Disney: online streaming media business becomes life saving straw

category:Finance
 Disney: online streaming media business becomes life saving straw


Coincidentally, the repeated overseas epidemic situation has made Disney recently announce that it will increase its layoff efforts. On November 25, the company said that due to the significant reduction in passenger flow caused by the epidemic, Disney will expand the number of layoffs to 32000 in the first half of next year.

But in a short period of time, Disney is under so much pressure to turn around. Although the expansion of online business is making more than expected development, it is not easy to make up for the lack of profit in the traditional advantages of offline paradise and resort business.

Paradise business meets the test of epidemic situation again

The maximum daily capacity of Shanghai Disneyland is about 80000 people. Since the announcement of the restart in May this year, its daily reception capacity has gradually increased from 20% of the maximum carrying capacity. But now Shanghai Disneyland is a little bleak.

In fiscal year 2020, the operating revenue of Disneyland business was US $16.502 billion, a year-on-year decrease of 37%; the operating loss was $81 million, compared with a profit of $6.758 billion in the same period of last year. In a single quarter, Disneys Park business hit a freezing point in the third quarter of fiscal year 2020, with an operating profit loss of $1.96 billion. In the fourth quarter, the business lost $1098 million.

However, Christine McCarthy, Disneys chief financial officer, also revealed a positive sign of the park business in the fourth quarter of fiscal year 2020, when the companys three Disneylands, Orlando, Shanghai and Hong Kong Disneyland, were profitable.

Shanghai Disneyland, as the first one of the six theme parks under Disney, has made unexpected recovery since it was announced to be reopened. The popularity of Shanghai Disneyland can be seen from the moment tickets sold out on the first day of restoration to the soaring hotel prices during the National Day holiday.

And the recovery of Shanghai Disneyland is driving the surrounding accommodation industry.

In September, we had a large number of whole rental orders for B & B, and the operating income of the whole month was 30% higher than that of last year. Hu Heping told the 21st century economic reporter that, especially during the National Day holiday this year, his B & B received full rental orders, which were combined with the factors of price increase in the peak season. The turnover during the whole small and long holiday was very considerable.

In Hu Hepings opinion, the flow of people brought by Shanghai Disneyland after the domestic epidemic situation was stable was indispensable, and the epidemic situation also changed the customer structure of orders. In the past, the whole rental orders received were all groups built by the company, but in recent months, the order customers also included wedding celebrations and family gatherings, and the proportion was not small. Hu Heping believes that the epidemic has indeed affected peoples travel mode and concept.

But Shanghai Disneyland and the surrounding accommodation industry are in trouble again after several local confirmed cases appeared in Pudong New Area of Shanghai in November.

In fact, although the number of visitors to Shanghai Disneyland has decreased, it still has a certain hematopoietic capacity under normal operation. However, Disneys other major theme parks are not lucky: on October 29, due to the spread of a new round of epidemic in France, Paris Disneyland closed again, and the reopening date is expected to be postponed to February next year; Disneyland in California recently announced to extend the closing time, which is expected to be until January next year; the other three Disneyland are in the operation state of restricting the flow of people and time.

Online streaming media business becomes life saving straw

Fortunately, Disneylands business has not let Disney into a corner.

On the one hand, continuous breakthroughs in vaccine research and development have gradually boosted the confidence of the tourism industry to recover; on the other hand, the breakthrough of Disneys own online business has made it see a new profit growth point that can be bet.

Disneys streaming media business has been incorporated into streaming media and international business (dtci) in financial reporting. The companys performance in fiscal year 2020 showed that its streaming media and international business achieved revenue of $16.967 billion, up 81% year-on-year. Among them, the annual revenue of streaming media business was 10.444 billion US dollars, an increase of 300% over the same period last year.

By restructuring its streaming business, Disney has concentrated its media business into a single agency responsible for content distribution, advertising sales and Disney +. Disney + is the core of streaming media business. As an online entertainment platform that Disney focuses on, Disney + benchmarking Netflix, at & T, Amazon primevideo, AppleTV +, etc.

Disney released data as of October 3, which showed that Disney + had 73.7 million subscribers worldwide, an increase of 16 million over the previous fiscal quarter, which has exceeded previous agency expectations.

Disneys streaming media platform has formed a more diversified product matrix: Disney +, Hulu, ESPN, hotstar. In addition, through acquisition, original, self-made and other channels, Disney has built a wealth of film and television entertainment IP resources, laying the foundation for the development of streaming media business. The 21st century business reporter found that before announcing the restructuring of its streaming media business, Disney had authorized Walt Disney films, marvel, Lucas and Pixar to the business this year.

However, in the eyes of the outside world, the streaming media business created by Disney is no different from rebuilding an online Disney. The main shaping method behind it is nothing more than burning money.

According to the financial year 2020, the annual operating profit of the streaming media and international business during the reporting period of Disney was 2.806 billion US dollars, and the loss range was increased. And according to Moffett Nathanson, a brokerage firm, Disneys investment in Disney + alone is expected to reach $2 billion this year.

Under the fierce competition, a marketing war is inevitable. Many institutions expect that Disneys streaming media business will maintain losses for some time in the future, and it is expected that it will not be profitable until 2024.

Therefore, after grasping the lifesaving straw of streaming media, Disney needs to ensure that the business will not be broken in the short term.