Disney’s Streaming Unit Loses Three Times More Money Than Disneyland Paris

The scale of the challenge Disney faces in trying to make its money back from Disney+ has been highlighted in new research which reveals that in just the past five years its streaming division has lost almost three times more money than Disneyland Paris has done in more than three decades despite the French resort being widely seen as one of the studio’s biggest financial flops.

In fact, despite recently posting a string of operating profits, Disney’s Direct To Consumer (DTC) streaming division is still one of the most loss-making ventures in the studio’s 102-year history. It is largely formed from three streaming platforms with Disney+ joined by ESPN+ and Hulu.

Fueled by heavy investment in exclusive content, the DTC division generated total operating losses of $11.4 billion between the launch of Disney+ in fall 2020 and April last year. Its results have begun to look up since then.

Over the past two years Disney has embarked on a round of cost-cutting, a crackdown on password sharing, price rises and the introduction of an advertising-supported subscription tier. These measures have finally had a magic touch and on Wednesday Disney announced that its DTC division made a $293 million operating profit for the first three months of the 2025 financial year bringing its total income over the past three quarters to $661 million. Offset against the losses, it gives the DTC division an operating loss of $10.7 billion since the launch of Disney+ as the chart below shows.

When the platform debuted, The Hollywood Reporter called it a “risky bet” as it competes directly with some of Disney’s biggest clients including movie theaters which pay it a share of their revenue from showing its films. Disneyland Paris was perhaps an even bigger gamble.

Originally known as Euro Disney, Disneyland Paris was the second-largest construction project in Europe when construction work began in 1988. Its location in the heart of Europe eventually proved to be perhaps its biggest strength but it didn’t seem that way when the resort’s ornate iron gates swung open for the first time on a blustery April day in 1992.

The chilly climate in Paris is a world away from the conditions in California and Florida which are home to Disney’s North American theme parks. Moreover, Disney had to deal with much more powerful unions in France than in the United States and their members initially claimed that the working environment was far from a fairytale.

French staff objected to strict presentation guidelines which banned moustaches, ear rings and long hair, while French tourists were put off by high ticket prices, the lack of alcohol in the park’s restaurants and English being its first language.

As if that wasn’t enough, there was a protracted deep recession with unfavorable exchange rates. It brought dark clouds to the magic kingdom which was especially vulnerable due to its ownership structure.

Disney requested a plot of land a fifth the size of Paris in order to maintain its exacting standards in the area surrounding the two parks and eight hotels which now sit on the site. The Mouse got its wish but it came with a catch. The French government was only prepared to allocate such a large plot of land to a foreign company on condition that it entered into a public-private partnership.

Disney incorporated Euro Disney SCA which became the resort’s parent company and was listed on the Paris Euronext exchange. Only 49% of it was in Disney’s hands making it the private party in the partnership. The majority of its shares were owned by the public which made it difficult for Disney to pour its own money into the business as it has done with its wholly-owned parks in the U.S.

Instead, the resort funded its construction with $1.8 billion (€1.7 billion) of bank borrowings and Disney followed suit by lending it even more money. The bank loans had hefty interest rates which led to Euro Disney burning up blockbuster losses. So high indeed that the business teetered close to bankruptcy on several occasions and required repeated bailouts.

This is despite the fact that the fundamental appeal of the resort was strong from the start. “From day one it was a hit with the people,” said Disney’s visionary former chief executive Michael Eisner. “I think we had 10 million people in year one – more than the Louvre.” It was no exaggeration as Disneyland Paris quickly became Europe’s most-visited tourist destination and hasn’t looked back.

It eventually even won over the French and became such a success that Disney paid off its debt and took full control of the resort in 2017 as this report in the Daily Telegraph forecast five years earlier. Disneyland Paris now casts a powerful spell on the bottom line of Disney’s international theme parks. As the Guardian revealed, the latest results of the resort’s current operating company, Euro Disney Associes, show that in the year-ending September 30, 2023, its revenue rose 23.5% to an all-time high of $3.1 billion (€2.9 billion) leaving it with $187.1 million (€175 million) of operating income.

However, this cannot be compared like-for-like with the same metric for Disney’s DTC division because it would artificially inflate the performance of Disneyland Paris. Testimony to this, the resort’s combined operating income since 1992 comes to $354.9 million which its nearly $11.1 billion higher than the result of Disney’s DTC division using the same metric.

However, it’s a different story at the bottom line. This is because the finance charges on debt are deducted after operating profit has been calculated which is why Disneyland Paris has generated a combined net loss of $4.06 billion since 1992 as the chart below shows.

The $4.06 billion is undoubtedly a staggering sum but Disney’s DTC division still lost 2.6 times more money in a sixth of the time. The big question is will it ever break even and, if so, how long will it take?

Disney declined to comment for this report but some clues about its forecasts came in its recent results announcement. On reading the comments from the company’s management you would be forgiven for thinking that streaming was Disney’s biggest cash cow not one which has cost the company $10.7 billion and only generated 0.9% of its operating income last year.

Talking about the outlook for streaming in 2025, Disney’s chief financial officer Hugh Johnston said “our expectations are for the business to do terrifically well. We made $300 million in the quarter. For the full year, our expectation is to be a little over $1 billion.” At that rate the DTC division won’t be in the black until 2035 though the prognosis could of course improve.

Looking to 2026, Disney forecasts a 10% operating margin for its entertainment DTC business, excluding its Hulu Live service. However, Disney’s financial statements don’t break out how much of the DTC division’s $22.8 billion revenue is generated by entertainment which makes it tough to estimate what the 10% margin would yield. Even if entertainment generates the lion’s share of the revenue it would mean that the streaming division still wouldn’t break even until well into the next decade and that’s assuming its costs don’t increase unexpectedly.

That can’t be ruled out as Disney is in the middle of developing a new flagship ESPN streaming platform which is due to be released in the fall. The development is being spearheaded by Disney’s chief product and technology officer Adam Smith, a YouTube veteran who was hired in August last year. He has got a lot on his plate.

“We’ve got some work to do internationally, particularly on the ad tier. Ad tech is also something that we’re working on,” said Disney’s chief executive Bob Iger on Wednesday adding that “one of the things that we are very, very mindful of is that home screen, or front screen or the first experience that consumers have, has to be more dynamic.” This could all be for naught if the streaming landscape changes.

Unsurprisingly, once studios put their content on streaming platforms it was quickly copied by pirates and made available for free all over the world. Usage rates of these rogue sites have surged as consumers’ purse strings have been pulled tight due to the cost of living crisis.

A report from Bloomberg revealed that there have been more than 140 billion visits to pirate streaming sites since 2020 compared to about 105 billion prior to the pandemic according to estimates from the US Chamber of Commerce’s Global Innovation Policy Center.

It is too late for studios to get the genie back in the bottle now that their content is online. Pirates remain one step ahead of them by using what are known as mirrored websites which copy their own content so if one gets shut down another is waiting in its place. Some studios seem to have responded resignedly.

Perhaps mindful of the rising tide of piracy, Warner Bros. has begun to release its back catalog for free on YouTube. Since the start of this year it has uploaded 31 movies to its YouTube channels where they generate revenue from advertising. Disney hasn’t gone down this road but in May 2023 it pulled nearly 50 titles from Disney+ enabling it to get a tax write-off on them or loan them out to Free Ad-Supported TV (FAST) services.

This move called the spending on streaming into question and if the new Warner Bros. model takes off then Disney+ could become redundant long before it recoups its accrued losses. That is made all the more difficult by the fact that Disney+ is losing subscribers with 700,000 disappearing in the latest quarter alone giving Disney a total of 125 million. It is less than half the tally of Disney’s chief rival Netflix which announced last month that it had topped 300 million global subscribers for the first time after cashing in on its push into live sports as this report explained.

The streamer smashed forecasts to add 19 million subscribers in the last three months of the year, marking its biggest-ever quarterly increase and giving it a total of 302 million worldwide. It led to Netflix’s annual operating income exceeding $10 billion for the first time whereas Disney’s drop in subscribers could have the opposite effect if it continues.

The fewer the number of subscribers, the lower the revenue and the harder it is to make a profit so this is perhaps the most crucial metric for Disney’s DTC division. The immediate outlook is bleak as Disney forecasts a “modest decline” in Disney+ subscriber numbers in the next quarter compared to the previous one. However, it is expected to improve when its recent batch of blockbusters at the box office comes on stream.

“As we add more of the movie slate that we produced in the back half of ’24 into the streaming service in ’25, we think that content will drive sub growth as well,” said Johnston on Wednesday.

Ironically, Disney’s best chance of making blockbuster profits was when its subscriber numbers were soaring during the pandemic but that is when its content costs were at its highest so it made massive losses.

The operating loss of its DTC division doesn’t even include the $71 billion cost of buying 21st Century Fox which was driven by Disney’s desire to broaden its portfolio of content as Iger explained on Wednesday. “You know, in late 2017, when we announced initially that we were acquiring assets from 20th Century Fox, we specifically mentioned that we were doing so through the lens of streaming,” he said. “We saw a world where streaming was going to proliferate and we knew we needed not only more content, but more distribution, and with that came just a tremendous amount of content.”

It also came with a tremendous bill and what makes it such a significant risk isn’t how much money is on the line but why it was spent. In 2019 Iger told The Hollywood Reporter that the biggest danger for Disney would have been to continue selling its content in the same way that it had been doing for decades.

“The risk would have been essentially maintaining a status quo approach to how we were managing our content,” he said. That was before Disney began pulling content from its streaming platform and before Warner Bros. started showing movies for free on YouTube. In such a fast-moving sector as tech, strategies can change swiftly but the spending stays with the company until it breaks even. Disney is still counting the cost of that.