Disney needs to catch fire again.
Disney may be the world’s largest entertainment company, with a huge theme park, sports TV, and consumer goods division, but in the punitive look of Wall Street, the only important business is streaming media—especially "subscribers", or the number of subscribers . Disney has begun to fall behind.
Disney said on Wednesday that its flagship streaming service added 2.1 million subscriptions in the most recent quarter, far below the expectations of analysts surveyed by FactSet. After a dizzying launch at the end of 2019, Disney encountered many headwinds, including a shortage of new shows related to the epidemic, an increasingly competitive streaming environment, delays in Indian Premier League cricket matches, and difficulties in launching in Latin America .
The increase in new members brings Disney's global payment base to 118.1 million. Disney added 12.4 million users in the last quarter, and as of June 27, the total number of members was 116 million. The slowdown in growth is worrisome because it is more difficult for Disney to achieve the company's commitment of 230 million to 260 million paying users. The end of fiscal year 2024.
Disney Chief Executive Bob Chapek told analysts on the conference call: "I want to reiterate that we are still focused on managing our DTC business in the long-term, not quarterly. We believe we are on the right track. On the track.", using the media industry abbreviation "direct-to-consumer."
Mr. Chapek tried to prepare investors for weak Disney growth this quarter. He stated at the Goldman Sachs Investor Conference in September that the subscriber rate will reach "low single digits in the millions", which is the slowest growth so far. Mr. Chapek also emphasized that Disney is a newbie in streaming and therefore understands subscriber behavior. "We found that there is a huge seasonality in this business, and we may not know it before we actually get involved," he said on an earnings-related conference call in August.
Some analysts lowered their expectations. Others seem to ignore Mr. Chapek's remarks. FactSet's polls show that the number of subscribers is expected to increase by about 10 million to 126 million.
Disney shares fell more than 4% in after-hours trading on Wednesday.
As a sign of pressure, Disney has been mobilizing its large marketing resources to refocus its attention on Disney. On Monday, the company announced a week-long discount: users who subscribed before November 14 will get a one-month discount of $2, followed by the normal rate of $8. On Friday, the company sees it as Disney Day, and the service will provide a wealth of content, including Billie Eilish's documentary, new Marvel specials, "Hisashi and the Legend of the Ten Rings" and "Home Alone" ". Relaunch the comedy "Home Alone" holiday movie series. Disneyland has marketing partners. Disney TV networks such as ESPN and ABC are also promoting this service.
Some analysts are beginning to worry that Disney will need to expand its content products to achieve its growth goals. The service does not have R-rated materials and mainly relies on exclusive programs from Marvel and "Star Wars", including "Rocky", "Wanda Vision", "The Mandalorian" and the upcoming "Book of Boba Fett" ".
Some animated films that were supposed to be shown in theaters-such as "Luca" and "Soul" from Pixar-were completely rerouted to Disney during the pandemic. But Disney has ended this practice, at least for now.
"Encanto" is an animated musical set in the Columbia Mountains. It will be released on November 24 and will be released on Disney in a month. The company regards "Encanto" as a vital test. Will most families rush to the cinema to watch (especially now that children can be vaccinated), will it ultimately weaken online demand? Or will they wait for Disney's debut, leading to lower-than-expected box office sales?
Or will this movie generate considerable interest in both venues?
Like other media companies, Disney has turned to streaming media because cable television has been in a long-term decline. More and more people are giving up cable TV connections in favor of streaming media options. Hulu, another streaming service under Disney, expanded its user base to 43.8 million in the most recent quarter, only adding 1 million since the end of June. Approximately 17.1 million people paid for access to the company's sports-focused ESPN platform, up from 14.9 million at the end of June.
Various costs (content production, marketing, technical infrastructure) led to a loss of approximately US$600 million in Disney's streaming media department; the total loss in the same period last year was US$400 million. Disney’s Chief Financial Officer Christine M. McCarthy told analysts on Wednesday that due to the disruption of service content channels related to the pandemic, Disney’s losses will peak in 2022 instead of 2021.
Disney generated a total of 18.5 billion US dollars in revenue, an increase of 26% over the same period last year. At that time, many theaters were closed due to the pandemic, and Disney theme parks were closed or operational capacity declined.
The total profit for the quarter was $160 million, or 9 cents per share, which is Disney's profit in the fourth quarter of the fiscal year. A year ago, Disney lost 710 million U.S. dollars, or 39 cents per share.