Revenues fall but Disney+ smashes targets in Q3 | Major Businesses | Business
By continuing to use this site you consent to the use of cookies on your device as described in our privacy policy unless you have disabled them. You can change your cookie settings at any time but parts of our site will not function correctly without them. [Close]
Even though Covid-19 had affected seriously some of the entertainment giant’s key segments, most significantly at Parks, Experiences and Products where it closed theme venues and retail stores, the Walt Disney company has enjoyed a third quarter with streaming services performing well above expectations.
DIsney 13Nov2019
For the quarter ended 27 June 2020, Disney reported total revenues of $11.779 billion, tumbling 42% on an annual basis. Revenue for the nine months of the fiscal year was $50,681 virtually the same at the same time in 2019. Total third quarter segment operating income was $1.099, down 72% year-on-year, and down 34% for the nine-month period to $7.502 billion. Net loss for the quarter was $4.718 billion, with compared with a Q3 2019 profit of $1.43 billion. Loss for the nine months of fiscal 2020 was $2.122 billion, turning around from a profits of $9.648 billion at the end of Q3 2019.

Yet while overall takings tool a big hit during the Covid-driven lockdown period, there was a brighter picture for the Media Networks and Direct-To-Consumer & International divisions. Media Networks generated $6.562 billion in revenue for the quarter, slipping 2% annually but revenues in Direct-To-Consumer & International rose by the same amount to $3.969 billion. Media Networks operating income in the third quarter soared 48% compared with Q3 2019 to $3.153 billion. This was driven mainly by a 12% annual rise in revenue at broadcasting to $2.528 billion. Cable networks revenue though slipped back 10% to $4.034 billion.

But the centre of attention for the third quaarter results was the performance of the Disney+ direct-to-consumer (DTC) service. By 27 June 2020, Disney had 57.5 million customers and in the analysts calls to announce the third quarter earnings, Disney revealed that this figure was now 60.5 million. at its launch in November, Disney predicted that it would only exceed 60 million Disney+ customers by 2024.

For fellow DTC services, ESPN+ and Hulu, the company reported for 8.5 million customers for the sports package, adding over six million customers over the year, while for Hulu it had 32.1 million subs for the SVOD-only bundle and 3.4 million for the SVOD with live TV option. These represented yearly growth of 25% and 55% respectively.

Analysts were not slow to pick up on the results release. Commenting on the results, PP Foresight tech, media and telco analyst Paolo Pescatore, said the results underlined the importance of a smart direct-to-consumer services which he said serves as a catalyst to connect with new audiences in a different way. “Though this might be alarming for the film business, it paves the way for a new way to reach users and maximise revenue. Also, it mitigates against the growing concern around piracy,” he remarked. “With this in mind [Disney] must continue to aggressively promote its growing suite of video streaming services given the competitive nature of this market. There are too many services chasing too few dollars. Disney needs to ensure a growing slate of successful shows to ensure services like Disney+ remain an indispensable part of a household’s TV needs.”

Mark Inskip, CEO Kantar Media UK & Ireland noted that while in lockdown subscribers have flocked to engage with Disney+, the real challenge will come as restrictions lift and some consumers may be tempted to direct their entertainment budgets elsewhere. “Netflix and Amazon Prime remain firm favourites across the world. As lockdown eases and household budgets remain tight, Disney+ will face an uphill climb to retain its audience and keep pace with those leading platforms, as well as with free ad-funded challengers.”