If Disney+ is the top reason you own Walt Disney (DIS 0.08%) stock right now, you're likely to be a bit frustrated. The company's flagship streaming service, along with its ESPN+ and Hulu platforms, are still adding subscribers, but the pace of this growth is slowing at the same time per-user revenue is falling. The company's direct-to-consumer business also remains in the red, booking ever-bigger losses.

Disney says the worst of these losses are behind it and maintains Disney+ will be profitable in 2024. And maybe that will be the case.

Given all of the underlying trends, current and would-be investors may want to consider the possibility that these profits won't be achieved as easily as the company suggests.

Moving in the wrong direction

The good news is that Walt Disney's direct-to-consumer (or streaming) ventures generated $4.9 billion in revenue last quarter, up nearly 8% on a year-over-year basis. When counting the version of the service including India's Hotstar, Disney+ now boasts 164.2 million subscribers, adding 12.1 million customers during the quarter ending in early October. ESPN+ and Hulu added subscribers, too, bringing their collective headcounts to 71.5 million users. The company now manages nearly 236 million unique streaming subscriptions, although a good number of these users are paying for ESPN+, Disney+, and Hulu as a bundle.

The bad news is that all the content and effort needed to keep these customers isn't cheap. Last quarter's operating loss for the media giant's direct-to-consumer arm reached a record-breaking $1.47 billion. The graphic below puts things -- and the trend -- in perspective.

Walt Disney's streaming business is losing more and more money.

Data source: Walt Disney Company. Chart by author.

Bulls will point out that CEO Bob Chapek addressed this issue during Tuesday evening's fiscal fourth-quarter earnings call by explaining, "We still expect Disney+ to achieve profitability in fiscal 2024, as losses begin to shrink in the first quarter of fiscal 2023 [currently underway]." And, as was noted, perhaps that's the shape of things to come.

There are three key headwinds that just might prevent Walt Disney's Disney+ from reaching that proverbial promised land of profitability, however, even with the impending launch of an ad-supported version.

Easier said than done

The first of these headwinds is that, while modest, Disney's total streaming revenue fell on a sequential basis last quarter despite continued subscriber growth.

Blame Disney+, mostly. Its average revenue per domestic (U.S. and Canada) fell from $6.81 per month a year ago to only $6.10 per month last quarter and was also down slightly from the fiscal third-quarter figure of $6.27. The international version of Disney+, as well as the Hotstar offering, saw similar sequential declines in average monthly per-user revenue, although these lower-cost services have a smaller impact on Disney's top and bottom lines. It's a subtle hint that the marketability of these services may be waning here and abroad, with that weakness only being offset by price breaks. 

Unfortunately, Disney isn't planning on doing any more marketing to beef up these numbers. It's looking to do less. During Tuesday's earnings call, Chapek only told investors to look for "a realignment of our [direct-to-consumer] cost, including meaningful rationalization of our marketing spend."

That move may prove the wrong one in light of the second stumbling block potentially standing in the way of Disney's profit projection for Disney+. That's competition from all directions, including an old one many presumed was a has-been.

Believe it or not, cable television is making a comeback. While the sheer number of U.S. consumers regularly streaming remains dominant at 75%, numbers from a survey recently taken by Hub Entertainment Research indicate the number of people watching live television events edged up from 21% a year ago to 23% this year, extending a slow, steady streak of recovery. It's not much, but it's something to build on at a point in time when market saturation is a serious concern. Another recent poll of U.S. consumers performed by NPR and Ipsos suggests 69% of them think there are too many streaming services, while 58% of this crowd admits to feeling overwhelmed by their sheer number of streaming choices.

In the meantime, other streaming names are racking up accolades Disney isn't. Rival HBO Max boasts the most award-winning content within the streaming arena, according to Ampere Analysis. Netflix (NFLX 0.68%) now ranks second.

The point is that future Disney+ customers may be tougher and more expensive to come by than past and present ones.

Finally, there's the great paradox. Disney may learn the only way to continue adding at least some streaming subscribers is to expand its streaming library by increasing its streaming content budget, compounding the problem of too much choice while exacerbating its content-spending problem. It's a tricky balance, to be sure.

Keep your expectations in check

Never say never. Walt Disney's streaming operation may well move out of the red and into the black by 2024, with measurable progress toward this taking shape as early as the next quarterly report.

In retrospect, though, Walt Disney's 2020 overhaul was meant to prioritize its then-booming streaming business, and tied too much of the stock's value to that particular opportunity. Its direct-to-consumer operation driving less than $5 billion worth of revenue per quarter (only about a fourth of its total business anyway) is still regularly in the red to the tune of $1 billion or more per quarter, and there's still no compelling, convincing explanation as to how the company is going to meaningfully close this gap.

Until there are more answers than questions -- and more certainty rather than less -- regarding its ballyhooed streaming initiatives, this stock's going to be a tough one to own. It could take several quarters, if not years, to achieve the sort of clarity investors really need here.