By Ryan Faughnder
The Los Angeles Times
Walt Disney Co. said Thursday its marquee streaming service Disney+ grew to nearly 95 million subscribers during the first quarter of its fiscal year, while the pandemic continued to weigh on the entertainment giant’s finances.
The Disney+ subscriber count of 94.9 million is up from the 86.8 million the company reported in December. Though a significant portion of Disney+’s subscriber count comes through Disney’s bundle with its Hotstar service in India, the growth represents a positive sign for a service considered key to its future.
Disney reported earnings that were far worse than a year earlier, but were not as bad as Wall Street expected.
Net income fell 99% to $29 million during the three months that ended Jan. 2. In the previous first quarter, Disney had a profit of $2.13 billion. The company’s earnings of 32 cents a share, excluding certain items, was far better than the loss of 34 cents Wall Street analysts expected, according to data firm FactSet. Quarterly revenues fell 22% to $16.2 billion, but that also topped analyst expectations of $15.9 billion.
Disney’s report comes just two months after the company announced a major increase of programming for its streaming services, with the aim of bringing at least 100 titles to Disney+ annually. It teased content including series about “Star Wars” character Lando Calrissian, a live-action “Pinocchio” film, a “Moana” series and a “Guardians of the Galaxy” holiday special.
Virtually all of recent Disney moves have highlighted its focus on streaming.
This month Disney said “Blank Panther” director Ryan Coogler would develop a series for Disney+ set in the land of Wakanda, as part of an exclusive deal to produce TV content for the company. During the Super Bowl on Sunday, Disney advertised the upcoming release of the animated fantasy “Raya and the Last Dragon” to Disney+ through its “premier access” model, which charges an additional $30 fee to watch the film.
Disney is banking on Disney+ and its other streamers to establish the Mouse House as a global entertainment superpower for years to come. The company in December set its sights on reaching as many as 260 million Disney subscribers by the end of fiscal 2024. The company’s total subscriber base for all its services — including Hulu, ESPN+ and Star — is expected to reach 300 million to 350 million in that time.
Streaming’s growth at Disney has been a boon for shareholders, sending the stock to record levels while the pandemic buffets other parts of the business. Disneyland in Anaheim has been shut down since March due to the spread of COVID-19, and attendance at Walt Disney World has suffered from capacity restrictions. The movie studio’s big releases, including “Black Widow,” have been delayed multiple times. “Black Widow” is currently scheduled for a May theatrical release.
As result, Disney has laid off thousands of workers across the company, slashed executive bonuses and pared down assets. This week Disney said it would close animation house Blue Sky Studios, known for the “Ice Age” movies, thus cutting 450 employees. The axing of the former Fox brand came after the decision to eliminate Radio Disney in December.
The quarterly report also follows a major restructuring that Disney Chief Executive Bob Chapek enacted in October to center the entertainment behemoth’s media and entertainment businesses around the company’s high-priority streaming efforts.
Disney’s parks, experiences and products business — which include cruise lines, the resorts as well as merchandise — continued to erode earnings. The segment posted a loss of $119 million compared with an operating profit of $2.52 billion a year earlier. Revenue was down 53% to $3.59 billion.
The newly minted media and entertainment distribution segment — which includes studios, TV networks and streaming services — generated $1.45 billion in operating income, down 2% from the prior year. Total sales for the division fell 5% to $12.7 billion.