Walt Disney‘s direct-to-consumer streaming services are expected to drive future growth of the media and entertainment conglomerate which is hit hard by the Covid-19 pandemic.
The crisis, that impacted almost all of Disney‘s businesses, has cost the company nearly $1.4 billion, from its shuttered theme parks, retail stores, delayed or cancelled theatrical releases, suspended cruise ship sailings, guided tours among others.
“While the Covid-19 pandemic has had an appreciable financial impact on a number of our businesses, we are confident in our ability to withstand this disruption and emerge from it in a strong position,” said Bob Chapek in his first earnings call as the chief executive of The Walt Disney Company. Direct-to-consumer business is the company’s top priority and a key to its growth, he said.
Disney+ has seen a significant bump in its paid subscriber base—similar to its streaming rivals—since people are confined to their homes due to coronavirus lockdowns. The video streaming service had 54.5 million paid subscribers as of May 2020, up from 33.5 million as on March 28 this year.
The service which debuted on top of Hotstar last month had reported 8 million subscribers in India, when it crossed the 50-million subscriber milestone last month. To put the growth in context, Disney was targeting to reach 60-90 million subscribers by 2024, when it launched the service in November last year.
“We have been thrilled with the performance of the service since our initial launch in November and we continue to expand into other markets. We announced in early April that in just 5 months we have surpassed 50 million subscribers globally, a significant milestone for us,” Chapek said. “We have been quite pleased with the growth that we have seen in the 4 weeks since then and there is more to come.”
Going forward, the company plans to roll out the service in Japan in June, followed by the Nordics, Belgium, Luxembourg, and Portugal in September and Latin America by the end of this year.
Disney+ execution had also drawn praise from executives of rival firms like Netflix co-founder Reed Hastings
“Over 20 years of watching different businesses, I’ve never seen such a good execution of the incumbent learning the new way and mastering it. The lesson out of this is that great execution, clarity around brand and focus really makes a difference” Hastings said in Netflix’s own earnings call last month.
Revenue from its direct-to-consumer and international segment rose to $4.1 billion for the quarter ended March 28, 2020 compared to $1.1 billion in the same quarter last year. Although, losses also shot up to $812 million for the quarter from $385 million in the corresponding period a year ago.
Preponing titles & digital exclusives
To aid this growth, Disney has been preponing the streaming launch of some of its titles like Frozen 2, Onward, and Star Wars: The Rise of Skywalker, all of which are now available on the service.
“We have a tremendous collection of assets. It’s quite possible that what we create is appreciated now more than ever, because people find comfort and inspiration in our messages of hope and optimism,” Disney Chairman Bob Iger said during the company’s earnings call.
Disney is also moving some of the theatrical releases like Artemis Fowl as a Disney+ exclusive later this year.
“We’re going to evaluate each one of our movies on a case-by-case situation. We very much believe in the value of the theatrical experience overall to launch blockbuster movies but we also realize that either because of changing and evolving consumer dynamics or because of certain situations like Covid-19, we may have to make some changes to that overall strategy just because theatres aren’t open or aren’t open to the extent that anybody needs to be financially viable,” Chapek said.
Last month, rival Universal Pictures had bypassed a traditional theatrical release for its animated film “Trolls World Tour” and released it as a digital rental across various platforms like Apple’s iTunes and Amazon Prime Video. The movie notched up about $100 million in rentals in just three weeks, making it one of the biggest digital debuts of all time.
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