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.

Bad years are a true portrayal of Disney in 2020. In its fiscal year 2020 results released on November 26, Disney lost $2.864 billion, the first big loss since it went public. Under the epidemic situation, Disneys self-help options are not many: try to reduce the cost of offline business such as theme park as far as possible, and accelerate the transformation of online business such as streaming media.

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

On November 27, 21st century economic reporter visited Shanghai Disneyland on the spot and found that the number of tourists on that day had indeed decreased a lot compared with the busy scene of entering the park a few months ago. Today, the number of people entering the park is about two or three thousand. A staff member at the ticket gate of Shanghai Disneyland told 21st century economic reporter.

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.

In May, Disneyland opened for business, and accommodation orders began to appear one after another. In June, there was a significant improvement process. After half a years visit to Yisu holiday villa, Hu Heping, the head of the villa, told the 21st century economic report that in the past three months, the booking of the B & B has exceeded that of the same period last year.

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.

Orders are almost precipitous. In an interview with the 21st century economic reporter, Hu Heping could not hide his helplessness. Originally, it was near the end of the year, and a new round of B & B booking season was coming, but now the epidemic situation is repeated, before several whole rental orders were quickly cancelled.

The 21st century economic reporter inquired the customer service personnel of Shanghai Disneyland Resort that in recent days, the number of visitors to the park is not large, but the park has re launched a winter afternoon half day ticket to attract visitors. The Disneyland, located in Pudong new area where the epidemic occurred, is still maintaining the normal opening of all amusement facilities and entertainment performances.

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.

Disney announced an increase in the number of layoffs, indicating that the company predicted that the park business could not return to normal level in the short term, and it needed to continue to shift the focus of investment.

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.

In October, Disney announced a restructuring of its media and entertainment division and would focus on streaming. Investment banks are very optimistic about this, and JPMorgan even reiterated its overweight rating for the first time, and gave a target price with a higher premium.

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.

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, the bet on streaming media business opens up the idea of Disney to use the streaming media platform to play a business synergy effect. However, it should be noted that, taking the North American market as an example, Disney has to face strong and numerous streaming media platform competitors. Among them, Netflix had 193 million users worldwide as of July this year, far more than Disney.

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.

Source: 21st century economic report author: Cao Enhui, editor in charge: Wang Xiaowu_ NF