COVID-19 Could Make Disney Even Stronger

During its last reported quarter, The Walt Disney Co. DIS lost $2.4 billion of its parks and experiences segment which saw revenue drop as dramatically as 61%, generating $2.6 billion. The segment includes its parks, cruise lines, resorts and merchandising, which were ‘perfectly' exposed the havoc brought on by COVID-19. But, the worst seems to be behind the legendary entertainment giant.

The Effects of a Global Pandemic

Although the majority of Disney's theme parks managed to reopen during the company's fiscal fourth quarter at a limited capacity, the continued closure of Disneyland California was a big financial hit. It is certain that it will remain closed until the end of the year as state guidelines prohibit reopening until coronavirus cases in counties fall below 1 per 100,000. This target will be difficult to achieve as cases soar throughout the country.

In the second quarter, the pandemic took $1 billion from this segment's operating income. By the end of the third quarter, the loss amplified to $3.5 billion. The fourth quarter that ended on October 3rd, 2020 saw a loss of $2.4 billion with COVID-19 ended up costing Disney $6.9 billion for the whole year.

Disney Plus Ended Up Being Pixie Dust

The flip side is that the measures taken to combat the spread of the virus actually launched Disney's latest streaming venue to the stars. By October 3rd, Disney+ had 73.7 million subscribers, exceeding all expectations by far. Amilestone Disney expected to reach in 2024 was achieved during its very first year of existence.

With an average revenue per user of $4.52, Disney now has a new jewel that is expected to generate a revenue of approximately $4 billion on an annual basis. Moreover, this forecast implies an assumption that the current number of subscribers remains unchanged. Considering that Disney's streaming star is set to launch in many new countries across the globe, the number of total subscribers is likely to continue increasing.

Streaming Battlefield

The streaming boom is perhaps best described by the Los Gatos, CA-based tech firm that benefited from the influx of all new entries that aim to challenge Netflix NFLX, including Disney+, Apple TV+ from Apple Inc. AAPL and Peacock from Comcast Corporation CMCSA. Roku ROKU reported 14.8 billion hours of streaming in its third quarter, which is a growth of 54% compared to last year's quarter.

Only one streaming newbie does not have a deal with Roku and that is AT&T T WarnerMedia's HBO Max. HBO Max was launched in May and didn't come near to Disney's subscribers record, but WarnerMedia seemed pleased with 8.6 million account activations. However, last Monday, the subscription service just announced it sealed a distribution deal with one major gatekeeper, Amazon AMNZ Fire TV. Two days later, Warner Bros revealed Wonder Woman 1984 would be released on HBO Max along with opened theaters next month. It seems the world is, once again, asking too much of Diana with the movie now expected to simply break even as opposed to achieve a new box office record. This announcement only intensified speculation that Roku's 46 million households will soon enter the equation.

Despite streaming wars intensifying, Disney has something that no one else has. Its secret weapon is its legacy in the form of its content for every age group and one can argue, every taste. Disney's content is the wholly grail that appeals to everyone on the planet and is what enabled it to lure in all those subscribers in a record amount of time.

Disney Plans To return Even Stronger

It appears that Disney is six months to one year away from leaving this pandemic nightmare behind it. But once it goes back to operating at full capacity, Disney will also have a rapidly growing streaming business to support its highly profitable legacy businesses that are slower-growing.

Disney achieved a good track record in the battle against COVID-19 by adapting its operations to a sanitary framework and these efforts might allow the rest of its businesses to return to normalcy by next summer. Based on early results from the partially opened theme parks and early reservations for cruises, the iconic entertainment company revealed that there is pent-up demand for these businesses that has the potential to flourish as soon as they get back up and running. Just like its heroes, Disney is poised to triumph at the end of this global saga. There is no doubt that Disney will "return" and even stronger than it was before COVID-19 turned the world upside down.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you're interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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