Disney+ and Hulu profits surge as Disney reshuffles merchandising unit
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Disney's June quarter results showed strengthened streaming profitability alongside a significant restructuring of the company's operations announced by chief executive Josh D'Amaro. Disney+ and Hulu generated $5.53 billion in revenue, an 11% year-on-year rise, while operating income in the entertainment streaming segment more than doubled to $712 million, up from $329 million a year earlier. From the first quarter of fiscal 2027, which begins in October 2026, D'Amaro plans to move most consumer products operations from the Experiences division into the Entertainment division, aligning merchandise revenue with the studios that create the underlying intellectual property.
The consumer products business itself brought in $1.1 billion this quarter, its strongest year-on-year growth in five years, and D'Amaro said the shift would make Disney's Entertainment segment more comparable with rivals' reporting methods. Overall streaming subscription revenue rose 15% to $4.7 billion, with advertising sales up 3%, though Disney no longer discloses quarterly subscriber totals. D'Amaro also highlighted the parks division's expanded rollout of Disney's proprietary AI tool, J.A.R.V.I.S., now used by more than 2,000 Imagineers for tasks including designing attractions and supporting the Abu Dhabi park.
- Disney+/Hulu revenue up 11% to $5.53bn; profit more than doubled
- Consumer products unit moving from Experiences to Entertainment division from October 2026
- Parks division rolling out J.A.R.V.I.S. AI tool for Imagineers
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Disney's streaming business, made up of Disney+ and Hulu, has been working towards sustained profitability after years of heavy losses as it competed with rivals such as Netflix. The company's latest quarterly results show that goal advancing further, with streaming revenue and operating income both climbing sharply. This matters because it signals whether Disney's bet on streaming can eventually rival the profits once generated by its traditional television networks.
Alongside this, Disney is reorganising how it manages merchandising. Consumer products, the division that turns films and TV characters into toys, clothing and other branded goods, currently sits within Disney's Experiences arm, which also runs its theme parks. Under changes led by Josh D'Amaro, most of this merchandising work will move into the Entertainment division from October 2026, bringing it closer to the film and TV studios that create the characters in the first place.
Disney is also increasing its use of artificial intelligence, particularly within its Parks business through Imagineering, the division responsible for designing attractions and experiences. Together, these developments reflect a broader push to connect Disney's creative output, its commercial products and new technology more closely across the company.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Supporters of Disney's approach see sound business logic in both moves. Uniting consumer products with the studios that create the underlying characters and stories allows merchandising strategy to be shaped from the outset by those closest to the creative vision, rather than bolted on afterwards, which can sharpen both storytelling and commercial execution. Likewise, giving Imagineers a tool like J.A.R.V.I.S. that distils seventy years of institutional knowledge is framed as empowering skilled staff to work faster and more ambitiously, using digital twins to test ideas before committing costly physical resources, which ultimately helps fund new attractions and jobs.
The case against
Sceptics raise legitimate concerns about where these trends lead. Folding merchandising into the entertainment division risks tilting creative decisions towards what sells as a toy or theme-park ride rather than what serves the story, a worry long voiced by writers, directors and fans about franchise-driven filmmaking. The expansion of proprietary AI tools into creative and design work, even when framed as augmentation, also touches a nerve for many in entertainment given recent industry-wide disputes over AI's role in creative labour, raising questions about transparency, job security and whether such systems could gradually narrow the scope for human judgement and craft.
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Originally published by Variety as “Disney Streaming Profit Doubles in June Quarter, Company Shifting Consumer Products to Studios Division”.