Disney is considered the leader in the entertainment sector due to its extensive catalog of content for all ages. However, in its hundred-year history, it has found solid financial momentum in its theme parks, cushioning losses from its recent foray into the streaming business with Disney+.
For Disney, the theme park segment maintained annual growth of six percent until 2019, a year when it began to suffer losses due to the Covid-19 pandemic and which negatively impacted attendance due to the closure of parks.
According to its latest financial report, in the first nine months of this year, net income generated by The Walt Disney Company’s theme parks reached $24.83 million, representing an annual increase of 17 percent.
For the mouse company, theme parks and resorts are the main source of income, surpassing television channels, streaming platforms, and sales of licenses and content.
In the case of streaming, the company launched its platform known as Disney + in November 2019, with programming from the Disney, Pixar, Marvel, Star Wars and National Geographic brands.
By July 2023, Disney+ reached 105 million subscribers, however, this represented a decrease of one million accounts compared to the previous year.
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According to its financial reports, just two years after launch, the average monthly revenue per subscriber on Disney Plus in 2022 reached $4.24 million, representing a four percent drop in subscriptions and creation of new accounts.
This drop in subscriptions led Disney to raise the price of the service, as well as reduce marketing expenses, part of a plan by current CEO Bob Iger, who has been working to achieve profitability in streaming by 2024.
We are pleased with our achievements, including the improved financial results of our streaming business, which reflect the strategic changes we have been making across the company to realign Disney and achieve sustained growth and success.
Disney CEO
For Wall Street analysts, this reduction in Disney+ losses pleases investors, who in the last year have stopped focusing on subscriber growth to focus on the increase in their most profitable business, theme parks.
In September, Disney announced a significant increase in its capital spending for the parks, reaching $60 billion over the next decade.
According to Reuters, Disney has more than a thousand hectares of land for future development at its six existing theme parks around the world. Its goal is to serve 700 million consumers identified by the company as Disney fans who have not yet visited one of its theme parks.
Disney also plans to nearly double its cruise line’s capacity, adding two ships in fiscal 2025 and another in 2026. However, analysts say this increase could be due to recent signs of slowing traffic to the parks.
Barclays Bank projects that this increase in spending is intended to help Disney compete with rivals that are expanding their presence in the United States, such as Universal’s Super Nintendo World in California and the upcoming Epic Universe in Florida in 2025.
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“Disney will likely face more competition and part of this investment could also be intended to address this competitive context,” the bank said.
2023-10-14 00:00:00
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