Three years since Disney+ first launched, and a month ahead of its much-anticipated ad-supported tier, the streamer’s subscriber numbers just keep soaring.

Disney+ added 12.1 million subscribers in the fiscal fourth quarter, for a total 164.2 million global subscribers, Disney said Tuesday. Nearly 2 million of those new Disney+ subscribers came from the U.S. and Canada.

Combined, the company reached 235 million global subscribers, adding 14.6 million across its streaming platforms.

A lot of that subscriber growth on Disney+ came from content like Hocus Pocus 2—the sequel film was the streamer’s most watched premiere, with 2.7 billion minutes viewed in its first weekend—Marvel’s She-Hulk: Attorney at Law and the Star Wars series Andor.

“Andor… earned rave reviews and showcases our ability to extend stories from the big screen to our streaming services,” said CEO Bob Chapek during the company’s earnings call Tuesday evening.

Hulu (including its Hulu + Live TV offering), which operates only in the U.S., added 1.6 million subscribers last quarter to reach 47.2 million overall and ESPN+ signed up 1.5 million subscribers, to hit 24.3 million.

Hulu and ESPN+ also had record content debuts, with the film Prey becoming Hulu’s biggest premiere across all films and series. ESPN+’s exclusive NFL broadcast of the Jaguars vs. Broncos was the most-viewed event on the service yet.

At what cost?

However, Disney’s substantial subscriber growth came at a significant cost. The company’s direct-to-consumer segment lost $1.5 billion in revenue last quarter—and $4 billion over the last year. Most of that recent loss came from Disney+ and a decrease in results at Hulu, but were partially offset by a good quarter at ESPN+.

The company said it is looking towards a brighter future, with CFO Christine McCarthy telling analysts its peak losses are behind it. “DTC operating results should improve going forward as we lay the foundation for a sustainably profitable business model,” she said.

The company expects DTC operating results to improve by at least $200 million in the first fiscal quarter of 2023, with larger improvement coming in the second quarter.

Those factors include upcoming price increases and the launch of Disney+’s upcoming advertising tier, neither of which are expected to have much of an impact in the next fiscal quarter because they do not take effect until December.

ESPN+ and Hulu are expected to continue to add new subscribers next quarter, while Disney+ numbers will increase “only slightly,” reflective on tougher comparisons from Disney+ day performance.

Yet despite its massive streaming losses, the company still expects Disney+ to be profitable by 2024, pointing to realigning costs and the Disney+ ad tier.

Ads on the way

Netflix beat Disney to the punch when it came to launching an ad-supported tier—Netflix’s rolled out earlier this month—but Disney+’s offering is only a month away.

Chapek described the new tier as a win for audiences, advertisers and shareholders, and said it will bring a new slate of subscription plans across all three streaming services and the Disney bundle.

“Advertiser interest has been strong,” said Chapek, saying the streaming service has secured more than 100 advertisers ahead of launch.

“We also have proven technology to deliver a great advertising experience on day one,” he said. “And importantly we have the ability to scale and innovate for audiences and advertisers alike.”