Disney have announced some financial details from the past few years on the Direct-To-Consumer and International Business division, which Disney+ is a major part of.
The reason for this information being released is because this division will be have to announce its financial results for the first time on February 5th, as part of Disney’s first quarter numbers.
Here are the official details:
The Walt Disney Company today provided detailed financial information regarding its recently formed Direct-to-Consumer and International business segment, offering additional insight into the Company’s growing DTC business and its investment in technology and original content.
In a Form 8-K published today, the Company recast financial results for the past three fiscal years to reflect the recent reorganization of Disney’s business segments. This recast has no impact on prior-years’ net income or earnings per share, and is intended to provide information useful to investors in analyzing the Company’s February 5 release of fiscal first quarter earnings, when financial results will be reported under the new segment structure.
“Our top priority is fully leveraging our global brands and great content to create world-class direct-to-consumer entertainment,” said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. “We have the structure and management in place to drive growth in our DTC business, and our acquisition of 21st Century Fox further enhances our ability to deliver significant value to consumers and shareholders.”
Mr. Iger added, “Acquiring BAMTech enabled us to enter the DTC space quickly and effectively, as demonstrated by the success of ESPN+. The service surpassed one million subscribers in its first five months and continues to grow as it expands its content mix, all of which bodes well for our upcoming launch of Disney+. The ability to connect directly with millions of Disney, Pixar, Marvel, and Star Wars fans creates tremendous opportunities for growth. In addition to leveraging our existing IP in new ways, we’re making significant investments in original content exclusively for Disney+, creating an impressive pipeline of high-quality movies and series we believe will make the streaming service even more compelling for consumers.”
The robust slate of Disney+ content currently in production includes the first-ever live-action Star Wars series,The Mandalorian; an original series based on Disney Channel’s High School Musical; an animated series based on Pixar’s Monsters, Inc. franchise; a new season of the Star Wars animated series, Clone Wars; a live-action version of the animated classic Lady and the Tramp; and a number of original docu-series. A live-action Marvel series starring Tom Hiddleston, a second Star Wars series starring Diego Luna, and other high-profile projects are also in development.
Disney will discuss its direct-to-consumer business in greater detail at Disney Investor Day on April 11, 2019. The Company will also present a demonstration of the highly anticipated Disney+ and a first-look at some of the original content being created by the Company’s television and film studios exclusively for the new streaming service.
My Take: I can’t help but think there are a few reasons why Disney announced this information today. One is to take the sting out of all the discussion about Netflix, who also announced financial details this week. Another reason is to hype up the reveal for Disney+ in April. But the main reason is to give investors details on why this new division will be showing a huge loss when Disney’s finance details are revealed next month.
Disney are spending a fortune on building Disney+ and until subscriptions start rolling in, the division is just losing money. After the costs of building ESPN+ and Disney+, subscriptions are only starting to come in for ESPN+. Hulu is also costing Disney a lot of money, which should change around once they’ve finished their purchase of Fox.
Do you agree with Disney’s strategy?