"Walt Disney Faces Inevitable Impact from COVID-19... Disney Plus Performance Should Be Noted"

[Asia Economy Reporter Eunmo Koo] Although The Walt Disney Company is not immune to the impact of the novel coronavirus disease (COVID-19), there is an analysis that the global performance of Disney+ deserves attention.

According to Hana Financial Investment on the 14th, Disney+ had 28.6 million subscribers as of early last month. Considering that the 5-year target for U.S. subscribers set last year was between 20 million and 30 million, this is a rapid pace. The subscriber composition is 50% direct subscriptions, 20% Verizon, and 30% others, and given the average revenue per user (ARPU) of $5.6, it is estimated that the majority have contracts of three years or longer.

Lee Ki-hoon, a researcher at Hana Financial Investment, said in a report on the same day, “As the uncertainty of COVID-19 has expanded worldwide recently, the theme parks and studios have inevitably been hit, causing stock prices to fall. However, with expansion into Europe and India upcoming, and subscriber growth announcements during this process being a key driver of future corporate value growth, it is necessary to watch closely with interest.”

In the first quarter of fiscal year 2020, revenue was $20.8 billion, a 36% increase compared to the same period last year, while operating profit was $2.8 billion, a 17% decrease. The media segment saw profit growth due to the Fox merger effect, but operating profit margin slightly declined from 22.5% to 22.1% due to decreased advertising and sales revenue and increased production costs in existing businesses. The parks segment grew 9% due to increased per capita spending and strong licensing, and the film segment increased profits by 207% thanks to the success of “Frozen 2” and “Star Wars 9.” The DTC&I (direct-to-consumer & international, including online video services) segment’s deficit expanded more than fivefold compared to the same period last year due to investments in ESPN+, the Hulu merger, and Disney+ launch costs.

Disney’s actual overseas expansion will begin at the end of this month. The researcher said, “On the 24th, Disney+ is scheduled to launch in eight Western European countries, and on the 29th in India,” adding, “In India, synergy is expected through bundling with Hotstar, a local OTT service acquired through the Fox acquisition.” He continued, “Hulu plans to start global expansion after Disney+ completes its global rollout,” and forecasted, “Although it is still early to conclude, if subscriber growth is faster than expected as in the U.S., the breakeven point could be reached earlier than 2024.”

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