Disney is a rare corporate giant who has managed to hold onto international adoration throughout generations. However, the COVID-19 pandemic has threatened to destabilise a rollercoaster that had been running at full speed ahead, perhaps more than most companies. The global pandemic forced Disney to close its theme parks for the first time since their conception in 1995. To add to this the pandemic has mullered its cruises, films, sports broadcasting and theatre productions. Disney’s response to this downturn is their newest edition, Disney Plus, which is a standout success. As lockdown measures are eased, perhaps a temporary financial disaster will be overturned.
On 4th of August, 2020, Disney announced that its revenue in the Q3 2020 fell by 42% compared to 2019. Brining in just $11.8bn, Disney accredited this loss in revenue to the lockdown measures imposed on its main money-makers like cruises and theatres. Furthermore, Disney revealed that its parks, experiences and products segment revenue dropped by 85%, its studio entertainment segment revenue dropped by 55% and media networks segment revenue dropped by 2% in 2019. Disney has suffered the biggest losses in its film and entertainment segment since numerous widely anticipated film released have been delayed or cancelled indefinitely. For example, Black Widow’s release date has been pushed from 1st May 2020 to 6th November 2020 and the live action version of Mulan, set to be released on Disney+ for a rental fee of $29.99, was postponed three times. According to the Financial Times estimations, Disney has laid off almost half of its workforce during lockdown in a bid to save $500m a month. This epitomises the devastating impact the pandemic has had.
However, Disney has managed to somewhat stabilise its revenue and market share through its brand-new streaming service – Disney+. Disney+ has been a phenomenal success, for example in July 31.7% out of a sample of 25,000 US Households chose to watch Hamilton on Disney+, followed by Netflix’s Unsolved Mysteries which was watched by 13.7%. In August 2020, it was reported that Disney+ has reached 60.5m paid subscribers which is a record 80% increase from March 2020. Disney’s innovation and appealing new content has given it a unique edge over other competitors allowing it to become a dominant force in the online streaming industry.
What does the future look like for Disney?
Optimistically, a relaxation in government measures in relation to the pandemic could result in a surge of activity leading to a profit in each of its divisions overturning their fall into red. In the US, most theatres are hoping to reopen in the coming weeks despite scheduled delays, while theme parks are set to go through a phased reopening process. With regards to its cruises, Disney has offered full refunds of free re-booking within fifteen months of the original departure date, this could encourage increased investment in its travel and tourism division in 2021.
Nevertheless, a spike in cases or an extensively speculated ‘second-wave’ will prove disastrous for this entertainment giant. Disney+, despite its meteoric success, simply cannot keep the entire company afloat. Disney may make a lot of its money from theme parks, but its future is not a rollercoaster ride anybody would want a go on.