Disney+ Gains 21.2 Million Subscribers While Parks Continue To See Billions In Losses

The quarter one Disney earnings call revealed much about The Walt Disney Company’s
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reliance on Disney+ during the age of coronavirus. In fact, the streaming service now has 94.9 million subscribers as of January 2, 2021. That is an increase of 21.2 million paying subscribers since the end of quarter four 2020 on September 30.

Disney’s Parks, Experience and Products segment, which includes Disney parks and resorts, Disney Cruise Line, and consumer products saw a decrease in revenue by 53% to $3.6 billion. Both Walt Disney World and Shanghai Disneyland were open for the entirety of the first quarter and made positive contributions. Disneyland Paris was open for about one third of the quarter, and Hong Kong Disneyland was open for about two thirds of the quarter before shutting down again due to a spike in coronavirus cases. The extended closure of The Disneyland Resort and Disney Cruise Line is partly to blame for the loss in revenue.

According to Disney, Parks, Experiences and Products had the most significant impact on operating income. Segment operating results decreased by $2.6 billion to a loss of $119 million. This was due to the decreases at Disney parks around the world, along with other travel experiences like Disney Cruise Line, Aulani, A Disney Resort and Spa in Hawaii, and Adventures by Disney.

While the Disneyland Resort is still closed progress on projects at the resort are still making progress. Pending reopening, Avengers Campus at Disney California Adventure is still on track to open in 2021. Work also continues on Mickey and Minnie’s Runaway Railway at Disneyland. The attraction recently opened at Walt Disney World in 2020.

Disney also gave updates on other attractions at Disney parks around the World. Work is still underway on Harmonious, a new nighttime firework show, at Epcot. Star Wars: Galactic Starcruiser is “unlike anything we’ve done before,” according to Bob Chapek, CEO of The Walt Disney Company. Over at Shanghai Disneyland, the new Zootopia-themed land has resumed construction.

Chapek did mention that Disney expects guests and cast members to follow coronavirus protocols through the end of this year. This includes wearing a mask and following social distance guidelines. Disney hopes 2022 brings an end to wearing masks and social distancing, but are following local and federal guidelines and relying on health information from Dr. Fauci.

A bright note in the fight against coronavirus is the mass vaccination location at the Disneyland Resort. Chapek said more than 100,000 doses have been given out at the site to date.

Looking forward, Hong Kong Disneyland should reopen in quarter two, but the Disneyland Resort and Disneyland Paris will likely be closed for the entirety of the second quarter. This will impact Disney’s bottom line from the park’s extended closure will likely be felt for the entirety of 2021 and into 2022.

Disney’s Direct-to-Consumer revenues for the quarter increased 73% to $3.5 billion and operating loss decreased from $1.1 billion to $466 million. Disney pins the decrease in operating loss to improved results at Hulu, Disney+ and ESPN+. While many analysts are suggesting that Disney+ will be profitable sooner than anticipated, Disney is sticking to their target of 2024 to reach profitability on the streaming service.

Chapek said that Disney will remain flexible on how they put titles in the marketplace for people to see. Pixar Animation Studios’ Soul was the latest film to go directly to Disney+. According to Chapek, “It was a big hit with our subscriber base.” Disney is continuing to monitor how movie theaters are reopening and if people actually want to go to a theater. Currently, Disney Animation Studios’ Raya and the Last Dragon will debut simultaneously in theaters and on Disney+ Premier Access on March 5. Black Widow, set to debut in theaters on May 7 is still on track for a theatrical only release.

One issue some subscribers are having with Disney+ is the lack of original programming that’s currently available. Disney did say that a goal set for the streaming service was to have over 100 new titles with original content and theatrical releases every year across all entertainment arms including Marvel, Star Wars, National Geographic, Pixar and Walt Disney Animation Studios.

Overall, The Walt Disney Company is adapting to this new playing field well, even if their Parks, Experiences and Products segment does not reflect that. As more people get vaccinated and herd immunity is built, Disney is confident that pent up longing to be at a theme park will bring more guests to ride on new attractions, buy merchandise, and eat their favorite in-park treat. And while there are new series coming to Disney+ throughout the year, it’s likely that there are many more new series and movies coming that many people don’t even know about yet. 2021 will likely be a year like no other for The Walt Disney Company.