The president of Kaltbaum Capital Management, Gary Kaltbaum, and ‘Barron’s Roundtable’ present Jack Otter on the future of Disney following the company’s recent earnings report.
The Disney magic stream flowed faster across consumers than even the masters of the ‘Mouse House’ imagined.
The Walt Disney Company revealed in its earnings announcement on Thursday that its 15-month-old streaming service, Disney +, amounted to 94.9 million subscribers for the quarter ended January 2nd. The number is not only better than analysts expected, but also when Disney first announced the service. it is expected to have 60 to 90 million subscribers by September 2024. During Investors Day in December, Disney buyers reviewed the projections, saying the red-hot service would reach $ 260 million by 2024.
Currently, Netflix is the world’s largest live consumer video service with 203 million subscribers worldwide.
DISNEY CALIFORNIA AVENTURE TO ‘TICKETED EXPERIENCE’ OF GAS AT HOME WITH FOOD, BUY, ENTERTAINMENT
“We are confident that, with our strong pipeline of exceptional high quality content and the upcoming launch of our new Star brand international general entertainment offering, we are well positioned to achieve even greater success going forward,” said Bob Chapek, CEO , said. said in the company’s earnings statement.
The success of the company’s streaming services has offset the losses that the company continues because the coronavirus pandemic keeps its theme parks completely closed or operates at a lower capacity.
The company reported its third direct decline of $ 16.2 billion, down 22% from $ 20.8 billion a year ago. Adjusted earnings per share for the quarter were 32 cents per share, compared to $ 1.53 per share last year.
| Ticker | Safety | Last | Alter | Alter% |
|---|---|---|---|---|
| DIS | WALT DISNEY COMPANY | 190.91 | +1.28 | + 0.68% |
| NFLX | NETFLIX INC. | 557.59 | -6.00 | -1.06% |
Operating income of the Parks, Experiences and Products segment decreased by $ 2.6 billion to a loss of $ 119 million. The segment’s revenue for the quarter fell 53 percent to $ 3.6 billion.
Disneyland Resort and California Adventure in Anaheim, Disneyland Paris and Hong Kong Disneyland closed during the quarter, while Walt Disney World in Orlando, Florida, the Disney Resort remains open at significantly reduced capacity.
However, Disney’s properties in California are showing signs of activity. Disneyland has been used as a COVID-19 vaccination site with 100,000 doses administered to date, while Disney’s California Adventure will offer a “ticket experience” next month, with food, merchandise and entertainment.
Chapek on Thursday noted on the company’s earnings call with analysts that the average daily attendance of Walt Disney World quarter-on-quarter has grown significantly, in part due to increased capacity due to the company’s health and safety protocols. Disney has noted that it is still pleased with the number of discussions at its theme parks during the current quarter.
“It’s clear that people want to reconnect with loved ones and spend time together doing things they enjoy, and given the demand we are seeing now, we are confident that it will only grow once the pandemic is over. . “ Chapek said.
Disney has worked hard to expand its offering at Walt Disney World, with two new Epcot attractions, Remy’s Ratatouille Adventure – based on his animated film “Ratatouille” and Guardians of the Galaxy: Cosmic Rewind from the two devastating Marvel movies.
Expectations are also high for a spectacular nightly show, “Harmony,” as well as the upcoming Star Wars Galactic Cruiser hotel.
A land of miracles, known as the Avengers Campus, will open at the California Adventure later this year, and Mickey’s Runaway Railway will arrive at Disneyland in 2023.
Chapek said the prospects for the reopening of its theme parks for the rest of 2021 will depend on the rate at which people receive COVID-19 vaccinations, but acknowledges that the reopening is likely to include continued social distance and mask wear.
‘We have no doubt that if we reopen in parks where we are closed or increase the capacity to wear some social distance and mask, you know, that’s the expectation for the rest of this year. I believe that dr. Fauci said earlier today that he hopes there are vaccines for everyone who wants them by April this year, “Chapek said.” If that happens, it’s a game changer that can speed up our expectations and give people the confidence that they will have to return to the park.Will there be some overlap until we know we can herd immunity? Of course.But we also believe that in 2022 we will be in the same state as wearing social foot and mask? Absolutely not.“
The company expects an additional cost of $ 1 billion related to the handling of government regulations and the implementation of safety measures for employees, talent and guests in the theme parks during fiscal 2021.
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Despite the obstacles the pandemic has placed in front of the theme parks, the company has also benefited from millions staying home and watching video content. Disney’s direct-to-consumer revenue for the quarter rose 73% to $ 3.5 billion, and the operating loss of the segment decreased from $ 1.1 billion to $ 466 million due to strong growth in subscribers at Disney + and Hulu, as well as increased advertising revenue driven by higher impressions in Hulu.
Disney + reported 21.2 million net additions worldwide in the quarter, bringing the total to 94.9 million subscribers. Hulu reached 39.4 million subscribers, with its Live TV accounting for 4 million subscribers and the SVOD subscription video (SVOD) serving only 35.4 million and ESPN’s total subscribers at the end of the quarter was 12.1 million .
Disney calls for a strong joint release of Disney’s Soul on the streaming service and on Christmas Day in theaters. The film grossed nearly $ 100 million worldwide.
‘We thought it was a very good thing to do for our consumer base and our subscriber base, given the holidays and given the fact that we talked consistently about staying flexible in terms of how we proceed to place our titles. into the market, ”Chapek told analysts. “We were absolutely delighted with what it has brought to our business in terms of acquisition and retention.”
Disney’s “Raya and the Last Dragon” will premiere on March 5 on the streaming service under Premiere Access, based on the model of the live action “Mulan”. Meanwhile, Marvel’s “Black Widow” is still focusing on an exclusive May 7 theatrical series. However, Chapek noted that the company will be watching the reopening of movie theaters very closely to determine if the release strategy is going to change.
The average monthly revenue per paid subscriber for Disney + decreased from $ 5.56 to $ 4.03 due to the launch of Disney + with Hotstar. Disney Plus Hotstar – available in India and Indonesia – has a lower average price point than other regions and contributed to the decline.
The average monthly revenue of EPSN + per paid subscriber increased by $ 4.44 to $ 4.48 due to a rising price. Average monthly revenue per paid subscriber for Hulu’s only SVOD service increased by $ 13.15 to $ 13.51 due to higher advertising revenue per subscriber, a lower mix of wholesale subscribers and an increase in premium per subscriber and additional income per function.
The Hulu Live TV + SVOD service increased from $ 59.47 to $ 75.11 due to increases in retail prices, higher advertising revenue per subscriber and an increase in premium per subscription and additional revenue.
“We believe that the strategic actions we take to transform our company will increase our growth and increase the value of shareholders, as evidenced by the incredible progress we have made in our DTC. [direct-to-consumer] Chapek, has reached more than 146 million total paid subscriptions in our streaming services.
More streaming muscle is likely to be wrapped up in the days ahead when Star, sort of Disney’s international version of Hulu with general entertainment – launches packed with Disney Plus.
More subscribers are also expected to sign following Disney’s announcement in December of about 100 upcoming projects, including 10 new Marvel series, 10 new “Star Wars” series, 15 Disney live-action, Disney Animation, and Pixar series and 15 all-new Disney live-action, Disney Animation and Pixar feature films.
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Revenue for Disney’s Media and Entertainment Distribution Units – its cable channels and the ABC television network – fell 5% to $ 12.6 billion with total operating revenue of $ 1.45 billion for the quarter.
Disney shares rose 2% in after-hours trading with the announcement of earnings.