Entertainment powerhouse Disney’s third-quarter earnings (for the fiscal year, not the calendar year) showed it took major hits in its streaming business while domestic parks continue to struggle.
DISNEY+ SUBSCRIBER LOSS
As Breitbart News previously reported, the company’s streaming service, Disney+, suffered a massive loss of 300,000 subscribers in both the United States and Canada while releasing a string of box-office flops in the movie theaters. Per the report:
To make matters worse for its fans, the Walt Disney Company is hiking Disney+’s monthly subscription price to $13.99 from $10.99 — a 27 percent increase. Last year, the price rose to $10.99 from $7.99, which means Disney+ subscribers will see their monthly bill climb a total of 75 percent in less than two years.
The new price is set to take effect in October.
On Wednesday, the studio reported domestic Disney+ subscriptions fell by 300,000 for the fiscal third quarter, to 46 million subscribers. By comparison, Netflix boasts around 76 million domestic subscribers. Worldwide, Disney+ subscriptions declined 24 percent for the period, mostly due to the end of Disney’s deal with Hotstar in India.
Should the streaming service continue its downward trend, it will likely signal that Disney+ has reached its cap in domestic audiences.
STREAMING LOSES $512 MILLION
The streaming service Disney+ launched in late 2019 and has yet to be profitable for the entertainment giant. The company has since “lost more than $10 billion in its direct-to-consumer segment, which also includes Hulu and ESPN+,” according to the Wall Street Journal. Due to the company’s massive spending to acquire subscribers for its streaming platform, Disney shares have been trading below $100 ($87.49 as of this writing).
“Earlier Wednesday, Disney reported that losses in its streaming business narrowed to $512 million in the third quarter from $1.06 billion in the year-earlier period,” WSJ noted.
“The improvement is a sign that cost controls put in place by Iger are starting to show a positive effect: Wall Street analysts polled by FactSet had expected a quarterly loss of $758 million,” the report added.
In March of this year, Bob Iger told Variety that the company miscalculated the streaming service’s “pricing strategy” by focusing too heavily on increasing its global subscribers.
“In our zeal to grow global subs, I think we were off in terms of our pricing strategy, and we’re now starting to learn more about it and to adjust accordingly,” he said.
Bob Iger and Mickey Mouse look on before ringing the opening bell at the New York Stock Exchange (NYSE), November 27, 2017 in New York City. (Drew Angerer/Getty Images)
Iger added that the company had a “disconnect” between the money it spent on creating content and the monetizing of that content.
REVENUE FALLS SHORT OF EXPECTATIONS
According to CNBC, the company recorded “$2.65 billion in one-time charges and impairments, dragging the company to a rare quarterly net loss.”
Disney described those charges as “content impairments,” which were the result of “pulling content off its streaming platforms and ending third-party licensing agreements.”
Earlier this year, Disney shocked the entertainment community when it decided to completely pull the Willow series from its streaming platform after widespread criticism and failure to attract viewers.
“Disney swung to a net loss of $460 million, or 25 cents per share, for the quarter ended July 1 from a net income of $1.41 billion, or 77 cents per share, during the year-ago period. Excluding those impairments, the company earned an adjusted $1.03 per share,” added CNBC.
While revenue increased by 4% to $22.33 billion, it did fall short of Wall Street’s $22.5 billion estimate.
DOMESTIC PARKS STRUGGLE
As the Wall Street Journal noted, Disney managed to stay afloat in the third quarter largely due to “continued growth at the company’s parks business.” On the domestic front, however, the company’s parks still face massive hurdles it will soon have to reckon with in the future, primarily at Disney World. As the Orlando Sentinel noted:
Revenue is up for Walt Disney Co.’s theme parks globally, but down at Walt Disney World, according to third-quarter financial results released by the company Wednesday.
Revenue was up 13% for Disney Parks, Experience and Products for the quarter ending July 1, compared with the year-earlier period. That segment includes the Disney theme parks in Asia, which saw a 94% increase in revenue.
But the performance in parks in Florida and California was a more sluggish 4% gain in revenue and a 13% decline in operating income compared with last year.
As for raw dollars, Domestic Parks & Experiences’ profits were $1.4 billion and overall revenues were $5.6 billion.
After Iger took back control earlier this year, his cost containment measures included closing Disney World’s $4,800-a-night Star Wars Glactic Starcruiser hotel.
The hotel will be closing at the end of September.
Paul Roland Bois joined Breitbart News in 2021. He also directed the award-winning feature film, EXEMPLUM, which can be viewed for FREE on YouTube or Tubi. A high-quality, ad-free stream can also be purchased on Google Play or Vimeo on Demand. Follow him on Twitter @prolandfilms or Instagram @prolandfilms.