Took Netflix 10 years... to reach the 68M US subscribers it has today. After just 2 months, Disney's almost halfway there with 28.6M. That's the headline from Disney's 4th quarter earnings report. It sounds good, but Disney+ actually hurt Disney's profits badly — those new subscribers drove revenues up 36% overall for Disney, but sank profits by 23%.
- Disney+'s 28M: 20% of those Mickey lovers aren't even paying the already low $6.99/month for Disney, they're getting it for free from a Verizon promotion.
- And it's expensive: The cast of The Mandalorian and the CGI gal who whipped up Baby Yoda aren't free. The streaming segment (which also includes Hulu and ESPN Plus) lost $693M last quarter (maybe the $7/month isn't enough).
- PS: A new series about Obi-Wan Kenobi is being developed for next year.
Remember Walt's character ecosystem... He drew it on a napkin back in 1957. Unlike HBO, Netflix, Quibi, and NBC's new Peacock streaming service , Disney+ doesn't need to make profits. It can set a low price to maximize the number of people who fall in love with Baby Yoda, then cash in on its other divisions:
- Media Networks: The division that's still making bank thanks to cable TV packages is still its profit puppy — it made $1.3B in profit in the last quarter.
- Theme parks: 10% more Americans visited its US parks, but this current quarter is expected to feel some pain from coronavirus (an estimated $130B of lost profit).
- Merchandise: Lunch boxes, stuffed toys, Frozen dresses — they're all bundled in with the Disney+ division, so we can't say exactly how sales did.
- Studio Entertainment: Disney is the undisputed king of movies, and Star Wars Episode IX helped profits triple in that division compared to the year before (a Star Wars-free year).
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