The largest entertainment company of the world Walt Disney Co returned to profits in its latest completed quarter driven by a growth in its Disney+ subscribers as well as lowering of losses at its theme parks which were hit hard by the Covid-19 pandemic.
Disney said on Thursday that during its latest completed quarter, the number of subscribers to the family-oriented video service grew to reach 94.9 million. That number comfortably neat average estimates of the Wall Street estimates compiled by Bloomberg at 90.7 million. The company also beat estimates for sales and earnings which propped yp the shares of the company by 4.1 per cent in late hour trading.
The strategy of the company to shift away from traditional media was actually paying off was evident from the more than 21 million new Disney+ streaming customers, pointed out the company’s Chief Executive Officer Bob Chapek.
A number of high-profile programming, including the second season of the Star Wars spinoff “The Mandalorian” and the Christmas debut of “Soul,” a Pixar movie originally scheduled for theatres, has been beneficial for the service.
Starting March, the company will raise its monthly price in the US for its online streaming subscriptions by a dollar to $8.
“Disney+ has exceeded even our highest expectations,” Chapek told investors on a conference call Thursday.
The company also comfortably beat average estimates of analysts for profit excluding some items, for the company’s first quarter ended January 2 which came in at 32 cents a share. In the second half of fiscal 2020, a rare loss had been posted by the company when it was in the middle of the worst performance because of the pandemic.
Even though revenue of the quarter was lower year on year in the quarter at $16.2 billion, it also beat estimates of analysts.
The performance of the company during the quarter helped it to enhance its global stature in the world of video streaming which is dominated by Netflix Inc. In December, the company had informed its shareholders about the fast growth of its streaming services while Chapek also set a target of achieving a total of 260 million subscribers for Disney+ by 2024, which has helped the company to register a 23 per cent rise in its stock price since them.
“The results are speaking for themselves,” Disney’s former streaming chief, Kevin Mayer, said in a television interview on Thursday. “He’s restructured the company, it looks like he’s emphasizing streaming, which is the same thing I would have done. Look where the stock is. Look at the results. No complaints about that.”
The profits of the company have been dragged down because of the continued closure of some of its entertainment parks and resorts because of the pandemic. But during the latest completed quarter, the losses of the business unit had been lowered following two very difficult quarters during the height of the pandemic.
While the parks and resorts of the company in California and Paris would potentially have to be kept close for the remained of the current quarter, the property of the company in Hong Kong will reopen sooner, the management of the said in a call with investors.
“If that happens, that is a game changer,” Chapek said. “That could accelerate our expectations and give people the confidence that they need to come back to the parks.”
(Adapted from Bloomberg.com)