It may be home to the Magic Kingdom, but the 99-year-old global entertainment giant Walt Disney Co. has proven that, come what may, it is once again a modern money-making machine.
“In the midst of a global pandemic, fast-changing consumer expectations and a leadership transition, we reimagined our parks business, substantially increased our investment in content creation and executed a reorganization that will facilitate our ongoing transformation,” Disney CEO Bob Chapek told analysts and investors on the company’s fiscal first-quarter earnings call Wednesday (Feb. 9) afternoon.
This, from a 30-year company veteran who assumed the top job at Disney just three weeks before pandemic lockdowns hit in March 2020 and has since sat atop an empire of largely shuttered theme parks, darkened theaters and unplugged studios.
Today, however, having survived the past 24 months and with COVID on the decline and Disney delivering 34% revenue growth and earnings that more than doubled, the 61-year old CEO could finally breathe.
“I am filled with optimism,” Chapek said, acknowledging the company’s upcoming 100th anniversary next year but also reflecting on the here and now. Specifically, all-time revenue and operating income records at domestic parks and resorts — despite Omicron — as well as a nearly 10% increase in its streaming media business to end the year with 196.4 million total subscribers.
A Walk in The Park
Officially, Disney’s Parks, Experiences and Products division revenue rose 104% but accounted for only about one-third of the company’s total $21.8 billion in revenue for the three months ending Jan. 1. However, on a bottom-line basis, the unit delivered roughly three-quarters of the company’s $3.2 billion operating income.
Compare that to the 34% growth of total top-line revenue and Disney, or the 15% increase in sales at the Media & Entertainment Distribution segment, and the magic of a near fully operational Magic Kingdom becomes clear.
“We were very pleased with the strong levels of demand we saw for both Walt Disney World and Disneyland, and our reservation system has allowed us to strategically manage attendance,” Disney Chief Financial Officer Christine McCarthy said on the earnings webcast, adding that attendance rose double digits in the final three months 2021.
In addition, McCarthy said that per capita spending at domestic parks was up more than 40% versus comparable 2019 levels due to a favorable mix of ticket prices, food, beverage and merchandise purchases.
“Q1 revenue and operating income exceeded pre-pandemic levels, even as we continued managing attendance to responsibly address ongoing COVID consideration,” she added.
“Content, Content, Content”
For pretty much the entirety of the last two years, Chapek said, the launch of Disney+ has been “plagued by COVID-related production interruptions, plus in all fairness, our own recognition that we needed to essentially double our production output.”
While admitting that combination has left the company today with less content than it wants, Chapek said the media trend is rising and will rectify itself in the second half of this year. He noted that the company had achieved its goal to deliver a new title every week.
Read also: Walt Disney Company Launches International Content Hub
“It’s all about content, content, content,” Chapek said, “and we are bullish about our future content, not only in terms of quality, but also in terms of quantity, and that’s really what’s driving our bullishness for the pricing power that we would have going forward.”
Still, McCarthy pointed out that Disney was “less than two and a half years into this business” and was still learning a lot about what consumers are watching, consumption patterns and repeatability.
“All of those things will factor into when we look at the price-value equation going forward,” McCarthy said, “so as we learn more, we’ll continue to refine the business model.”
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More