Disney continues to face financial difficulties in almost every part of its business, but a year later Avengers: Endgame came out, it is clear how much the pandemic has affected the studio department.
Disney didn’t release major films in the past quarter, and its third-quarter earnings report shows how much of an impact it had on the company. Total sales were $ 11.78 billion, down from $ 20.2 billion the year before, but most came from streaming. Studio sales were down 55 percent to $ 1.7 billion in the quarter, the company announced. That means Disney made $ 1.7 billion this quarter and $ 3.8 billion in the same time frame last year. What it shows is that there is a large one Avengers: Endgame hole in the calendar, and it’s a perfect example of how much impact the pandemic has had on one of Disney’s core businesses.
“Theatrical distribution in the quarter was negatively impacted by COVID-19, as theaters were generally closed at home and abroad,” the report said. “No significant titles were released in the current quarter compared to the release of Avengers: Endgame, Aladdin and Dark Phoenix in the previous year’s quarter. “
Last year, third quarter sales for Disney studios the company saw $ 3.8 billion – an increase of 33 percent compared to the previous quarter. That’s an impressive amount, helped by Avengers: Endgame, the greatest film in history. It’s even more impressive as Disney also suffered significant losses in its movie division ($ 170 million in operating revenue) as a result of disappointing 20th Century Fox movies, especially Dark Phoenix. Even with those losses, Disney had enough blockbusters to generate significant income, forcing executives to knock each other back for a job well done.
Now Disney’s theatrical arm is in the air. Mulan has been taken off the theatrical calendar and questions are already being asked about what it means Black Widow, which comes out November 6. What will happen in the coming months is crucial. Could Disney release his greatest movies of the year (Mulan and Black Widow) as a staggered release? Warner Bros. explores the staggered release route with Christopher Nolan’s Rack, which will premiere on August 26 in 70 international territories and will subsequently release on September 3 in selected cities in the United States. Could Mulan make their international debut before hitting American theaters?
Or, in the meantime, could Disney use a combination of digital rental and its thriving streaming business until theaters can safely reopen and people get back to the movies? It seems unlikely considering how much Mulan and Black Widow could make in theaters, but that was in the Before Times. It may not be going well with the House of Mouse, but the company’s streaming department continues to grow at an incredible rate. Disney Plus is now showing off more than 60 million subscribers. Disney’s streaming division also saw revenues for the quarter increase by two percent to $ 4 billion. A lonely bright spot for the company.
“Despite the ongoing challenges of the pandemic, we have continued to build on the incredible success of Disney Plus as we grow our global direct-to-consumer businesses,” CEO Bob Chapek said in the earnings report. “The global reach of our full portfolio of direct-to-consumer services now exceeds an astounding 100 million paid subscriptions – a major milestone and a reaffirmation of our DTC strategy, which we see as key to the future growth of our business. “
Disney Plus, Hulu, even ESPN Plus all saw growth in the past quarter, but it was Disney Plus that continued to shine. Part of it comes from Hamilton landing on the streamer – a high-profile movie that brought in a lot of new Disney Plus subscribers. While Disney faces the same production issues as its competitors, the company may bring older titles to its platform for new shows – such as The Mandalorians second season in October – debut.
Disney is already doing this; the company has turned boring licensing deals into a “Summer Movie Nights” festival, with an X-Men movie every week or the arrival of Pixar’s The Incredibles 2. Although Disney owns Pixar and the X-Men franchise after taking over 21st Century Fox, the films have been entangled in previous licensing deals and have not been available so far. They’re not new movies by any means, but the marketing seems like Disney Plus has some exciting new additions, and it may be enough to get some people to relocate to the platform or sign up again.
The big question is whether Disney Plus and Hulu are enough to weather the storm. Disney’s parks and cruise industry experienced total closings or limited reopenings in countries like China for the quarter, and similar to Comcast, Google, and Twitter, ad revenue for networks like ESPN and ABC declined year over year.
Disney’s ability to bounce back quickly is far from certain. The company’s ad revenues were down 36 percent in June alone compared to 2019 due to the lack of sports, according to Variety. The media networking department is hopeful things will get better with the return of sports, but things can go wrong if games are canceled. Disney reported that the media division was down 2 percent to $ 6.6 billion. Parks have a similar problem. The phased reopening seems to be going well for Disney so far, but cases in Florida and California continue to grow. Those parks could see shutdowns again if cases continue to rise. Park revenues for the quarter were down 85 percent, according to the report.
Disney’s earnings aren’t great, but they’re not unexpected. Since streaming remains the only bright spot, it will be interesting to see how much Disney leans on it in the coming months as executives figure out how to get things back to normal.