Disney+ hits nearly 138 million subscribers, though profits plummet despite return to parks

Disney said Wednesday that its profits fell in the last quarter, but its theme parks and Disney+ streaming service were booming.

The entertainment giant reported net income of $470 million (about Rs 3,645 crore), just over half of the $912 million (about Rs 7,075 crore) in profit it made in the during the same period a year earlier.

But park attendance which had plummeted due to the ongoing COVID-19 pandemic rebounded and Disney+ gained 7.9 million subscribers to 137.7 million.

When adding subscriptions to Disney’s Hulu and ESPN+ streaming services, the total number exceeds 205 million.

“Our strong second quarter results, including the fantastic performance of our national parks and the continued growth of our streaming services, once again proved that we are in a league of our own,” the Walt Disney CEO said. , Bob Chapek.

Chapek told analysts that Disney is open to raising the price of its subscription to the streaming service in the future, but has no specific plans. Disney+ is pursuing an ad-supported version of the service, which is expected to launch later in 2022.

Disney+ has gained more subscribers than analysts had expected, in stark contrast to the drop in subscriber numbers reported by rival Netflix in the first quarter of this year.

A drop of just 200,000 users – less than 0.1% of Netflix’s total customer base – sent shares of the Silicon Valley company plunging and prompted a shareholder to file a lawsuit accusing the TV titan streaming for not making it clear that subscriber numbers were at risk.

“Disney+ has brought Netflix to its knees (in the United States),” technical analyst Rob Enderle of the Enderle Group told AFP.

“Kids have always sought out their content, and for parents, getting their service was a no-brainer.”

About half of Disney+ subscribers are families with children, executives said on the earnings call.

Disney has stopped licensing its coveted content to Netflix to make it exclusive to its own streaming service, and said it plans to stick with the tactic when it comes to market rivals.

Parks and politics

Disney said that as its streaming television service continues to grow strongly, its resorts and parks generally operate without any of the significant COVID-19-related capacity restrictions that were in place last year.

The pandemic continues to hamper movie and TV production, Disney said, but it has been able to release movies in theaters so far this year.

“Our slate for the remainder of this year is incredibly strong,” Chapek told analysts while discussing the company’s show lineup for streaming and theaters.

Chapek acknowledged the difficulties in getting Disney films released in China, saying the situation there was “very complicated” politically and commercially.

He said he was encouraged by the fact that a young strange doctor The movie based on a Marvel comic book character grossed over $500 million (about Rs 3,877 crore) in its first week, even without screening in China.

Disney has encountered political turmoil closer to home, with the governor of Florida recently signing legislation that eliminates a law that for decades allowed the entertainment giant to act as local government in Orlando, where it has a theme park.

The move was the latest installment in a dispute between the state’s Republican administration and Disney, after the company criticized the passage in March of a law banning school classes on sexual orientation.

“From a financial standpoint, Disney will get away with it with the cap removed,” analyst Enderle said.

“It’s almost as if Florida gave them a monetary favor; Disney covered all the costs for the municipality they were in.”

The Reedy Creek Improvement District was an area created by the Florida Congress in 1967 to facilitate the construction of Disney World in Orlando.

Under the deal, Disney runs the neighborhood as if the entertainment juggernaut were a local government, including collecting taxes and guaranteeing essential public services like garbage collection and water treatment.

Under Florida law, if the special district is dissolved, its assets and debts would be transferred to the local governments that surround the area.

“Removing the district could transfer a $2 billion (approximately Rs. 15,515 crore) debt from Disney to taxpayers,” state Democratic Senator Linda Stewart warned after the bill was signed.

---