hulu reached 54.7 million subscribers. Together, Disney closed the quarter with 180.7 million total streaming subscribers, representing a 2.5% sequential increase. This momentum signals that the company’s transition from conventional media to streaming is yielding real momentum.DIS’ Competition in the Streaming Space

Netflix Inc. NFLX, the streaming pioneer, dominates the U.S. market with more than $11 billion in the second quarter of 2025 and 45% earnings growth. Netflix's dominant scale, AI-driven recommendations and fast-growing ad-supported tier, nearly half of U.S. sign-ups, bolster its edge over Disney. With exclusive NFL and FIFA rights, plus unmatched success in weekly streaming charts through diverse, original content, Netflix’s expanding global subscriber base and accelerating ad business solidify its leadership and growth momentum.

Paramount Global PARA, through Paramount+ and Pluto TV, leverages its extensive CBS, Nickelodeon and Star Trek content to compete with Disney+ in family programming, live TV and classics. Paramount’s subscription revenues climbed 16% in the first quarter of 2025, fueled by growing subscribers, though streaming remains unprofitable due to debt and operating losses. Paramount’s rich content, cable networks and multi-revenue streams drive global viewership, keeping it positioned for growth despite profitability hurdles.

DIS’ Share Price Performance, Valuation & Estimates

DIS shares have gained 9.1% in the year-to-date period, underperforming both the Zacks Consumer Discretionary sector’s return of 10.6% and the Zacks Media Conglomerates industry’s appreciation of 13.5%.

DIS’ YTD Price Performance

From a valuation standpoint, DIS stock is currently trading at a forward 12-month Price/Earnings ratio of 19.46X compared with the industry’s 21.1X. DIS has a Value Score of B.

DIS’s Valuation

The Zacks Consensus Estimate for Disney’s 2025 earnings is pegged at $5.78 per share, up a couple of cents over the past 30 days. This indicates a 16.3% increase from the figure reported in the year-ago quarter.

DIS stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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