Disney's sales plunge 42% because hybrid ecosystems don't help in a pandemic
Mickey had a lonely quarter... Disney's sales plunged 42% because Splash Mountain isn't corona-friendly. Disney lost an unhappy $5B, compared to a $1.4B profit last year. Disney's US parks, resorts, cruises, and Disneyland Paris were closed for the entire quarter. Turns out, 3 out of 4 of Disney's biz divisions are pandemic losers:
- Parks and Experiences sales plunged 85% on corona-closures, coming in at less than $1B. Disney lost $2B on parks (compared to a $1.7B profit last year).
- Studio Entertainment sales sank 55%, since Disney hasn't been able to release a new movie to theaters since mid-March. The big-budget Mulan remake got its theatrical release postponed a million times — now it'll skip theaters for $30 online rentals starting September 4th.
- TV channel sales dropped 2% — Disney-owned channels like ABC, ESPN, and Nat Geo suffered from the acceleration of cord-cutting.
- Streaming was the only winner — sales jumped 2%. Disney now has 100M paying subscribers across its streamers (including Disney+, Hulu, ESPN+). Disney+ alone has over 60M paid subscribers, less than a year after launching (Netflix has 193M).
A tale of two business ecosystems... The more techy an ecosystem, the better it likely performed last quarter. Case in point: Amazon sales soared 40% and it doubled its quarterly profit (basically, opposite of Disney). That's because all of Amazon's biz lines directly benefited from the corona-conomy: ecommerce, cloud computing, streaming video, and grocery delivery — all highly corona-friendly.
COVID helped the digital economy... But hurt nearly everything else. It's simple, but true: the more a product can be enjoyed with a few taps on a screen, the better it likely performed in the corona-conomy.
- Having a "hybrid" ecosystem like Disney's isn't beneficial during times like these. That's why the tech-heavy Nasdaq index keeps hitting record highs.
- Now Disney is looking to double down on its techier side: CEO Bob Chapek Chapek said it'll launch a new streaming service in 2021. The less it involves leaving home, the better.