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May 6, 2020updated 05 Aug 2020 12:28pm

Disney+ subscriber boost a silver lining in mixed Q2 earnings

By Robert Scammell

The Walt Disney Company’s streaming service, Disney+, now has 54.5 million paid subscribers – one of the few silver linings in a second-quarter earnings report that saw its revenues diminished by the coronavirus pandemic.

As of 28 March, the end period for the fiscal quarter, Disney+’s subscriber base stood at 33.5 million. But in an earnings call, new Disney chief executive Bob Chepak said that since then it had added a further 21 million subscribers.

On 8 April Disney revealed it had reached 50 million subscribers, with coronavirus lockdown measures prompting a surge in signups. Average monthly revenue per Disney+ subscriber stands at $5.63.

It puts the streaming service well ahead of schedule for its previous forecast of between 60 million and 90 million Disney+ subscribers by the end of its 2024 fiscal year.

Disney has reached the 54.5 million mark in just six months. Netflix, by comparison, has attracted more than 182 million subscribers in 13 years.

Disney’s other streaming services, Hulu and ESPN+, both added healthy subscriber numbers during the quarter. Hulu now has 32.1 million total subscribers, up from 25.2 million a year ago. ESPN+ now has 7.9 million subscribers, up from 2.2 million the same quarter last year.

Total revenue for Disney’s direct-to-consumer segment came in at $4.1bn

Coronavirus takes toll on Disney Q2 earnings

The success of Disney+ will be small comfort to the media giant, which reported a 58% decline in operating income from its theme parks and cruises.

It reported total revenue across the business of $18.01bn for the quarter, up 21% year-on-year. Disney estimates that the coronavirus has cost it “as much as $1.4bn” in before-tax profits for the quarter.

“While the Covid-19 pandemic has had an appreciable financial impact on a number of our businesses, we are confident in our ability to withstand this disruption and emerge from it in a strong position,” said Chapek, who took the reigns on 25 February.

“Disney has repeatedly shown that it is exceptionally resilient, bolstered by the quality of our storytelling and the strong affinity consumers have for our brands, which is evident in the extraordinary response to Disney+ since its launch last November.”

Cinema closures have also dented Disney’s studio entertainment segment, which reported revenue of $2.54bn. While this is up 18% year-on-year, the delayed release of films such as Mulan and Black Widow will be a blow to revenue.

“As expected, the closing of cinemas and Disney’s theme parks has already had a huge impact on the company’s profits, which will be difficult to make up through streaming alone,” said Alec Dafferner, partner at investment firm GP Bullhound.

“Along with having to push back open releases such as Mulan, many of the Disney’s other acquisitions will also be suffering during this period as the shutting down of filming will be affecting content slates going into 2021.”

Despite the coronavirus setback, Disney’s strength puts it in a good position to come through the pandemic, said Dafferner.

“As we have seen, cash is king at the moment and Disney’s strength prior to this will still likely stand the business in good stead to weather the storm, at least for some time,” he said.

“In spite of the hits to its usual revenue stream, it will be interesting to see how Disney will adapt and pivot going forward.”

Read more: Netflix adds 15.8 million subscribers in lockdown surge