'Disney Plus' Nears 30 Million Subscribers... Driving Disney's Growth

[Asia Economy Reporter Eunmo Koo] The online video service (OTT) 'Disney Plus,' newly launched last November, is leading the growth of The Walt Disney Company by securing nearly 30 million subscribers in just over three months since its launch.

According to Shinhan Investment Corp. on the 8th, The Walt Disney Company announced its fiscal 2020 first-quarter results (October to December 2019 local time) on the 4th. During this period, revenue increased by 38% year-on-year to $20.9 billion, and earnings per share (EPS) rose 17% to $1.53. By segment, Media Networks revenue grew 24% to $7.4 billion, Theme Parks & Resorts increased 8% to $7.4 billion, Direct-to-Consumer & International (D2C) surged 334% to $4.0 billion, and Studios recorded a 106% increase to $3.8 billion.

Non-GAAP operating income was $4.0 billion, up 9% year-on-year, exceeding consensus by 4%. Researcher Yongmin Cho of Shinhan Investment explained, "The Media Networks segment saw a 23% increase in operating income due to the 21st Century Fox merger effect. Although the international segment was sluggish due to prolonged protests in Hong Kong, Theme Parks & Resorts operating income rose 9% thanks to strong merchandise licensing and increased spending by visitors at U.S. theme parks." He added, "D2C saw an expanded deficit due to the launch of Disney Plus, the inclusion of Hulu, and losses from ESPN Plus, while the Studios segment stood out with a 207% increase in operating income."

Disney Plus is expected to achieve its guidance early by attracting more subscribers than anticipated. At the end of last year, Disney Plus had 26.5 million subscribers, exceeding the market's expected 20 to 25 million. The day before the earnings announcement, the total number of subscribers reached 28.6 million, adding 2.1 million in one month. Researcher Cho said, "Although direct comparison is difficult, it took competitor Netflix about five years to reach a similar scale," and predicted, "The 2024 guidance of 20 to 30 million U.S. subscribers (60 to 90 million globally) is likely to be achieved early within this year."

Currently, Disney's stock is trading at a 12-month forward price-to-earnings ratio (PER) of about 25 times, with evaluations focusing more on the expansion of new businesses rather than deteriorating profitability. Researcher Cho analyzed, "Considering competitor Netflix's valuation (60 times), an upward revision of the applied multiple and stock price increase are expected due to the growing share of streaming revenue," and added, "Although the Theme Parks & Resorts segment's performance will inevitably decline in the second quarter due to the novel coronavirus, the focus should be on the growth of the streaming business."

This content was produced with the assistance of AI translation services.