Disney said Wednesday that its profits fell in the recently ended quarter, but that its theme parks and streaming service Disney+ are booming.
The entertainment giant posted a net income of $470 million (approximately Rs 3,645 crore), just over half the profit of $912 million (approximately Rs 7,075 crore) a year earlier.
However, Disney+ subscribers rose by 7.9 million to 137.7 million as park attendance rebounded due to the ongoing COVID-19 pandemic.
Add subscriptions to Disney’s streaming services Hulu and ESPN+, and the total comes to 205 million.
“Our strong performance in the second quarter, including our strong performance at domestic parks and continued growth in our streaming service, once again proved we’re in a league of our own,” said Walt Disney CEO Bob Charlie. Peck said.
Chapek told analysts that Disney is open to raising the price of its streaming service subscriptions in the future, but has no specific plans. Disney+ is pursuing an ad-supported version of the service that will launch later in 2022.
Disney+ gained more subscribers than analysts had expected, in stark contrast to the subscriber decline reported by rival Netflix in the first quarter of this year.
The drop in just 200,000 subscribers — less than 0.1% of Netflix’s total customer base — sent shares of the Silicon Valley company tumbling and prompted a shareholder lawsuit alleging the streaming-TV giant didn’t make it clear that subscriber numbers were at risk.
“Disney+ keeps Netflix to its knees [in the US]Rob Enderle, a technology analyst at the Enderle Group, told AFP.
“Kids are chasing their content all the time, and it’s a no-brainer for parents to get them.”
About half of Disney+ subscribers are families with children, executives said on the earnings call.
Disney stopped licensing its coveted content to Netflix to keep it exclusive to its own streaming service, and said it plans to stick to that strategy when it comes to market competitors.
Parks and Politics
Disney said that as its streaming TV service continues to grow strongly, its resorts and parks typically operate without the significant COVID-19-related capacity restrictions imposed last year.
Disney said the pandemic does continue to plague film and TV production, but it has been able to release films in theaters so far this year.
“We have a very strong lineup for the rest of the year,” Chapek told analysts when discussing the company’s lineup of streaming and theater programming.
Chapek acknowledged the challenges of releasing Disney films in China, saying the situation there was “very complicated” from a political and business perspective.
He said he was encouraged by the fact that a new release Doctor Strange Even without a release in China, the film based on the Marvel comics raked in more than $500 million (approximately Rs 38.77 crore) in its first week.
Disney has faced political turmoil closer to home, with Florida’s governor recently signing a law to repeal decades of regulations that allowed the entertainment giant to serve as local government in Orlando, where there is a theme park.
The move is the latest in a row between the state’s Republican administration and Disney, after the company criticized a law passed in March banning sexual orientation classes in schools.
“From a financial standpoint, Disney will be one step ahead of pulling the plug,” said analyst Endler.
“It’s almost as if Florida gave them a monetary advantage; Disney covered all the costs of their city.”
The Reed Creek Improvement District is an area created by the Florida State Legislature in 1967 to facilitate the construction of Disney World in Orlando.
Under the agreement, Disney manages the area as if the entertainment giant were the local government, including collecting taxes and guaranteeing basic public services such as garbage collection and water treatment.
Under Florida law, if the District is dissolved, its assets and liabilities will be transferred to local governments surrounding the area.
After the bill was signed, state Democratic Senator Linda Stewart warned that “cancelling districts could transfer $2 billion (approximately Rs 15,515 crore) of debt from Disney to taxpayers.”