[Overseas Stocks Spotlight] "Walt Disney's DTC Strategy to Be Released in December Should Be Watched"

[Asia Economy Reporter Eunmo Koo] Walt Disney (Walt Disney·DIS.US)'s online video service (OTT) 'Disney Plus (Disney+)' has achieved its five-year goal within its first year of launch, and analysts suggest paying attention to the direct-to-consumer (DTC) strategy to be unveiled next month.

Previously, Disney announced that Disney+ had 73.7 million subscribers as of the end of September. This means it achieved the target set for its fifth year in less than a year. As of November, it has expanded to more than 30 countries including North America, South America, Europe, Oceania, and parts of Asia (Japan, India, Indonesia). Next year, it plans to expand into Eastern Europe and Asia.

Kihoon Lee, a researcher at Hana Financial Investment, explained in a report on the 29th, "The explosive growth in subscribers is attributed not only to Disney's strong intellectual property (IP) and the acceleration of OTT transition due to COVID-19, but also to effective promotional strategies with local media players (telecom companies and OTTs) such as the Hotstar bundle in India."

In the fourth quarter of fiscal year 2020, revenue decreased by 23% compared to the same period last year to $14.7 billion, and operating profit dropped by 82% to $600 million. By segment, Media, Parks, Films, and DTC&I recorded $1.9 billion, -$1.1 billion, $400 million, and -$600 million respectively.

The Media segment saw a 5% increase compared to the previous year due to reduced costs from disruptions in program production and sports broadcasting caused by COVID-19. The Parks segment turned to a loss due to entry restrictions and partial business suspensions. Despite distributing three films including Mulan on Disney+, the Films segment's profit decreased by 61% due to the absence of tentpole releases. The DTC&I segment reduced its deficit by nearly $170 million thanks to growth in Hulu and ESPN despite investments in Disney+. Annual revenue decreased by 6% year-on-year to $65.4 billion, and operating profit fell by 45% to $8.1 billion, reflecting the impact on key business areas such as theme parks and films, as well as expanded investments in DTC content.

Attention is expected to focus on Disney's DTC business plan to be unveiled on the 10th of next month. Since the launch of Disney+ in November last year, Disney has been asked about subscriber guidance but has postponed answers citing the newness of the service. Disney plans to share detailed plans for its DTC business at Investor Day on the 10th. The researcher said, "Recently, Disney reorganized its business structure around two pillars: content 'production' and 'distribution,' identifying the DTC business as a core future growth engine. Given the mention of launching the global OTT brand 'STAR,' it is expected that discussions on the global expansion of Disney OTT will be a key focus, making it worth anticipating."

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