Los Angeles - Disney reported mixed quarterly results on Tuesday, with per-share profit declining by 17% and revenue climbing by 36%. Costs associated with building its Disney Plus streaming service occupied much of the gap.
But investors and Disney’s Hollywood competitors were only interested in one number: Disney Plus subscribers. There are 26.5 million, the company said, an astounding number for a service that is less than three months old. Disney said that average monthly revenue per paid subscriber was $5.56.
Disney unveiled its streaming platform on Nov. 12 amid a thundering marketing campaign and found immediate success with “The Mandalorian,” a live-action “Star Wars” series that introduced a blockbuster character known as Baby Yoda. Initial interest in Disney Plus was bigger than even Disney anticipated, resulting in login problems. Within a day of its introduction, Disney Plus had 10 million subscribers, including an unspecified number of accounts that signed up for free under a promotion with Verizon, blowing past analyst estimates. Disney Plus costs $7 a month for those paying the sticker price.
Robert A. Iger, Disney’s chief executive, is expected to offer further details about Disney Plus during a post-earnings conference call on Tuesday with analysts. How many subscribers are getting a discount? What have cancellations been like now that “The Mandalorian” has finished its first season? Exactly when will Marvel’s slate of original shows arrive?
Disney also disclosed subscribers for its other streaming services. Hulu had 30.4 million at the end of the year, a 33% increase from a year ago. ESPN Plus, dedicated to sports programming, had about 6.6 million, up from 1.4 million.
Another focus of the call will almost assuredly be the coronavirus outbreak in China that has sickened more than 20,000 people in the country and killed at least 425. As a result, the Shanghai Disney Resort and Hong Kong Disneyland Park have been closed for more than a week. Michael Morris, an analyst at Guggenheim Securities, said in a note last week that the closures would have a “significant” impact on Disney’s sprawling theme park division, which includes outposts in Tokyo, Paris and Orlando, Florida.
“Prolonged closures and a slow return of attendance at both Shanghai and Hong Kong for the balance of the year will result in revenue declines of 75%, 50% and 30% over the next three quarters,” Morris said.
Investors on Tuesday will be looking to see what Iger plans to do if the virus outbreak spreads further in the United States, which has 11 confirmed cases so far.
Iger may also offer an update on Disney’s ongoing efforts to digest the entertainment assets it bought from Rupert Murdoch last year for $71.3 billion.
Disney said on Jan. 17 that its newly purchased 20th Century Fox and Fox Searchlight movie studios would drop the word Fox. (Murdoch retained ownership of Fox News and the Fox broadcast network.) Emma Watts, the top executive at 20th Century, quit last week. She was primarily responsible for shepherding James Cameron’s four upcoming “Avatar” sequels. Hulu’s chief executive, Randy Freer, has also resigned.