Disney streaming is gaining momentum as Hollywood pressure increases

Monday 02 February 2026 18:41

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Disney beat Wall Street expectations in the latest quarter, supported by an unexpected increase in its streaming business, despite rising costs taking a toll on the entertainment industry.

The media giant reported adjusted earnings per share of $1.63 for its fiscal first quarter, higher than estimates of about $1.56.

Revenue increased five percent over last year to $26 billion, but operating income fell to $4.6 billion from $5.1 billion a year earlier, due to inflationary pressures and rising human rights costs.

Streaming topped the list, with revenue from its direct-to-consumer business rising 11 percent to $5.3 billion.

Meanwhile, operating income increased to $450 million, a positive step forward for a division that recently turned profitable.

Disney has stopped reporting subscriber numbers, and instead encouraged investors to focus on margins, price and cash generation.

Chief executive Bog Iger said he was “pleased with the start of our fiscal year,” with the company forecasting streaming operating income of around $500 million in the current quarter, and double-digit growth for the full year.

This comes as the industry decisively moves away from streaming’s old playbook of “growth at any cost.”

This shift also follows competitors facing increasing strategic pressure in the market.

Warner Bros. Discovery is in takeover talks with Netflix, as legacy studios grapple with the long-term decline of cable TV, as well as soaring prices for premium content.

An industry-wide recalibration has put scale and pricing power under greater scrutiny than customer numbers alone.

Disney’s entertainment division benefited from strong box office performances from Zootopia 3 and Avatar, increasing revenue seven percent to $11.6 billion.

But higher production and distribution costs caused the unit’s operating income to fall 35 percent, proving that cinematic success doesn’t always translate into profits.

Signals of inflation and sports succession

The biggest pressure for the company was in sports, with operating income at Disney’s sports division down 23 percent.

This was driven by higher NBA and college sports rights costs, coupled with a $110 loss from a carriage dispute with YouTube TV.

Revenue rose just one percent to $4.9 billion, highlighting the tight margins now applied to live sports broadcasts.

The results come as Disney’s long-standing succession question is nearing resolution, with Bloomberg recently reporting that the group is close to naming Josh D’Amaro as Iger’s successor.

This would close a chapter that has weighed on investor confidence since Iger’s return in 2022.

Looking ahead, Disney reiterated its full-year outlook, projecting double-digit revenue growth, operating cash flow of $19 billion and stock repurchases of $7 billion.

As Warner Bros. explores consolidation and Netflix pushes its balance sheet to stay on top, Disney’s goal is to prove that profitable streaming can coexist with its blockbuster ambitions.