Disney+ and Hulu profits surge as Disney reshuffles merchandising unit
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Disney's June quarter demonstrated strengthened streaming profitability alongside a major operational restructuring announced by CEO Josh D'Amaro. The company's Disney+ and Hulu services generated $5.53 billion in revenue, representing an 11% year-over-year gain, whilst operating income in the entertainment streaming segment surged to $712 million—more than double the prior-year figure. Beginning in October 2026, D'Amaro plans to transfer most consumer products operations from the Experiences division to the Entertainment division, positioning merchandise revenue alongside the studios responsible for creating the underlying intellectual property.
The restructuring reflects a strategic alignment between content creation and commercial exploitation. Consumer products themselves achieved $1.1 billion in quarterly sales this period, representing the strongest annual growth rate in five years. Beyond financial restructuring, Disney is expanding artificial intelligence deployment across operations, particularly within Parks. The company has made its proprietary J.A.R.V.I.S. AI platform available to over 2,000 Imagineers, granting access to more than seven decades of institutional knowledge whilst enabling AI-powered digital twins and simulations for attraction development and guest-facing services.
- Disney streaming operating income more than doubled to $712M; Disney+ and Hulu revenue climbed 11% to $5.53B
- CEO restructuring moves consumer products from Experiences to Entertainment division starting Q1 FY2027 to align merchandise with IP-creating studios
- Parks division now deploying proprietary AI tool (J.A.R.V.I.S.) to support attraction design, simulation, and guest services
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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”.