Disney’s streaming service and media networks held together the spreadsheets as COVID-19 ravaged the company’s financial results.
Losses were of course expected in this quarter, though the business seemingly fared better than most would have assumed as Disney share price shot up 10%.
Total revenues for the period ending June 27 were $11.779 billion, a 42% decline on the same period of 2019, while operating income shrunk 72% to $1.099 billion. The company is still in profit, but the coronavirus had a serious impact on the Disney financials. This is an unprecedented period of events of course, but a second wave of the coronavirus could cause just as much damage to the firm.
“Despite the ongoing challenges of the pandemic, we’ve continued to build on the incredible success of Disney+ as we grow our global direct-to-consumer businesses,” said CEO Bob Chapek.
“The global reach of our full portfolio of direct-to-consumer services now exceeds an astounding 100 million paid subscriptions — a significant milestone and a reaffirmation of our DTC strategy, which we view as key to the future growth of our company.”
Disney+ has proven to be a perfectly capable rival to Netflix, YouTube and Amazon in the streaming wars, though this is perhaps fortunate when you look at the impact of COVID-19 on other areas of the business.
| Disney financial results by segment (in millions, USD) | ||
| Business unit | Total revenue | Year-on-year |
| Media Networks | 6,562 | -2% |
| Parks, Experiences and Products | 983 | -85% |
| Studio Entertainment | 1,738 | -55% |
| Direct-to-Consumer & International | 3,969 | +2% |
“It is very well placed given its vast portfolio of assets and unique franchises. Key to its future growth is direct-to-consumer services,” said Paolo Pescatore of PP Foresight.
“The company smashed its own target for Disney+ four years ahead of schedule (60m-90m subs by 2024). Though it has been late to the streaming market, it is making good progress in a short period of time.”
With Disney+ now commanding 57.5 million subscribers, the reception of the service has clearly been positive. Having launched in December to much fanfare, the international expansion of the brand has been rapid. It has reached subscriber milestones faster than Netflix, but don’t forget, it doesn’t have to prove the value of streaming services as a valid alternative to traditional media as icebreaker Netflix did.
The streaming market is a very interesting one as it is becoming far too big for the subscription dollars which are floating around. With monthly contract becoming the norm, service providers are pressured to consistently spend huge amounts on creating attractive content portfolios. Disney is in an excellent position with its franchises, however the consumer can only tolerate so many services.
With Netflix, Amazon Prime, Hulu, Sky, Apple, Disney and YouTube, as well as numerous other regional players, competing for the same household budgets, a few are going to lose out financially.