It is reported that when Disney's Disney + streaming service achieved strong growth in the last quarter, in sharp contrast, the number of subscribers to Netflix, the market leader, fell. Disney added 7.9 million subscribers in the quarter, much higher than the expectation of 5 million. Just a few weeks ago, Netflix warned that the company could reduce 2 million subscribers this quarter, triggering a sharp sell-off in stocks. The outside world is therefore worried about the potential size of the global streaming media market.
Disney's theme park sector also achieved a strong recovery, with quarterly revenue more than doubling year-on-year to $6.6 billion, exceeding Wall Street expectations.
Disney + subscribers totaled 137.7 million, while Disney's streaming service subscribers, including Disney +, ESPN + and Hulu, reached 205 million. Bob chapek, CEO of the group, said Disney + would reach its target of 230 million to 260 million subscribers by 2024.
But Disney CFO Christine McCarthy cooled expectations for streaming growth in the second half of the year. "The first half exceeded expectations, so the increase may not be as large as we initially expected." "But we still expect growth in the second half of the year to exceed that in the first half," she said
The company's shares fell 3% in after hours trading on Wednesday. Disney's share price has fallen more than 40% in the past year, while the S & P 500 index fell only 5.2% in the same period.
Disney's revenue in the quarter was $19.2 billion, up 23% from $15.6 billion in the same period last year, but the figure fell short of expectations due to the payment of $1 billion for the early termination of TV programs and film copyrights. The company also recorded an impairment loss of $195 million on its Russian assets.
Disney's earnings per share was $1.08, lower than Wall Street's expected $1.19, mainly due to the rise in the effective tax rate on overseas earnings. Net profit from continuing operations fell 48% year-on-year to $470 million from $912 million.
Analysts expect that theme parks, which suffered heavy losses during the epidemic, will achieve a strong recovery this year. Disney's US theme park business had an operating profit of US $3.7 billion in the quarter, a year-on-year increase of 50%.
During the epidemic, the company replaced the "fast track" with "Disney spirit" to help paying users skip the queue. Chapick said that this upgrade helped increase the per capita expenditure of theme parks in the United States compared with 2019 before the epidemic. "Our local park project has performed well." He said.
But the company also warned that the closure of Asian theme parks, including Hong Kong and Shanghai, had reduced its operating profit by as much as $350 million in the third quarter.
Due to the soaring content budget caused by fierce competition in the streaming media industry, investors are increasingly concerned about the cost of the business.
Chapick said Disney was "closely watching rising costs". But he added, "good content drives our subscription growth, which in turn drives our profitability." The company said it would cut total spending on film and television by $1 billion to $32 billion this year.
Disney currently has a strong backup film source, including the latest films of its Toy Story Series "Buzz Lightyear", "Panther" and the sequel of "Avatar", the highest box office record holder in film history, are scheduled to be released at the end of the year. The company's latest Marvel film, Dr. strange 2: Crazy multiverse, has grossed $185 million in the United States since its release on May 6.
Chapick said that the company plans to launch Disney +, which generates revenue through advertising, and has made great progress. Netflix said last month that it was also exploring ways to generate revenue through advertising. It is worth mentioning that this has always been strongly opposed by reed Hastings, its co CEO. Netflix has not publicly disclosed when it will launch the service.