Shares of the Walt Disney Co. (NYSE: DIS) were up 4% on Thursday after the company delivered blockbuster results for the first quarter of 2022 a day ago. The company exceeded expectations on revenue and earnings with Disney+ subscribers also surpassing projections. Here are the two factors that drove the robust results for the entertainment giant:
Strength in streaming
Disney’s streaming business is a golden feather in its cap. The company’s streaming services ended the first quarter with total subscriptions of 196.4 million, reflecting net additions of 70.4 million. Disney+ added nearly 12 million subscribers bringing the total to nearly 130 million global paid subscribers.
During the quarter, Disney+ added 4.1 million paid domestic subscribers, including around 2 million incremental subscribers that it gained through the inclusion of Disney+ and ESPN+ to its Hulu Live subscription.
Within international markets, excluding Disney+ Hotstar, the company added 5.1 million subscribers, helped by growth in the Asia Pacific and European markets as well as expansion into new markets such as South Korea, Hong Kong and Taiwan. In Disney+ Hotstar markets, the company added 2.6 million paid subscribers.
Disney’s content has always been its biggest strength. Its general entertainment content has played a key role in driving engagement in many of its international markets and the company plans to make the integration of owned general entertainment into its services, particularly Disney+, a priority going forward.
Disney maintains its outlook for 230-260 million total paid Disney+ subscribers globally by the end of FY2024. The company does not expect subscriber growth to be linear from quarter to quarter and growth in the latter half of the year is expected to exceed growth in the first half.
Revival of Parks
The Parks, Experiences and Products segment which took a hit from the pandemic finally bounced back strong. Revenue more than doubled year-over-year to $7.2 billion while operating income was up $2.6 billion.
The company saw strong demand at both Walt Disney World and Disneyland with attendance up double-digits from last quarter. Favorable guest and ticket mix, and higher food, beverage and merchandise spending helped drive revenue and operating income ahead of pre-pandemic levels.
New franchise-based lands and attractions as well as character merchandise has helped improve the guest experience significantly. During the quarter, more than a third of domestic park guests purchased Genie+, Lightning Lane or both. During the holiday period, this number was up more than 50%.
Looking into the second quarter, the company expects demand at its domestic parks to remain strong. Although international parks showed improving trends during the quarter, they are expected to be impacted by pandemic-related volatility for the rest of Q2.
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