The Walt Disney Company’s Q3 earnings report has come out ahead of its investor call, and like many of its attractions, there are ups and downs. Disney+ and Hulu streaming services turned a profit while their theme park performance dipped.
The company’s revenue was $23.2 billion, slightly outperforming the expectation of $23.1 billion.
Streaming
Disney did have a bump in Disney+ subscribers from a year ago, but it isn’t a lot. Currently, they have 153.8 million.
Hulu also saw an increase in subscribers, hitting 51.1 million.
The company is likely counting on the new streaming bundle, which includes Disney+, Hulu, and Max, to increase those numbers. However, their recent announcement of price increases may also cost them a lot of subscribers.
Disney still claims that its streaming profitability will be better in Q4 and that ESPN+ will be profitable as well. This time around ESPN lost money.
Theme Parks
Usually, the theme parks carry the company, but that is showing signs of stalling.
Revenue grew slightly, but operating income dropped.
Disney did temper expectations for the theme parks, saying:
“While we are actively monitoring attendance and guest spending and aggressively managing our cost base, we expect Q4 Experiences segment operating income to decline by mid-single digits versus the prior year, reflecting these underlying dynamics.”
They admit to a “flattish revenue Q4 in the parks,” which will likely last for a few quarters.
Higher costs were driven by inflation due to increased technology spending and guest offerings.
Attendance is down because the economy isn’t doing well and let’s be honest, Disney is getting too expensive for people. That is why it will be down for a few quarters.
When it comes to Disney Cruise Lines, the company claims they are seeing strong demand, but they said the profitability will be impacted by the costs of launching their new ships, the Disney Adventure and the Disney Treasure.
Disney Entertainment
Disney claims that the release of “Inside Out 2” drove not only theatrical revenue but also sign-ups for Disney+, as people wanted to watch the original. Bob Iger did say that they expect better “engagement” for upcoming releases, especially “Moana 2” and “Mufassa: The Lion King.”
“In the lead-up to and following the theatrical release of Inside Out 2, millions of viewers turned to Disney+ to watch the original Inside Out film from 2015, driving over 1.3 million Disney+ sign-ups and generating over 100 million views of the original film globally since the first Inside Out 2 teaser trailer dropped. With the release of Deadpool & Wolverine we’ve seen heightened viewership with the original Deadpool films, and we expect similar engagement with the upcoming releases of Moana 2 and Mufasa: The Lion King. The theatrical success of our franchises, which contributes to our growth and improved financial performance in streaming, should also positively impact churn and engagement. ”
Ahead of the market opening, Disney stock is hovering around $90 per share.
Frankly, it’s a lot of smoke and mirrors. Streaming might do better because they are partnering with people and bundling. It sounds to me like they are trying to find more bundle partners. And theme parks are going to do bad for a while.
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