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Should Disney+ outshine theme park gloom?

Disney+ subscribers are nearing the 100m milestone
Should Disney+ outshine theme park gloom?
  • Coronavirus restrictions are causing expensive losses at theme parks, cruises and resorts
  • But investors are paying closer attention to streaming figures

Walt Disney (US:DIS) said last night that so far the pandemic has cost it a whopping $2.6bn (£1.9bn) in operating income, as both its international and domestic theme parks faced various public health restrictions and, in some cases, complete closure. But the sweet music from its streaming service is drowning out those uglier figures. Investors are instead focusing on the new subscribers to the Disney Plus streaming service, which reached a total 94.9m. 

Going off figures the company gave in an analyst meeting in December, the group added 8.1m of those subscribers in just the last month of the quarter. It said then that it aimed to grow as big as its rival Netflix (US:NFLX) by 2024 - arguably ambitious, but certainly feasible given that Disney Plus has nearly amassed around half of its competitor’s paying members in under two years. 

Average revenue per subscriber has fallen by more than a quarter since December 2019 to $4.03, but that was diluted by lower figures from its new service in Indonesia and India, Disney+ HotStar. International markets such as these will be key in securing an advantage over Netflix, whose domestic user gains have decelerated since the first coronavirus outbreak back in March last year.

Pandemic-induced losses have been deep, knocking off more than a fifth of the group’s top-line in its most recent quarter. But Disney is one of the few companies in the world that can withstand such massive blows to its income, with a $17bn worth of cash to hand. That is not to mention the vaccine rollout in the US, which should eventually alleviate some of the pain at the group’s theme parks, cruise lines and resorts. 

That progress could equally slow down Disney’s growth-spurt in streaming, and might coincide with a dry-up in new content due to the present disruption in film and television production. That could work in Netflix's favour, seeing as it has a larger library of original material that is targeted at an adult audience. But in the long-run, Disney's experience in the sector, combined with its digital content-first restructuring, gives it a serious edge over its peers. With directors aiming for Disney Plus to turn its first profit in 2024, the market is not likely to give up on an old industry favourite, despite the impact of the villainous virus elsewhere in its business.