It’s Q1 earnings time for The Walt Disney Company. While all guest eyes are drawn to images and details from the Disney100 celebration, investors were keen to see the numbers this afternoon after a disastrous Q4. The earnings call was the first under the reinstated CEO Bob Iger. Once the dreadful series of waiting music had ended, and the self-important schpiel had finished, the broadcast had some interesting results.
Creative Announcements: Toy Story, Frozen, and Zootopia Sequels and Avatar Experience for Disneyland
The company began with an ode to its roots, “fuelled by storytelling and creativity,” leading into the film successes of the last few months, including Avatar: The way of the water, Black Panther: Wakanda Forever, and more. New sequels were also officially announced for Toy Story, Frozen, and Zootopia, as well as an exciting new venture for Disneyland that was mentioned, an Avatar Experience that would be announced in more detail soon.
Company-Wide Cost Reduction Plan Axes 7000 Jobs
The exciting creative news couldn’t detract from the announcements that came as part of a company-wide cost reduction plan with a target of 55 billion dollars in cost savings. According to Bob Iger, a portion of that will come from a reduction in its workforce by 7000 jobs.
The Walt Disney Company Profit Increases Overall by 8%
Everyone was waiting to hear the figures, and while the numbers as individual pieces are still quite concerning when it comes to streaming in particular, the overall standing of the company had improved by 8%, primarily due to the popularity of the Disney theme parks and experiences, which saw substantial growth. We will get into that in a moment. Here are the figures for the Q1 earnings:
However, when you look at the breakdown of figures into segments, they tell a different story, one that still leads Disney down the path of overspending, which, as we can see from the planned reduction in the workforce, has a direct impact on employees.
Disney Parks Income Increases by 25%
Disney Park’s operating income increased by 25%, with an upswing at domestic and international parks and experiences. The result was obtained despite reducing guest capacity by approximately 20% from the pre-pandemic numbers during peak times to prioritize the guest experience. Growth at Disneyland Paris and higher revenue in Tokyo Disneyland also contributed to the overall increase. However, a slight decrease in income from Hong Kong Disneyland offset a portion of the progress. Shanghai Disneyland retuned numbers that were in line with the closures seen at the park during Q1.
A significant point about the numbers here is in the reduction of crowds during peak times to improve the guest experience, an effort that Disney hasn’t shown any signs of prioritizing for the last few years, seemingly favoring the bottom line over the quality of the product. Bob Iger was confident in the company’s commitment to the guest experience; turning in impressive numbers while purposefully reducing the available profit margin will bode well with Disney fans.
Disney also noted that some of their pricing was alienating consumers and sighted the steps taken in Disneyland so far to offer cheaper options on certain days with a range of new approaches to help restore that accessibility for the community.
Disney+ and Streaming Services
Moving on to the tricky part, Disney’s overinvestment in streaming content will be causing headaches for a little while, with the quick fixes applied to lessen the impact of decreasing income taking longer to have an effect. Streaming figures were down, despite the addition of price increases and the new ad tier for Disney+, now allowing advertising income to grow through the service.
The Walt Disney Company took a light-hearted approach to the losses at the back end of the report and is already warning investors of the continued impact on potential Q2 results.
Bob Iger said the “forces of destruction have only gotten stronger” and was proud of Disney’s progress in relinking the creative sector with financial and distribution departments that will hopefully give the company a more cohesive flow leading into the future, presumably to avoid future financial downfalls. Iger also talked about the “tough environment” and how Disney’s core brands allow the company to differentiate itself and will help them to deliver relatively strong returns.
When asked about his thoughts on the future of TV primarily being funneled through streaming rather than traditional means, the reinstated CEO responded that he had been “watching the impact of technology for a long time,” acknowledging a shift in the relationship between creator and consumer; streaming isn’t delivering the same bottom line results yet also carries a higher demand for choice and flexibility from the consumer. Disney won’t be abandoning linear platforms any time soon, spoken under the guise of supporting fans though admitting the higher revenue and lower costs of supplying that type of content.
For more information, you can read the full report here.
Zoë Wood is a travel writer from Sydney, Australia. Since her first visit to Disneyland at the age of 6, she has spent her years frequently visiting Disney Parks and traveling around the world.
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