The Walt Disney Company has reported its earnings for the first quarter of fiscal 2025, revealing strong revenue growth but also exposing some ongoing challenges. While Disney’s Parks & Experiences division remains a key profit driver, domestic theme parks saw only modest gains due to hurricanes, attendance fluctuations, and shifting guest spending habits. Notably, hotel occupancy rates remained flat around 85% domestically.
Meanwhile, Disney+ turned a profit, but subscriber numbers have slightly declined, signaling a shift toward focusing on increasing revenue per user rather than rapid expansion.
With competition on the horizon—including the launch of Universal’s Epic Universe in 2025—Disney’s theme parks must find new ways to drive growth. At the same time, the company is making key strategic moves in its streaming business, ensuring profitability while preparing for a more competitive media landscape.
I’ll dive into all the details below, but the upshot is the earnings are a reflection of what we expected from wait time and booking data. Domestic attendance is softening. Will it mean better or more discounts for us as consumers? Maybe. Disney has a bit of a cap on discounts and sticks to 20-35% off rooms. It will be interesting to see what, if anything, they do to counteract the lag in demand for fall/winter 2025.
That said, let’s dive into the key takeaways from Disney’s Q1 2025 earnings report and what they mean for the future of Disney Parks and Disney+.
Parks & Experiences: Growth with Some Setbacks
Disney’s Experiences division, which includes theme parks, resorts, cruise lines, and consumer products, saw revenue increase by 3% year-over-year to $9.42 billion. While this is an improvement, the division’s operating income remained flat, as higher costs, weather disruptions, and attendance shifts in domestic parks weighed on results.
Walt Disney World & Disneyland: Modest Gains, Some Struggles
Disney’s domestic parks, including Walt Disney World and Disneyland, contributed $6.43 billion in revenue, a 2% increase from last year. However, operating income fell 5% to $1.98 billion, revealing that profitability is under pressure.
Two major factors contributed to this decline:
- Hurricanes Milton and Helene forced park closures and disrupted travel plans, leading to a $120 million loss in revenue.
- $75 million in pre-opening expenses for the new Disney Treasure cruise ship added additional costs to the quarter.
Despite these setbacks, guest spending per capita increased, showing that Disney is still successfully driving in-park revenue through premium experiences, merchandise, and food sales. However, it’s clear attendance is softening.
Domestic Park Hotels: Strong Spending, Flat Occupancy
Disney’s domestic hotel performance remained steady, with 85% occupancy, unchanged from the previous year. However, the real growth came from guest spending, which increased by 5% per room night, a notable jump from just 1% in the prior year. This suggests that, while the number of occupied rooms hasn’t grown, guests are spending more on premium experiences, dining, and in-room extras. Additionally, the number of available hotel room nights slightly declined to 2.54 million, down from 2.547 million, possibly due to ongoing refurbishments or strategic inventory management. These trends indicate that Disney is successfully driving higher revenue per guest, even as overall attendance remains soft.
International Parks: A Big Success Story
While domestic parks struggled, international Disney parks thrived, with operating income surging 28% to $420 million. This dramatic growth was fueled by record-breaking attendance and guest spending at Hong Kong Disneyland and Shanghai Disneyland, where World of Frozen and Zootopia Land debuted to massive fanfare.
This success proves that investing in new attractions is still the best way to drive attendance and revenue growth. It also raises an important question: Will Disney take the same approach in its domestic parks, or will it rely on upcharges and operational tweaks rather than major expansions?
Epic Universe: “Small Impact” or Big Challenge?
One of the biggest questions surrounding Disney’s parks is how Universal’s Epic Universe will affect Walt Disney World attendance. When asked, Disney CFO Hugh Johnston downplayed concerns, stating that the company expects only a “small impact” from the new park.
Interestingly, Johnston carefully avoided mentioning Universal or Epic Universe by name, likely to downplay competitive pressure and avoid headline-grabbing quotes. However, in past earnings calls, Disney CEO Bob Iger and Johnston have suggested that Epic Universe could actually be beneficial to Walt Disney World, bringing more visitors to Orlando overall.
That optimistic outlook may not reflect reality. Epic Universe will feature brand-new attractions, immersive lands, and the first-ever theme park hotel inside the gates, which could lure guests away from Disney. With no major new rides announced for Walt Disney World in 2025, the lack of a strong competitive response could put Disney at a disadvantage. We know there are a number of new attractions, shows and lands in the works, but with construction just starting (or not even started), there will be largely no impact from those in 2025.
Lightning Lane Premier Pass: More Expansions Coming?
Disney also provided updates on Lightning Lane Premier Pass, the most expensive tier of its paid skip-the-line system. While Johnston declined to share exact adoption numbers, he described the program as a “premium product” and hinted that Disney expects it to grow over time.
This statement is particularly interesting because Lightning Lane Premier Pass has already had its restrictions lifted and is now available to all guests. If demand was already strong, why would Disney still expect it to “build over time”?
One possible explanation is that Disney plans to expand the program further. Some potential next steps include:
- A Multi-Park Lightning Lane Premier Pass, allowing guests to use it at both Disneyland and Walt Disney World.
- A Lightning Lane Premier Pass Unlimited, which would function similarly to Universal’s Express Pass, offering unlimited ride access.
While these changes would generate more revenue, they could also have unintended consequences—such as cannibalizing VIP tour sales or shortening the length of guest stays at Disney’s most expensive hotels. We still maintain the VIP Tour is more often a far better value at present.
As Disney looks for new ways to drive profits, expect Lightning Lane Premier Pass to evolve further in 2025.
Disney+: Profitable, But Growth Slowing
Disney’s Direct-to-Consumer (DTC) division, which includes Disney+, Hulu, and ESPN+, continues to improve financially:
- Operating income rose to $293 million, a significant turnaround from a $138 million loss in Q1 FY24.
- Disney+ and Hulu now have a combined 178 million total subscribers, a modest increase.
- Disney+ core subscriptions fell slightly to 124.6 million (-0.7M from Q4 FY24).
- Hulu subscriptions grew to 53.6 million (+3%), helping offset Disney+ losses.
A big reason for Disney+’s improved profitability is higher pricing because Domestic (U.S./Canada) average revenue per user (ARPU) rose to $7.99, up 4% from last quarter.
The Outlook for Disney+ in 2025
Disney warned that Disney+ subscriber numbers may see another “modest decline” in Q2 FY25, which aligns with previous forecasts. However, profitability is now the priority over rapid growth.
One interesting development is the addition of an ESPN tile to Disney+, signaling deeper integration between sports and entertainment. This could open the door for more bundling opportunities, potentially driving higher revenue per user.
Ultimately, Disney+ is no longer hemorrhaging money, but growth is slowing. Expect more price hikes and bundling strategies as Disney shifts its focus to profitability.
Final Thoughts: What’s Next for Disney Parks & Streaming?
Disney’s Q1 2025 earnings paint a clear picture: Parks & Experiences remain the company’s financial backbone, but growth is shifting from domestic parks to international expansion.
The big questions for the rest of 2025:
- Will Walt Disney World and Disneyland introduce additional discounts and added value to compete with Universal’s Epic Universe?
- How far will Lightning Lane Premier Pass expand, and could it introduce even higher-priced tiers?
The next few months will be telling as Disney navigates increasing competition in both parks and streaming.
