There has been some MASSIVE Disney news released lately and you might have missed some of it!
On February 8th, 2023, Disney held its earnings call and released its earnings report for the first quarter of the 2023 fiscal year. You might be wondering, “why should I care about Disney’s financial standing or what they have to say about their revenues?” But you might be surprised! Along with key financial news, Disney also revealed some big updates that could impact movie fans, parkgoers, and more. So sit back, grab a soda (or your drink of choice), and let’s unpack all of this huge Disney news together.
Note that we’ll be giving you just a quick summary under each major topic. For more about that topic, be sure to click the links provided to read our FULL articles.
A Historical Disney+ Moment…But Not in a Great Way
First, in terms of Disney+, we’ve been keeping a close eye on those subscriber numbers. As of October 1st, 2022, Disney+ had a total of 164.2 million subscribers. As of December 31st, 2022, however, that number actually DROPPED to 161.8 million.
Now, that’s not a huge drop in the grand scheme of things, but it is a drop, which is interesting to see considering Disney+ has typically reported subscriber INCREASES. It’s especially interesting because since the October numbers were released, Disney+ introduced its ad-supported and ad-free tiers. It looks like Disney+ subscriptions within the domestic market only went up slightly, but the decrease appears to have taken place on Disney+ Hotstar.
Click here to see our full post about this change
Streaming Losses and Overall Financial Results
Aside from Disney+ numbers, how is streaming doing in terms of profitability? Well, Iger has reiterated their goal to make Disney+ profitable by the end of fiscal year 2024, but right now direct-to-consumer is still reporting big losses. While it did report revenues for this past quarter, direct-to-consumer also reported a $1.053 billion operating loss.
The average monthly revenue per paid subscriber also DROPPED on Disney+ domestic but increased at Disney+ Hotstar.
In terms of the company as a whole, Disney noted that revenues for the quarter grew 8%, and their diluted earnings per share from continuing operations for the quarter increased.
Iger called this a “solid first quarter,” and said that following this they are “embarking on a significant transformation, one that will maximize the potential of our world-class creative teams and our unparalleled brands and franchises.”
Iger noted that the work they’re doing to “reshape our company around creativity, while reducing expenses, will lead to sustained growth and profitability for our streaming business, better position us to weather future disruption and global economic challenges, and deliver value for our shareholders.”
To see more about the overall financial results, click here
Iger’s #1 Priority? We Know It
There are a LOT of things happening at the Walt Disney Company. Between the parks side, restructuring the Company (more on that later), and streaming, you might wonder what is at the top of Iger’s list of priorities? Well, now we know.
During the earnings call, Iger emphasized how important streaming is to him and to Disney. He said, “our priority is the enduring growth and profitability of our streaming business.” And at one point he noted that his “No. 1 priority” is improving “the economics of our streaming business.”
So basically expect streaming to continue to be a BIG deal at Disney. Iger noted that Disney is “focused on the success of our streaming business and the return it generates for our shareholders long into the future.” And he made it clear that Disney is NOT stepping away from streaming at all.
He further emphasized, “Our current forecasts indicate Disney+ will hit profitability by the end of fiscal 2024, and achieving that remains our goal. Since my return, I have drilled down into every facet of the streaming business to determine how to achieve both profitability and growth.”
So expect some more streaming updates in the future and a continued focus on that moving forward.
Click here to read our full post about Iger sharing his #1 priority
You’re Spending MORE at the Disney Parks
Ever feel like you’re spending MORE in the parks these days? Well, you’d be right. The Disney Parks, Experiences, and Products division reported some BIG revenues this past quarter. In fact, Disney reported the revenue for Parks & Experiences in Q1 2023 was $8.7 billion, an increase of 21%.
The company also reported that segment operating income (the difference between net revenue and operating expenses) increased 25% to $3.1 billion.
Disney shared that the income growth was due to “higher volumes and increased guest spending, partially offset by cost inflation, higher operations support costs and increased costs for new guest offerings.”
In terms of increased guest spending, you can thank Genie+ and Lightning Lane for that! So you are likely spending more in the parks and contributing to just how well the parks are doing financially.
Click here to see more about the results in the Parks division
Disney Is “Reducing” Their Workforce
Disney has seen some big losses financially mainly on the streaming side and they’re taking steps to address that. During the earnings call, Iger shared that they were putting things in place that would target a $5.5 BILLION cost savings across the entire company.
To help achieve these savings, Iger said they would be “reducing [their] workforce by approximately 7,000 jobs.” Not much else was really shared about this cut, except it is our understanding that this could include job positions that are open for hiring and have not been filled yet.
Iger said that while these adjustments are “necessary to address the challenges we’re facing today,” he does not “make this decision lightly.” Iger said, “I have enormous respect and appreciation for the talent and dedication of our employees worldwide, and I’m mindful of the personal impact of these changes.”
Josh D’Amaro, chairman of Disney Parks, Experiences, and Products, has since commented on these layoffs. He said that the workforce reductions would impact EVERY segment of the company (including his division) but that the Company does not expect it to impact the hourly frontline roles in operations.
We’ll continue to keep an eye out for updates about these workforce changes.
Click here to see more about this announcement
A NEW Avatar Experience?!
Moving on from more of the financial news, during the earnings call, Iger also announced some BIG parks news. Specifically, he shared that a NEW Avatar experience will be coming to Disneyland.
Iger didn’t share much about this other than to say that “Avatar represents yet another core franchise for the company. And as you’ve seen time and time again, we have a unique way of leveraging creative success across multiple businesses and territories and over long periods of time.” Iger noted that more details about this experience will be shared soon.
Avatar in Disneyland? Click here for our original post about this story!
3 BIG Movie Sequels
Ever wished you could see another sequel to Toy Story or Frozen? Think Zootopia deserves a sequel of its own? Well, you’re in luck! During the earnings call, Iger revealed that they have “sequels in the works” for some of the Company’s “most popular franchises: Toy Story, Frozen, and Zootopia.”
Again, Iger didn’t share many details about these developments but he did note that Disney would “have more to share about this production soon,” and shared that this “is a great example of how we’re leaning into our unrivaled brands and franchises.”
Click here to see what some of the STARS of these movies have had to say about these sequels!
And see everything we know about Frozen 3 here!
Back to the theme parks, throughout the earnings call we eagerly awaited to see if Iger would say anything about changes to the Park Pass system, but alas it was not so. Though Iger didn’t say that anything would be altered with the Park Pass system during the call, he did make some very interesting comments about managing theme park capacity.
Iger noted that they are managing capacity “very, very carefully,” especially in light of some changes that have increased the number of days on which you can obtain cheaper tickets at Disneyland.
According to Iger, some of the changes they’re making at Disney (which seemed to be a reference to the increased amount of cheaper Disneyland tickets), have enabled Disney to “shift [the] mix…from annual pass holders to people who may come just once in a lifetime or once.”
Iger said that standard ticket guests (not annual passholders), “tend to be good customers of ours because of their per-cap spending when they’re there.” And he said that the changes are helping Disney “manage capacity without…doing too much damage to the bottom line.”
So it seems that once again, as Bob Chapek said before, Disney is working to strike a balance between Passholders and “regular” guests, and the Park Pass system could be helping them do just that.
But it’s not just about restricting capacity or the ability for certain guests to visit the parks. Iger also said that they’re looking at where they can invest in the parks to “increase capacity while — by preserving guest satisfaction.”
Iger also mentioned how they reduced capacity during the holiday season to improve the guest experience while still maintaining profitability. He shared that they’d “continue to look at opportunities like that, which is essentially to simply get more creative in terms of managing the capacity that we have.”
In other words, it doesn’t necessarily sound like things that help manage capacity (like the Park Pass system) will be going away anytime soon (though one Disney executive has indicated that there could be changes made to the system in the future). We’ll continue to keep an eye out for updates there.
See our full post about Iger’s comments on managing capacity here
In huge Disney news, Iger also announced a massive restructuring and reorganization at the Company. This is something Iger had been tasked with upon returning as CEO and it seems like steps are being taken to achieve that goal.
Effective immediately, Disney is now divided into 3 core business segments:
- Disney Entertainment — this is co-chaired by Alan Bergman and Dana Walden and it will “include the company’s full portfolio of entertainment, media, and content businesses globally, including streaming”
- ESPN — this is chaired by Jimmy Pitaro and will focus on “ESPN Networks, ESPN+, and our international sports channels”
- Disney Parks, Experiences, and Products — this is chaired by Josh D’Amaro and will continue to handle theme parks, resort destinations, cruise line, and consumer products, games, and publishing
In many ways, this has undone the structure that was put in place while Chapek was CEO with the creation of DMED — Disney Media & Entertainment Distribution.
In an interview following the earnings call, Iger shared that while Chapek certainly had reasons for creating the DMED structure (and those may have been valid reasons), Iger felt that the structure was a mistake because it created a divide between creatives and the distribution of their works.
This structure, according to Iger, “will result in a more cost-effective, coordinated, and streamlined approach to our operations.” He later shared, “I love the fact that we are relinking the creative side of our business with the distribution and the monetization side of our business.”
As a result of these changes, we’ve already seen one executive’s departure from the Company announced. We’ll continue to look for more updates as Disney transitions to this structure.
Click here to read more about how a change from Iger seeks to fix a Chapek “mistake”
Theme Park Pricing
And finally, we have a note about theme park pricing. Disney’s theme parks can be incredibly expensive, but Iger has a particular view about just how Disney has been handling their pricing lately.
During the call, Iger said, “It’s clear that some of our pricing initiatives were alienating to consumers.”
Iger shared, “I’ve always believed…that accessibility is a core value of the Disney brand.” But he shared that Disney was “not perceived to be as accessible or as affordable to many segments as we probably should have been. So, after basically paying heed to what we were hearing, we started to address it.”
Iger said that Disney has taken some steps to address the issue and used Disneyland as an example where they have increased the number of days on which Disneyland’s cheapest ticket price is available.
He noted that one thing they’re working to do is provide “more flexibility for the consumer in terms of how much it cost them to go.”
While that might be good news, it’s important to remember that since Iger’s time as CEO we have also seen price increases put in place in Disney World and Genie+ hit some big numbers, though those are things that could have been planned during Chapek’s time and simply could not be stopped.
On the flip side, we’ve seen a free perk (overnight self-parking) return to Disney World’s hotels and a change announced for select Annual Passholder Park Passes.
We’ll be interested to see what other changes the future brings.
See Iger’s comments about theme park pricing here
And that’s a wrap-up of the biggest news! What surprised you the most? Tell us in the comments below. And stay tuned for more updates.
Click here to see what Bob Iger had to say about a key question regarding his future with Disney
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What do you think about these changes? Tell us in the comments.
[email protected] says
The one thing I did not hear from Iger was the reduction of executive compensation
Gail Walraed says
Maybe Mr Igor should think about who kept the parks open during COVID when. People could not visit from other states or countries who the ANNUAL PASSHOLDERS
Catherine L Fraser -Dery says
Disney needs to stop raising prices…..And stop price gouging it’s customers… i have waited for decades to be able to go to Disney. I am shocked at the prices for a dinner or breakfast ? Lets be real here and bring the prices down no reason to have to pay $60 dollars to have breakfast after paying huge $$ $$ for hotel and park tickets… the prices are ridiculous and yes they are alienating many!