Disney Reveals Streaming Plans With Direct-to-Consumer Segment
The Walt Disney Company delivered a quarterly earnings report yesterday that for the first time gave a detailed look at its streaming service plans and financials as part of its new direct-to-consumer segment. The company is currently readying subscription service Disney+ for launch later this year.
Disney's direct-to-consumer and international group saw revenue of $918 million for the quarter ending December 29, with an operating loss of $136 million. That loss is due to investments for Disney+ and ESPN+. The company noted ESPN+ has 2 million subscribers, doubling its count in the last five months. The company warned investors that this segment's operating income will take a $200 million year-over-year hit next quarter thanks to continued investment.
Disney offered plenty of content news, including that Disney+ will benefit from assets gained in the company's $71.3 billion acquisition of 21st Century Fox. That deal will give Disney majority control of Hulu. Disney will lose $150 million per year by no longer licensing content to Netflix, but it hopes to recoup that with its own streaming service. The company plans to shorten the window between when its movies are in theaters and when they're available for streaming.
ESPN+ was buoyed by a May 2018 deal with UFC. The service saw almost 600,000 new signups before the UFC Fight Night in December, the first under the partnership which lets ESPN+ stream 15 live UFC events in total.
Disney's direct-to-consumer business "remains our number one priority," said CEO Bob Iger. "This is a bet on the future of this business." The company will offer further details on its direct-to-consumer plans during an Investor Day in April.
UBS believes the Disney+ service will grow quickly, with 5 million subscribers in its first year, but original content costs will start at $1 billion per year.
Families can add some Disney characters to their kitchen by following Disney Eats videos. The company also announced its first-ever podcast.
When Disney removes its movies from Netflix in 2019, one-fifth of Netflix subscribers could decide to leave, according to a poll conducted by Fluent.