Disney+ lost 2.4 million subscribers in the fourth quarter of 2022, the first time the service has ever experienced a decline. The news came as part of Walt Disney Company’s quarterly report, with the entertainment giant posting a net income of $1.3 billion on revenues of $23.5 billion in the quarter ending December 31.

“After a solid quarter, we are embarking on a significant transformation, one that will maximize the potential of our world-class creative teams and our unparalleled brands and franchises,” Disney CEO Robert Iger said. “We believe the work we are doing to reshape our company around creativity, while reducing expenses, will lead to sustained growth and profitability for our streaming business, better position us to weather future disruption and global economic challenges, and deliver value for our shareholders.”

Disney+ ended the quarter with 161.8 million paid subscribers, a decline of 1 percent quarter-over-quarter. But paid Hulu subscribers were up 2 percent to 48 million, and paid ESPN+ subscribers were up 2 percent to 24.9 million. The average monthly revenue per paid Disney+ subscriber was up 1 percent to $3.93, with Hulu up 2 percent to $12.46, Hulu with live TV up 1 percent to $87.90, and ESPN+ up 14 percent to $5.53.

Disney said that the drop in Disney+ subscribers was due to declines in its India-based Disney+ Hotstar business, which lost the streaming rights to Indian Premier League (IPL) cricket matches last year. But higher programming, production, and technology costs contributed to the troubles, partially offset by higher subscription revenue and a decrease in marketing costs.

Disney+ introduced an ad-supported tier in late 2022 in the US but the firm reported that this offering would not impact revenues in a meaningful way until late 2023. Disney said that it was pleased with the initial reaction.