Disney's Operating Profit Plummets Due to COVID Impact... Will Disney Plus Launch in Korea Be Delayed?

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Seulgina Cho] The World Disney Company, hit hard by the novel coronavirus disease (COVID-19), has revealed quarterly earnings far below initial expectations, putting a brake on the ambitious online video service (OTT) Disney Plus, which was launched at the end of last year.

Following a series of halted original content production and broadcasting plans, the anticipated entry into the Korean market, expected as early as this year, has also become uncertain. As even the OTT market, considered a major beneficiary of the so-called 'stay-at-home era,' is hampered by COVID-19 risks, the competition among domestic companies eager to partner with Disney Plus is intensifying.

On the 5th (local time), Disney announced after the New York Stock Exchange closed that its earnings per share (EPS) for the second quarter of the fiscal year (January to March) stood at 60 cents. This is far below Wall Street's forecast of 89 cents per share. During this period, revenue increased by 21% year-on-year to $18 billion. However, due to the COVID-19 shock, core businesses such as theme parks and film distribution were severely impacted, resulting in an overall operating profit decline of 37% to $2.416 billion and a net profit drop of 91% to $475 million. The theme park segment, which suffered the most, saw its operating profit decrease by a staggering 58%.

Despite growth in the OTT sector amid COVID-19, future prospects are not optimistic. With more time spent at home, Disney Plus's paid subscriber count rose from 26.5 million at the end of last year to 54.5 million as of the 4th. However, the quarterly operating loss of the DTC (Direct to Consumer) and international business segment, including Disney Plus, soared to $812 million, more than double that of the previous year.

Moreover, consecutive filming and production halts have delayed the airing of original content such as Loki, and additional content investment has become difficult. An industry insider noted, "If Disney undertakes large-scale cost reductions, investment in Disney Plus content will inevitably face greater difficulties," adding, "The business structure differs from that of competitor Netflix."

This also poses a variable for Disney Plus's entry into Korea. Disney Plus has already postponed its plan to open a Korean branch, initially scheduled for February. Considering that the service launch was delayed once in some regions immediately after the COVID-19 outbreak, the expected entry into the Korean market, anticipated as early as this year or at the latest next year, may also be delayed.

Domestic companies have been engaged in a strategic competition since last year to partner with Disney Plus, known as the 'content kingdom.' SK Telecom, leading with Wave, is the most proactive, while LG Uplus, which is partnered with Netflix, has also hinted at the possibility of external platform partnerships, showing interest in Disney Plus. Even companies that had judged Disney Plus's solo entry to have sufficient market potential are now speculating that, due to COVID-19 variables, Disney Plus will actively utilize domestic OTT platforms. Meanwhile, some analysts suggest that the recent lawsuit over Netflix's network usage fees could accelerate Disney Plus's entry into Korea, its competitor.

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