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Disney's shares experienced a sharp decline of around 9% on Thursday, May 13, following the company's report of subscriber losses at its streaming platform, Disney+. And Disney CEO Bob Iger doubled down on the company’s long-term streaming strategy.

The entertainment giant lost four million subscribers. Wall Street was shocked and reacted immediately with a significant reduction in the company's market value. 

Despite this loss, the company's profits and revenue were in line with Wall Street estimates, mainly due to an increase in prices that helped narrow the operating losses at Disney+ by $400 million.

Disney's Long-Term Streaming Strategy

The company has been focusing on its streaming services with Disney+ as the flagship product. Despite the subscriber loss, Disney plans to expand its streaming services and content library. The company recently announced plans to add Hulu content to its Disney+ streaming app. Moreover, it is planning to raise the price of its ad-free streaming service later this year. However, analysts predict that such price hikes are not sustainable in the long run, and Disney will soon run out of headroom for further increases.

Disney also faces tough competition from streaming services like Netflix with the new ad tiers they offer. And competitors like Warner Bros. Discovery and Paramount are a challenge. The competitive marketplace, along with reductions in ad budgets and economic uncertainty, are posing a challenge to Disney's long-term streaming strategy.

Disney boss Iger has been overseeing a broad restructuring at the company. And he has been overseeing job cuts of approximately 7,000. Iger has staggered the staffing reductions, which are planned to be completed before the summer.

 The company's efforts to reduce costs and operate more efficiently are essential for the successful transition to streaming.

What the Analysts Say

Analysts at SVB Moffett Nathanson lowered their price target for Disney's stock by $3 to $127 following the report, but maintained the firm's outperform rating. They predict aggregate subscriptions will be roughly flat in the fiscal third quarter and rise in the fiscal fourth quarter.

Macquarie senior media tech analyst Tim Nollen also maintained an outperform rating. And he noted that Disney has the essential assets to successfully transition to streaming, but it's a multi-faceted effort.

 Nollen wrote in a note that "Disney is making headway in its cost-saving and operating-efficiency efforts amid a deteriorating linear TV business, both structurally and cyclically."

Disney's subscriber losses have affected the company's stock prices. But the company is committed to a long-term strategy of expanding the streaming services and adding content from Hulu to Disney+.