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Disney’s streaming services and sports are its key to surviving the pandemic

The Walt Disney Company’s success in pulling through the COVID-19 pandemic may just depend on its success in hawking its digital subscriptions to customers. Disney+, Hulu, ESPN, and Hotstar will bring in more revenue to the entertainment giant than any shuttered theme park ever could. Productions are stalled too, so Disney will have to lean heavily on its decades-long catalogue of content. Until this year 37% of Disney’s money came from theme parks and products. That number is likely to change dramatically in the coming months.

  • Disney would rather wait for big movies to release in theatres: Universal had great success releasing its film Trolls World Tour online, with over $95 million in rental fees on services like iTunes. But Disney would rather not go down that route for the most part. “So we’re going to evaluate each one of our movies on a case-by-case situation as we are doing right now during this coronavirus situation. I think you know that Artemis Fowl is moving over to Disney+ given the demographics of appeal of that film, which was not originally the plan. But all our other Temple movies have been rescheduled theatrically for later in the year. So we very much believe in the power of that launch platform for our big movies,” Walt Disney Company CEO Bob Chapek said.
  • Sports’ conversion conversion to digital is key: Chapek said that sports will be key to helping the company survive.  “And we’re going to do that, though, as we always have done in a very disciplined manner. Existing consumer trends play a real big part on how we think about the value of sports rights as they make the transition from linear over to digital. And I think it really – it’s a bit premature to give any specific details on what the strategy is other than we’re obviously highly interested in those and we think we want to make the evolution along with the consumer as they go from linear to digital,” he said. This, of course, will depend on increased subscriber revenue, as ad sales have reduced considerably, This also depends on when big sporting events, like the NFL and IPL.
  • Disney+’s wild success will help the company: Disney+ expected 60–90 million new subscribers by 2024. They have 54 million already, per its earnings report. That is beyond the wildest expectations of analysts and even Disney itself. That factor alone could make Disney+ that much more important to Disney weathering this pandemic long enough to get most of its businesses operating again.

Q2-FY20 Disney (ended March 28, 2020)

Revenue: $18 billion (21% growth)
Net income from continuing operations: $475 million (down by 91%)
Free cash flow: $1.9 billion

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Press Release and Results | Earnings Call Transcript

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I cover the digital content ecosystem and telecom for MediaNama.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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