It may be famous for its spellbinding theme parks and whimsical productions, but Disney’s financials for the second quarter of 2021 were anything but magical.
Disney’s stock price dropped by 3.5% during after-hours trading last May 13, following its announcement that its quarterly revenue was lower than expected and that the number of subscriptions for its Disney+ streaming service was significantly lower than its projection of 109 million.
Company revenue was pegged at $15.61 billion, slightly lower than the $15.87 billion previously projected.
However, according to CEO Bob Chapek, he was not at all disappointed by Disney’s Q2 performance. In an interview, Chapek stated that the company is still within the limits of its internal projections for the quarter.
Slow but steady growth in streaming
While its streaming services businesses fell slightly short of industry projections, Disney+ has enabled the company to reach its key audiences despite the restrictions preventing the public from watching feature-length films in cinemas.
Since its launch in November 2019, its family-friendly streaming service has reported rapid yet steady growth in terms of revenue and its subscriber base. However, its somewhat sluggish performance throughout the first half of 2021 may signify that Disney+ may be settling into a growth rut.
Still, company executives are optimistic that subscribers for the streaming service can still grow to around 230 to 260 million by 2024.
The company said it now has around 159 million subscribers for Disney+ and affiliate services Hulu and ESPN+. As a result, Disney’s direct-to-consumer sector revenue has grown by 59% to $4 billion as of the middle of the second quarter, offsetting losses in other key revenue-generating sectors.
Disney has also declared the extension of its contract with Major League Baseball (MLB) well into 2028 and has also inked an eight-year deal with LaLiga Santander, the Spanish League’s top men’s professional soccer division.
The thing about theme parks
While its streaming services have benefited the most from the pandemic, Disney’s theme parks across the globe were among the businesses hit the hardest by precautionary restrictions.
Q2 revenues for the company’s parks, experiences, and products segment went down to $3.2 billion as of mid-Q2, a 44% drop resulting from the full or partial closure of amusement facilities and the suspension of operations for guided tours as well as cruises.
At present, the pandemic cost Disney theme parks $1.2 billion in losses. The company also recorded a $414 million charge for impairments and employee severance within the quarter following the closure of one of its animation studios and several of its Disney-branded retail hubs.
But it’s not all bad news. Disney reopened its two parks in California on April 30th. Pre-booking for future dates is up as more people are getting vaccinated, and the overall number of coronavirus cases in the country is on a downturn.
Moreover, the Centers for Disease Control and Prevention (CDC) announced that fully vaccinated people could stop wearing their masks and don’t have to stay six feet apart from others. Disney is looking forward to welcoming visitors back and expecting more positive financials at the end of Q3.