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Disney+ is finally taking off. For the first time, the American entertainment giant’s streaming services were profitable in the third quarter of its staggered financial year. This is good news for Disney, which has invested heavily in this segment.
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– The streaming services of American entertainment giant Disney have become profitable for the first time.
Long awaited, the services de streaming US entertainment giant Disney turned profitable for the first time in the third quarter of its staggered financial year, with an operating profit finally positivewhile the group saw its profits confirm their good trajectory. Between April and June, the group recorded a positive net result of 2.6 billion dollars, compared to a net loss of 460 million over the same period a year earlier, but also a strong improvement compared to the 216 million net profit of the previous quarter. Turnover increased by 3.6% over a year, to reach 23.2 billion dollars, slightly exceeding the 23.1 billion expected by analysts. A figure particularly monitored by investors in the United States, earnings per share reached 1.43 dollars over the quarter, compared to a loss per share of 0.25 dollars.
The good performance of streaming services is good news for Disney, which has invested a lot in this segment, after having started late compared to its competitor Netflix in particular. “Disney has finally found the formula to make streaming profitable”Third Bridge analyst Jamie Lumley said in a note, “This finally puts Disney on the list of streaming companies that are, along with Netflix”The group’s streaming segment includes Disney+, ESPN+, focused on sports offerings, and Hulu, of which Disney held the majority since 2019, before purchasing the remaining 33% of capital from the operator Comcast last November.
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Revenue in this segment rose 15%. It takes into account the full integration of Hulu sales. Operating income shows a slight profit, of $47 million, compared to a loss of $512 million a year earlier over the same period. And this should continue: the group announced on Tuesday a new increase in the prices of its basic subscriptions, which go from $7.99 per month in the United States to $9.99. “Every time we’ve raised prices, we’ve seen a very small rate of subscriber loss, nothing that we would consider significant.”said the group’s CEO, Bob Iger, during a conference call with analysts.
Cinema party, not parks
Mr Iger also welcomed the fact that he had retained the NBA’s broadcast rights in the United States, on his ESPN and ABC channels, saying that “it had enormous value (in) the eyes” of the group, particularly due to the length of the contract, which allows Disney to keep the NBA for the next 12 seasons. On the cinema side, Disney is also benefiting from the excellent reception of Vice-versa 2still showing, and whose global revenues now exceed $1.5 billion, only a portion of which is attributable to the past quarter. For the current quarter, the group should also benefit from the release of its latest Marvel film, Deadpool & WolverineJuly 26. These results did not impress the markets, however: Disney shares ended Wednesday’s session on Wall Street down sharply by 4.47%, at $85.95, with investors particularly disappointed by the performance of the theme parks. This segment “is showing signs of weakness, with profitability declining compared to previous quarters. This is a warning sign as the outlook projects a slow end to summer, normally the busiest season for Disney parks.”Mr Lumley noted.
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The parks are in fact experiencing a drop in their revenues, partly due to the results of Disneyland Paris. The latter undergoes the Olympics backlashwhich created an avoidance effect of the French capital, classic for this type of major event for a certain number of tourists. But not only that: in the United States, too, attendance at the parks was not as expected, with domestic revenues falling by 6% over a year, and the group expects the trend to persist for several more quarters. “40% of our revenues (in this segment, editor’s note) are not domestic, it is either parks abroad or derivative products. Overall, I think it is a slight slowdown that is more than offset by the results of our entertainment segment”Mr. Iger insisted.
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