Disney's Earnings Miss‚ But There Was Some Good News in There
It is hard to deny that Disney's earnings have been a big miss this quarter‚ but there was some good news to come out of the miss as well. While Streaming has been a huge expense for Disney‚ there has been good news too‚ and it's now bringing in valuable ad dollars for the company. And while the theme park business might be slowing down for now‚ the company's outlook for 2021 is rosy.
Streaming lost money for Disney
For Disney‚ streaming lost money last quarter. However‚ the company's streaming services have been growing steadily since the start of the year. In fact‚ the company now has more than 205.6 million subscribers. Although the company lost money‚ it has made up for it in subscriber growth. In addition‚ streaming services like Disney+ have helped the company offset the losses in other Disney
businesses. Still‚ building a successful streaming service costs money‚ which has slowed down its progress in other areas. The streaming business for Disney
hasn't turned a profit yet‚ and it's not expected to break even by the end of fiscal 2021. The company has seen slower growth in its subscriber base for its Disney+ service‚ and the number of households signing up for its service dipped to 2.1 million in the fourth quarter of fiscal 2021. As a result‚ the company has begun reorganizing its business around its video-streaming services. Despite the recent loss‚ the company beat Wall Street's earnings forecast for the quarter. Disney
generated $59 billion last year‚ but it only made $10 billion in profit. This year‚ Disney
is forecasted to make $10 billion on $71 billion in revenue‚ and by 2023‚ it will be worth $100 billion. However‚ the company's streaming business continues to lose money. The company plans to invest more in the future of its streaming business‚ including adding more movies and TV series. But despite the loss‚ Disney
is still far from its goal of 260 million paying subscribers. That means that the company's spending plans will have to be curtailed‚ and Disney
will have to raise prices to attract more subscribers. While streaming will likely continue to lose money‚ the company has yet to show a clear path to profitability. But Disney
has already confirmed ten Star Wars and Marvel productions next year‚ which should keep subscribers happy.
Theme park business is recovering
Like Akira Kurosawa's Rashomon‚ Disney's theme parks are slowly recovering. In fact‚ it's recovering more quickly than expected. The company has seen an increase in the number of guests per day and in per-person spending. Last quarter‚ the company's Parks‚ Experiences and Products segment generated over $26 billion in revenue‚ a 23% increase year over year. The stock climbed as a result‚ and its recovery looks set to be prolonged. The company's shares shot up in early Tuesday morning trading‚ following third-quarter theme park attendance numbers. Though the parks' attendance levels were hit by the Zika virus pandemic‚ they recovered in the third quarter as a result of widespread vaccinations. Another good sign for Disney
is the streaming service Disney+‚ which added 116 million subscribers during the third quarter‚ beating analysts' estimates of 114.5 million. While it's still early to tell if Disney
is recovering from the past few years of negative results‚ it's already a long way from where it started. In the third quarter of 2015‚ the company reported a net profit. Even though the Zika virus has hit theme parks‚ the outlook for international operations remains uncertain. However‚ the deterioration in international air travel is likely to limit attendance at international parks. Despite these challenges‚ Disney
and Comcast are optimistic about their domestic business while six flags have been cautious. And despite the problems‚ the company's theme park business remains strong‚ according to analysts. Theme parks are a huge part of Disney's revenue‚ accounting for more than 40 percent of it. The company's theme park segment closed many parks during the Ebola pandemic‚ but it's recovering quickly. The company reported a record-breaking Q1 in its theme park segment last year‚ while its parent company‚ Comcast‚ reported its most profitable quarter ever. The Disney
theme park segment is also on track to exceed its previous record-setting figures for the same year.
Hulu is bringing in valuable ad dollars for Disney Disney
is raking in valuable ad dollars from Hulu‚ the popular streaming video service. The Walt Disney
Company has agreed to buy Comcast's one-third stake in Hulu for $27.5 billion over five years. Hulu currently has more than 40 million paying subscribers. Disney
expects to make $43 million a month off this move‚ even if it costs them more. The company's decision to raise the price of Hulu has fueled speculation that the company is testing the waters to see if consumers will pay. Earlier this year‚ Disney
announced plans to incorporate Hulu's technology into its pitch for TV ad dollars. It plans to roll out an ad exchange and self-serve ad platform. By 2024‚ Disney
hopes to generate at least 50% of its revenue through automated ad-buying. Currently‚ there are few ad-supported streaming services. The deal will give Hulu a lot of freedom. Disney
has the resources to cut the price of its ad-supported service‚ run more promotions‚ and invest in additional content. That will increase engagement‚ create more ad inventory‚ and boost advertising revenue. This is exactly what Hulu needs. If Disney
wants to remain competitive‚ it'll have to make Hulu an important part of its strategy. The deal will allow Disney
to market Hulu in its overall portfolio. Disney's ad sales division closed its upfront in 2021-22‚ and is expected to earn $3.5 billion. Its advertisers can also strike one deal with Hulu and use the platform to promote their products. This will allow the company to take advantage of the Hulu platform's ability to target viewers based on their interests.
Theme park business is picking up in 2021
If a movie like Rashomon is a fairy tale‚ Disney's theme parks would be the COVID-19 of theme parks. Guests are returning to Disney
theme parks in droves‚ spending more per person than ever before. Disney's earnings call with analysts showed that demand for the parks is still very strong‚ with higher reservation volume than in the third fiscal quarter. However‚ the company is facing a number of challenges. For the third quarter of 2021‚ Disney's theme parks segment recorded $2.45 billion in operating income on $7.23 billion in revenue‚ up from $1.06 billion in the previous quarter. However‚ some of the parks were closed due to the pandemic‚ which resulted in a decline in revenues. In addition‚ COVID-19 restrictions continued to affect some international operations. The good news for Disney
theme parks is that demand is returning. With the advent of technology‚ theme parks can now offer a peace of mind to visitors. The park can anticipate and respond to the needs of different age groups‚ increasing revenue and engagement. Young children‚ for example‚ are increasingly eager to pre-book activities such as rides and dining. Millennials are also more than willing to give their data for personalized offers. Hence‚ Disney
is planning to invest in the latest innovations in this area. The company also recently announced pricing for its new star-wars hotel. The hotel is expected to cost $1000 per night. The company is also bringing back its Lightning Lanes ride. Meanwhile‚ its kitchen is understaffed and there are long queues at the restaurants. As a result‚ visitors are unhappy with the new monetization plans of the theme parks. In 2021‚ Disney
is hoping to turn the trend around with a new hotel in Tokyo.
Disney is looking to jump into the gambling industry
The Walt Disney
Company is looking to expand its sports betting business through its ESPN arm. This move is designed to appeal to a younger demographic‚ and executives are cautious about entering this business. However‚ Disney
CEO Bob Chapek recently hinted that the company is looking to incorporate betting practices into the company's ESPN programming. Whether or not the move will make a difference to the Disney
brand remains to be seen. While Disney
is known for family-friendly content‚ it has also been known to try new things‚ including gambling. It has released mature movies‚ covered more adult topics‚ and even opened an adults-only space on its cruise ships. Now‚ the company wants to get into the gambling business in a major way‚ and that's an interesting move. Disney's focus on family-friendly entertainment has certainly not made it difficult to expand into other areas‚ and the company hopes to take advantage of that popularity. The company has already backed expansion efforts in Florida‚ where the Seminole Tribe has operated casinos on its land. The two parties have agreed to a mobile wagering compact last spring. The Hard Rock digital platform was launched Nov. 1 but has been hampered by a legal battle. In the meantime‚ the company is looking to get into the gambling industry through other means. Once legal‚ however‚ the company's move will likely be welcomed by gambling enthusiasts. With the increasing popularity of sports betting‚ Disney
would be able to take advantage of the brand's popularity among younger people. However‚ sports betting has its downsides. While it might cause a backlash among current customers‚ it could also lead to a rise in profits for the Walt Disney
Company. This would also mean that it could potentially gain an edge over competitors and increase its bottom line. So‚ while gambling is a risky business for Disney‚ it could ultimately benefit the brand.