Once upon a time, last quarter, The Walt Disney Company (NYSE:DIS) managed to beat both top and bottom-line expectations as its theme parks, experiences, and products division saw a revenue boost of 72% after collapsing during the pandemic. But the entertainment giant did more than just recover from a what-could-have-been a lethal blow from the damage caused by COVID-19, it redefined its future and possibly made it even brighter with its streaming star, Disney +. Yesterday Disney announced a renewed offer for a Magical Holiday Experience for the entire family.
With technology advancing at light speed, companies are gaining what-used-to-be unimaginable opportunities to tailor experiences for their customers so it is no surprise that a company that has been warming people’s hearts and sparking their imagination for almost a century will make the most of it. Therefore, a membership program like Amazon.com Inc (NASDAQ:AMZN) and Apple Inc (NASDAQ:AAPL) have in place seems like the logical next step.
A redefined legacy
Ironically, Disney's much-imitated business model is what made the company exposed to the pandemic. The things that helped Disney become the biggest and longest-lasting entertainment company in the world are what made it impossible to itself from COVID-19. Only a few companies have been hit harder by the pandemic, with the legendary House of Mouse losing at least $30 million a day when COVID-19 started its relentless march across the globe, shutting down its cash cows- theme parks and cruises, unlike the streaming player Roku Inc (NASDAQ:ROKU) that thrived pandemic and posted huge gains in 2020 and 2021. But the cards have now turned with Roku’s most recent results disappointing investors while revenue of Disney’s beyond important division grew to $7.4 billion from $4.3 billion realized during last year’s comparable quarter. Its empire is now much stronger due to being enriched by streaming.
Disney+ helped Disney rebound and the positive trend is here to stay
Former Disney, America’s most beloved, CEO Bob Iger noted that Disney+ projects in production during the pandemic kept the company vibrant during the dark times as they represented a beacon of hope.
During the last reported fiscal third quarter that ended on July 2nd, Disney+ streaming program gained 14.4 million new subscribers with total subscriptions amounting to 152.1 million, exceeding analyst expectations of 147 million and dismissing rumors that the global streaming market is nearing saturation with uncertainty being brought on by Netflix (NASDAQ:NFLX) that reported another drop in subscribers and Warner Bros. Discovery Inc (NASDAQ:WBD) that revealed it will be modifying its content strategy.
Profitability
The company reaffirmed its expectation of Disney+ becoming profitable by the end of its fiscal 2024 year and unveiled a new pricing structure that involves an advertising-supported Disney+ with the price of ad-free Disney+ rising 38% to $10.99 which is a $3 per month increase.
Back in December 2020, Disney had set its Disney+ guidance by the end of fiscal 2024 in the range between 230 million and 260 million. The target for September 2024 has now been reduced by 15 million at both ends, with the drop being partially due to the popular Indian cricket competitions.
Cross-selling efforts
Like Amazon.com with its Prime and Apple Inc with Apple One, WSJ reported that the entertainment giant is exploring its own version of a loyalty program. Kristina Schake, senior executive vice president and chief communications officer issued a statement saying that a membership program is one of the many exciting ideas that is being explored.
By adding a commerce feature to Disney+ and package parks and merchandise offerings, Disney will get to know its customers’ preferences even better while encouraging them to spend more on its products and services
Disney already has a program in place for superfans - the D23 Official Fan Club. Priced from $99.99 to $129.99 a year, members gain access to exclusive events and merchandise, with a discounted three-year subscription to Disney+ that was offered in 2019. Therefore, a new membership program will likely target more casual Disney fans. According to WSJ, the company expects to introduce the retail feature such as a toy version of the Star Wars ‘dark saber’ to Disney+ subscribers as soon as this year. Fortunately, the company has what seems to be an endless range of products and services that originate from its content.
A new kind of fairytale in the making
After organizing the World’s Most Magical Celebration for its Walt Disney World’s 50th Anniversary that is due to last 18 months, it’s safe to say that the legendary entertainment giant will surely do much more than encourage its Disney+ viewers to buy merchandise related to their favorite show by allowing them to scan a QR code that is linked to its online shop and recommend Disney+ content to its theme park visitors, especially since the cross-company strategy team includes Mike White who is in charge of the company’s metaverse strategy which is an entirely new kind of fairytale in the making.
In many ways, the pandemic has forever changed our mindsets and habits. But, Disney’s power lies in allowing us to dream of a more magical world. In other words, it nurtures the finest part of the human experience - our souls which haven’t essentially changed during the company’s 99-year-old history. The desire to be happy is part of the basic human nature and therefore, Disney’s mission to entertain and inspire people cannot become irrelevant as long as there are human beings. As Mr. Chapek highlighted back in May, Disney is different from competitors because of its ability to reach people in many different ways with its unique synergy flywheel.
