Disney’s streaming plans are at the center of fourth-quarter earnings

Disney is still facing unprecedented challenges across many of its largest divisions, including theme parks, but its fourth quarter earnings report highlights one area that hasn’t stopped growing: streaming.

Overall, Disney’s fourth quarter revenue was better than expected, earning $ 14.7 billion compared to an expected $ 14.2 billion. A good part of that came from Disney’s streaming division, which continues to grow, now boasting just over 120 million subscribers across all of its services worldwide. The return of sport has also helped generate advertising revenue in its media network division. However, it was the Parks, Experiences and Consumer Products division that continued to wave, down 61% year-over-year. With Disney’s final films shifted from calendar year to 2020, there isn’t much revenue coming from the Studios either. Overall revenues fell 23% year-over-year.

In recent weeks, Disney announced a major reorganization to prioritize streaming; moved its next big Pixar release, Soul, on a Disney Plus exclusive basis; and is gearing up for a major streaming-focused investor day on December 10, which will include more information on the launch of Disney’s new international streaming service, Star. Disney is publicly prioritizing its direct-to-consumer division led by CEO Bob Chapek, and major shareholders like Dan Loeb are publicly asking Disney to get even more streaming. As Guggenheim analyst Michael Morris wrote in a statement, Disney is making “streaming its primary mechanism for monetization.”

Today it also happens to be the anniversary of Disney Plus.

It’s easy for Disney to celebrate its position in the direct-to-consumer market. Disney Plus has seen unprecedented growth, going from 10 million subscribers within the first 24 hours to over 73.7 million now. It has outperformed nearly all of its competitors except Netflix and Amazon Prime Video, the latter of which has the advantage of being tied to Amazon’s retail division.

The first year of Disney Plus was an incredible success. The company’s streaming package has also spearheaded growth on its other platforms, with Hulu’s subscribers growing to 36.6 million. and ESPN Plus up to 10.3 million. Streaming isn’t a sprint, though; it’s a marathon. The bigger question is how does Disney keep this momentum going? How does it stop people from canceling their subscriptions and paying their attention to other competitors like Netflix and HBO Max or free video platforms like TikTok and YouTube? Right now, the number of people canceling their Disney Plus subscriptions is just below the industry average, according to data from Antenna Analytics, but Disney needs to find ways to ensure its growth continues.

Two of Disney’s biggest problems are providing more consistent output of shows and movies, and offering a much more diverse range of content. The first is easier to repair. Production of series and films designated for Disney Plus has resumed. Other highly anticipated series such as WandaVision will help kick off the new year by giving people who currently open Disney Plus for The Mandalorian a reason to stay. And Disney is spending time figuring out exactly how to keep Disney Plus fresh. This could include asking studio managers to reallocate a movie or show destined for theatrical or network release to Disney Plus as an exclusive.

The biggest hurdle Disney faces is figuring out how to find subscribers in an audience that doesn’t care Star Wars or Marvel. The biggest increase in Disney Plus subscribers didn’t come from The Mandalorian or Mulan – he came from Hamilton.

Image: Antenna

Chapek said Disney employees through and through at the time HamiltonThe audience was important because it represented a different group of subscribers from the company’s regular customers. Disney needs to find more Hamilton times to keep non-Disney fan subscribers and have a rich library offering things that will interest them – not just Disney classics – that will keep them there after you finish watching a movie or TV show.

Many of the Disney departments have a long way to go. Disneyland is unlikely to open anytime soon, and other parks around the world may be closed (such as in Paris) as cases increase. The Disney’s Studios business relies on the return of cinemas to a semblance of normalcy, which in turn depends on people feeling comfortable in a movie theater again. This may not happen until a vaccine is released. While the Disney Media Networks division is seeing some comeback in advertising, people are still slashing their cable packages. It is a trend that will not slow down.

Much of Disney’s future is uncertain – streaming is the only thing that isn’t.