Disney+ is adding up for the Magic Kingdom as service blows by subscriber projections

The Disney magic has cast its spell over streaming consumers faster than even the masters of the "Mouse House"  imagined. 

The Walt Disney Company revealed Thursday in its earnings announcement that its 15-month old streaming service, Disney+, totaled 94.9 million subscribers -- adding 21 million new customers -- for the quarter ending January 2. The number is not only well ahead of analyst expectations, but when Disney first announced the service it expected to have 60 to 90 million subscribers by September of 2024. In December during its Investor Day, Disney brass revised the projections saying the red-hot service could hit up to 260 million by 2024.

Currently, Netflix is the world's biggest direct to consumer video service with 203 million subscribers worldwide. 

DISNEY CALIFORNIA AVENTURE TO HOST 'TICKETED EXPERIENCE" WITH FOOD, MERCH, ENTERTAINMENT

"We’re confident that, with our robust pipeline of exceptional, high-quality content and the upcoming launch of our new Star-branded international general entertainment offering, we are well-positioned to achieve even greater success going forward," CEO Bob Chapek said in the company's earnings release. 

The success of the company's streaming services has offset the losses the company continues to take as the coronavirus pandemic keeps its theme parks either shuttered entirely or operating at reduced capacity. 

Even though the company reported its first profit after two straight quarters of losses, it reported its third straight revenue decline of $16.2 billion, a 22% decrease compared to $20.8 billion a year ago. Net income for the first quarter totaled $17 million, or 1 cent per share, compared with $2.1 billion or $1.16 cents per share a year earlier. Adjusted earnings per share in the quarter was 32 cents a share, compared to a $1.53 per share last year.

Ticker	Security	Last	Change	Change %
DIS	THE WALT DISNEY CO.	115.07	+5.94	+5.44%
NFLX	NETFLIX INC.	823.96	-13.30	-1.59%

The Parks, Experiences and Products segment's operating income decreased by $2.6 billion to a loss of $119 million. The segment's revenue for the quarter decreased 53 percent to $3.6 billion compared to $7.5 billion a year ago. 

Disneyland Resort and California Adventure in Anaheim were closed for the duration of the quarter, while Disneyland Paris was open until the end of October and Hong Kong Disneyland was open until the beginning of December. Meanwhile, Walt Disney World in Orlando, Florida and Shanghai Disney Resort remained open for the duration of the quarter at significantly reduced capacities.

However, Disney's California properties are showing signs of activity. Disneyland was utilized as a COVID-19 vaccination site with 100,000 doses administered to date while Disney's California Adventure is set to host a "ticketed experience" next month, with food, merchandise and entertianment. 

Chapek noted on the company's earnings call with analysts on Thursday that average daily attendance at Walt Disney World grew significantly quarter-over-quarter, in part due to increased capacity as a result of the company's health and safety protocols. Disney noted it continues to be pleased with the rate of bookings at its theme parks during the current quarter. 

"It's clear that people want to reconnect with loved ones and spend time together doing things they enjoy, and given the demand we're seeing now, we're confident it will only grow once the pandemic is behind us," Chapek said.

Disney has been hard at work expanding its offerings at Walt Disney World, with two new upcoming Epcot attractions, Remy's Ratatouille Adventure -- based on its animated hit film, "Ratatouille" and Guardians of the Galaxy: Cosmic Rewind from the two smash Marvel movies.

Expectations are also high for a nighttime spectacular show, "Harmonious," as well as the upcoming Star Wars Galactic Cruiser hotel.

A Marvel-themed land known as Avengers Campus is slated to open at the California Adventure later this year, and Mickey's Runaway Railway will come to Disneyland in 2023. 

Chapek said the outlook for the reopening of its theme parks for the rest of 2021 will depend on the rate in which people receive COVID-19 vaccinations, but acknowledged reopenings will likely include continued social distancing and mask-wearing. 

"We have no doubt that when we reopen up in parks that we're closed or increase the capacity that we'll have some level of social distancing and mask wearing, you know, for the remainder of this year, that's our expectation. But I believe that Dr. Fauci said earlier today that he hopes that there's vaccines for everyone who wants them by April this year," Chapek said. "If that happens, that is a game changer and that could accelerate our expectation and give people the confidence that they need to come back to the park. Will there be some overlap until we know that we could herd immunity? Sure, there will. But do we also believe that we'll be in the same state of six-foot social distancing and mask wearing in 2022? Absolutely not."

The company expects an additional $1 billion in costs related to addressing government regulations and implementing safety measures for employees, talent and guests at its theme parks during fiscal 2021. 

GET FOX BUSINESS ON THE GO BY CLICKING HERE

Despite the hurdles the pandemic has put in front of the theme parks, the company has also benefitted from millions staying at home and watching video content. Disney's direct-to-consumer revenues for the quarter increased 73% to $3.5 billion and the segment's operating loss decreased from $1.1 billion to $466 million thanks to strong subscriber growth at Disney+ and Hulu as well as increased advertising revenue driven by higher impressions at Hulu.

Disney+ reported 21.2 million global net additions in the quarter, bringing its total to 94.9 million subscribers. Hulu reached 39.4 million subscribers, with its Live TV accounting for 4 million of those subscribers and subscription video on demand (SVOD) only service accounting for 35.4 million. ESPN's total subscribers at the end of the quarter were 12.1 million.

Disney cited a strong combined release of Soul on the streaming service and in theaters on Christmas Day. The film has taken in nearly $100 million in the global box office. 

"We thought that was a really nice thing to do for our consumer base and our subscriber base, given the holiday and given the fact that we have talked consistently about remaining flexible in terms of how we're going to go ahead and put our titles out into the marketplace," Chapek told analysts. "We were absolutely thrilled by what that brought to our business in terms of both acquisition and retention."

Disney's "Raya and the Last Dragon" is set to premiere on the streaming service on March 5 under Premier Access, following the model of the live-action "Mulan." Meanwhile, Marvel's "Black Widow " is still targeting an exclusive theatrical release of May 7. However, Chapek noted the company would watch the reopening of movie theaters very carefully in determining whether that release strategy could potentially change.

Average monthly revenue per paid subscriber for Disney+ decreased from $5.56 to $4.03 due to the launch of Disney+ with Hotstar. Disney Plus Hotstar – available in India and Indonesia -- carries a lower average price point than other regions and contributed to the drop.

EPSN+'s average monthly revenue per paid subscriber increased $4.44 to $4.48 due to an increase in pricing. Average monthly revenue per paid subscriber for Hulu's SVOD only service increased  $13.15 to $13.51 due to higher per-subscriber advertising revenue, a lower mix of wholesale subscribers and an increase in per-subscriber premium and feature add-on revenue.

The Hulu Live TV + SVOD service increased from $59.47 to $75.11 due to increases in retail pricing, higher per-subscriber advertising revenue and an increase in per-subscriber premium and feature add-on revenue. 

"We believe the strategic actions we’re taking to transform our Company will fuel our growth and enhance shareholder value, as demonstrated by the incredible strides we’ve made in our DTC [direct-to-consumer] business, reaching more than 146 million total paid subscriptions across our streaming services at the end of the quarter," said Chapek. 

More streaming muscles will likely be flexed in the days ahead when Star, sort of Disney’s international version of Hulu featuring general-entertainment - launches packaged with Disney Plus. 

Also, more subscribers are expected to sign on in the wake of Disney's December announcement of some 100 upcoming projects including 10 new Marvel series, 10 new "Star Wars" series, 15 Disney live-action, Disney Animation, and Pixar series and 15 all-new Disney live-action, Disney Animation, and Pixar feature films.

CLICK HERE TO READ MORE STORIES ON FOX BUSINESS

Revenue for Disney's Media and Entertainment Distribution units -- its cable channels and the ABC television network -- fell 5% to $12.6 billion with total operating income of $1.45 billion for the quarter. 

Disney shares rose about 2% in after-hours trading on the earnings announcement.