Categories Analysis, Leisure & Entertainment

A look at Disney’s (DIS) strategy as it moves on from the pandemic

Disney expects to see some margin benefits from its Parks segment over the long term

The Walt Disney Co. (NYSE: DIS) had a rough time amid the COVID-19 pandemic as its theme parks closed down and its movie productions were halted, significantly hurting its revenue. On the other hand, its streaming business gained traction, adding subscribers at a rapid pace and leading the company to restructure the business putting the direct-to-consumer segment at the forefront of its focus.

As the effects of the pandemic slowly begin to ease and Disney gets back in action, it has a clear strategy to leverage its resources and drive growth going forward.

Content

Content forms the core part of Disney’s growth strategy. Through the reorganization, the company can make sure that there is a steady flow of strong content into all its distribution channels.

Disney’s vast range of assets and its ability to use its brands and franchises across its various segments give it a massive advantage over its competitors. An example of this is the launch of the Avengers Campus attraction at Disneyland Resort and the premiere of the series Loki on Disney+, both of which come from the Marvel universe. This ecosystem model will allow Disney to cross-market its attractions across its various lines of businesses such as across parks and streaming.

Streaming is an important part of Disney’s business. At its recent Investor Day, the company stated that 40% of its sales this year came from streaming and digital. Disney expects total paid subscribers worldwide for Disney+ to reach 230-260 million by the end of FY2024.

The streaming business has given Disney the opportunity to dig into its popular brands and franchises to create fresh content as well as the freedom to present this content through various mediums, be it movies or series. The company believes there is endless opportunity in this space and it has plans to launch new content every week on Disney+. Disney is also focusing on creating local content for its international markets which is another growth driver.

Parks

Parks witnessed a 49% decline in revenues during the first half of FY2021. However, things are expected to pick up once the pandemic wanes and Disney has some elaborate plans for the expansion of this business.

At its Investor Day, the company said it is working on a huge transformation at the Epcot Park at Walt Disney World in Orlando. It also has various attractions planned over the next five years which include a Ratatouille attraction, a night-time show called Harmonious, and a Guardians of the Galaxy: Cosmic Rewind attraction.

Disney will also bring a Zootopia attraction to the Shanghai Disney Resort and a Frozen installation to Hong Kong Disneyland. At the Tokyo Disney Resort, the company has attractions based on Frozen, Tangled, and Peter Pan coming up.   

Disney also expects to see some margin benefits from its Parks segment over the long term. The company expects its admissions per cap to benefit from its data-based pricing models as well as the strategic management of attendance across different ticket types.

Shares of Disney have gained 55% over the past 12 months.

Click here to read more on streaming stocks

Looking for more insights on the earnings results? Click here to access the full transcripts of the latest earnings conference calls!

Most Popular

KR Earnings: Kroger Q3 sales, profit increase and top expectations

Department store chain The Kroger Co. (NYSE: KR) on Thursday said its third-quarter sales and adjusted earnings increased year-over-year. The latest numbers also exceeded the market's expectations. Net earnings attributable to

CrowdStrike: Why this cybersecurity stock is a good investment for 2023

CrowdStrike Holdings, Inc. (NASDAQ: CRWD) has steadily expanded its subscriber base over the years, riding the ever-growing demand for cybersecurity solutions. As digital adoption continues -- which accelerated after the

CRM Results: Salesforce Q3 earnings beat; revenues rise 14%

Customer relationship management platform Salesforce, Inc. (NYSE: CRM) on Wednesday reported an increase in third-quarter adjusted earnings, aided by double-digit growth in revenues. The numbers surpassed analysts' predictions. Third-quarter profit,

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top