Streaming proves to be a bright spot as Disney has seen its Q3 2020 revenue fall by 42% to $11.78 billion as the effects of the Covid-19 pandemic hit hard. The company lost $4.7 billion in the three months to 27 June.
Revenue from its amusement parks tumbled by 85%, while the segment took a $3.5 billion hit to operating income. Movie studio revenue sank by 55% to $1.7 billion.
However, direct-to-consumer revenue, which includes streaming services, increased by 2% to reach $3.97 billion.
Disney is struggling but streaming is surging
Disney has been hit hard by the Covid-19 pandemic. Movie production and releases have been postponed, theme parks closed, and sporting events scheduled to be shown on ESPN cancelled.
Streaming has been the sole bright spot for the company. The company now has 100 million paid subscribers across its streaming services, over half of which subscribe to Disney+.
As Covid-19 crippled the box office, Disney has strengthened its streaming offerings. In July it released Broadway musical Hamilton to its Disney+ service, leading to a surge in download numbers.
The company has made a number of streaming releases that have been brought to Disney+ earlier than planned. Star Wars: The Rise of Skywalker was released in May, three months earlier than planned. Frozen 2 was also released three months earlier than anticipated and Onward reached the service weeks after its box office run was cut short by the pandemic.
With US movie theaters still closed, Disney has announced that it plans to release its anticipated live-action Mulan remake to Disney+. This will premiere on 4 September with $29.99 price tag. The movie had been scheduled for a March box office release, but had been postponed several times.
The decision to skip movie theaters around the world and release straight to streaming reflects the continued uncertainty surrounding the box office.
New service to build on success
Disney is looking to further build on its streaming success with the launch of a new streaming service outside the US next year.
The new service will offer a wider variety of content than Disney+, with the company owning broadcaster ABC, 20th Century Films and SearchLight Pictures. The international service plans to be similar to Hulu but operate under the star brand it acquired from Fox.
In a number of markets, the new streaming service will be integrated into the Disney+ offering.
Disney has adapted well to the pandemic, concentrating on what it can improve while the fate of many other parts of its business remain out of the company’s control.