Stay-At-Home Economy Cuts Both Ways For Disney
Because of that phenomenon, the company’s streaming service, Disney+, checked in with magical numbers as families spent their time in front of screens. But it also cut the other way as the company’s theme parks were hurt significantly by the pandemic.
Disney, which was reporting its fiscal first quarter ending Jan. 2, saw an overall revenue drop of 22 percent year over year, from $20.9 billion to $16.2 billion. The tide that lifted the numbers from what would have been the abyss came from its streaming service. Revenue from Disney+ increased 73 percent to $3.5 billion; operating loss decreased from $1.1 billion to $466 million. The decrease in operating loss was due to improved results at Disney-owned Hulu, and to a lesser extent, at Disney+ and ESPN+.
According to the company, the increase at Hulu was due to subscriber growth and increased advertising revenues driven by higher impressions, partially offset by an increase in programming and production cost. The improvement at Disney+ was driven by an increase in subscribers, including from launching in additional markets. Disney said it now has almost 95 million paid subscribers to its Disney+ streaming service as of the quarter ended Jan. 2. This comes during the first quarter after Disney’s free trial period ended for some subscribers who are also Verizon customers.
The pandemic continued to impact results specifically for Disney Parks, Experiences and Products, which includes cruise ship sailings and parks and resorts either currently open at reduced capacity or parks that have been unable to reopen due to closures impacted by the pandemic. Revenues for that division decreased 53 percent to $3.6 billion, and segment operating results decreased $2.6 billion to a loss of $119 million.
According to CEO Bob Chapek, reopening Disney’s parks and increasing capacity at parks that are currently open to guests will be determined by the confidence in families to safely return and the vaccine distribution to the public.
“Despite everything that’s happening with a pandemic, I think we’ve made a pretty big impression on our consumer base and prospective guests in terms of the safety measures to give assurances to people that they should come in and bring their families,” Chapek said on the company’s earnings call. “And we’re very, very pleased with what we’re seeing in terms of future bookings.”