Yesterday we reported that Disney theme parks were forecasted to take a $2 billion loss due to COVID-19. Today Disney released its earnings report ahead of the quarter 3 2020 financial earnings webcast.
Bob Chapek, CEO of Disney, had this to say on the earnings report:
“Despite the ongoing challenges of the pandemic, we’ve continued to build on the incredible success of Disney+ as we grow our global direct-to-consumer businesses. The global reach of our full portfolio of direct-to-consumer services now exceeds an astounding 100 million paid subscriptions — a significant milestone and a reaffirmation of our DTC strategy, which we view as key to the future growth of our company.”
The losses come as no surprise due to the fact that the theme parks have just recently started reopening. Disneyland and California Adventure also still remain closed with no set date for reopening. Disney is still doing well despite the losses and they seem to be exceeding expectations despite the impact of the coronavirus pandemic.
Disney Sees Direct to Consumer as Being the Top Priority For the Company Now
Bob Chapek discussed Disney+ during the call and how it has exceeded their expectations since launching last November. There are over 60.5 million Disney+ subscribers and over 100 million subscribers across all of Disney’s streaming platforms. The streaming service has surpassed all internal goals for subscriptions in all markets. Disney+ has released a mixture of live theatre, musicals, and traditional content since its launch date.
Chapek stated, “The incredible success we’ve achieved to date has made us even more confident in our direct to consumer business and our ability to be more aggressive in our approach.” Chapek also stated that Disney sees direct to consumer as being the top priority for the company now.
One of Disney+ greatest successes has been The Mandalorian. It has claimed 15 out of the 145 2020 Primetime Emmy Nominations that The Walt Disney Company brands brought in. It is the most Primetime Emmy nominations any Disney television series had this year. Star Wars fans are eagerly awaiting the second season set for October while season 3 is already in pre-production.
The live action film Mulan was supposed to hit theaters this past March but has been delayed due to the coronavirus pandemic. In order to fit consumers needs based on this unpredictable time, Mulan will be coming to Disney+ on September 4th on a premier access basis for $29.99 in the U.S. and slightly varying for other countries. It will be also be released theatrically in markets without Disney+ and where theaters are open.
Disney will be hosting an investor day in the coming months which will focus on plans to accelerate the push into direct to consumer marketplace in Disney+, Hulu, ESPN+, and Star Brands. Chapek stated, “Let me reiterate that we see tremendous opportunity in the direct to consumer space. We intend to take full advantage of that opportunity…I think that this new content, having so much of it all at once, I think it’s really going to propel the business forward.”
In 2021, Disney plans to offer more direct to consumer content internationally and in many markets where Disney+ is already available. International direct to consumer entertainment offered under the Star brand in 2021 will be ABC, FOX, and ESPN. In many of the markets, it will be fully integrated into Disney+.
Disney Executives Address Disney World Cancellations and Attendance
In the earnings report released today, the Walt Disney Company announced a massive loss from the theme parks due to the extended closure caused by the global pandemic. Although Disney executives acknowledged a large amount of vacation cancellations due to the spread of the disease, they are still net positive.
Bob Chapek stated they did find “higher than expected level of cancellations once somebody does make a reservation, because as the disease ebbs and flows they might necessarily cancel,” and they could tell before Walt Disney World reopened that there would be a demand to go beyond social distancing.
Chapek stated during the webcast, “Each day we are at a percentage of the park that we can fill while maintaining social distancing” and ““research and bookings indicate we should be in good shape when consumer confidence returns.” He is hopeful of Walt Disney World’s future stating that a park can open when revenue exceeds the operating costs and Walt Disney World Resort theme parks are still recording a positive net revenue.
Christine McCarthy, Senior Executive Vice President and Chief Financial Officer, reiterated that Disney World has delivered net positive contributions. She stated that while the pandemic surge in Florida, which limited the amount of inbound travel than anticipated, is having a little bit of a dampening effect she said net revenue is still positive and it will pick up with more regular travel patterns.
McCarthy and Disney would not provide the numbers of pricing and occupancy of Walt Disney World Hotels. She called them “meaningless numbers” because travel patterns aren’t normal and not all hotels are open. They will be provided once travel patterns return to normal and all hotels are open.
McCarthy also addressed that the Walt Disney World Resort just fully opened Star Wars: Galaxy’s Edge with Star Wars: Rise of the Resistance in the beginning of this calendar year. She explained that per capita is great because a lot of locals have not yet had the chance to experience those new attractions.
Although There’s Been Loss, Chapek Remains Optimistic About Disney’s Future
In his opening statement of the quarterly earning’s call, Walt Disney CEO Bob Chapek stated, “I am as optimistic as I can be about our plans moving forward.”
Chapek also stated on the call, “Despite the harsh realities we are facing today, we have made some encouraging progress. Since our last earnings call, we have begun a responsible phased reopening of our theme parks…” Chapek said, giving a nod to Walt Disney World Resort, Shanghai Disney Resort, and the other parks that have reopened this year after being closed due to COVID-19.
Chapek also addressed current social issues stating that “issues of racism and social injustice have also been front and center in ours and our nations’ consciousness in recent months.” He announced with pride that the company has “established diversity and inclusion pillars” and is striving “toward greater representation and inclusion.”
There is so much to look forward to in Disney’s future with new shows coming to Disney+, new areas of the theme parks opening up, Walt Disney World’s 50th anniversary, and so much more!
You can listen to the full webcast that was recorded today here.