Disney’s streaming service has emerged as a strong rival in the Netflix dominated sector, which has in turn elevated the group’s revenue above expectations.
Revenue was up 45 per cent to £12.3bn in its third quarter – inching past analyst forecasts of £12.14bn.
The entertainment giant pulled in £664m in net income in the three months to 3 July, swinging from a loss of £3.4bn in comparison with the same period in 2020 due to its theme parks being closed to visitors under pandemic restrictions.
Streaming service Disney+ signed up 12m new subscribers in the most recent quarter, doubling its customer base from a year ago.
With a total of 116m subscribers, it shows Disney to be eating into Netflix’s streaming market share.
In the same quarter, Netflix added just 1.5m subscribers and shed 430,000 viewers in the US and Canada.
As the pandemic’s restrictions have continued, Disney and other Hollywood studios experimented with releasing blockbuster’s to streaming services alongside cinemas — which prompted Scarlett Johansson to sue Disney last month.
“Global lockdowns unsurprisingly saw losses rack up in those parts of Disney that rely on packing thousands of guests into theme parks and cinemas all around the world,” equity analyst at Hargreaves Lansdown Nicholas Hyett said.
“Fortunately, draconian cuts in production spend kept Disney’s mature, unglamorous, but suddenly vital, broadcast and cable TV arms in the black and that’s carried it through.
Despite Disney’s growing power in the streaming sector, Hyett explained that the entertainment giant still needs to be careful to keep up with competition.
“Looking back at 2020, investors may even think that the pandemic provided a helpful backdrop for the launch of Disney+, a service that would have otherwise had to go toe-to-toe with Netflix in a far more competitive environment.
“Still, the need to fight off stiff competition in streaming probably explains why content spend has rapidly recovered as park losses narrow. Freed from the need to support shuttered parks, Disney’s creative studios are getting the cash injection they need to arm Disney in a streaming war that looks likely to hot up from here.
“Cable and broadcast can’t be relied upon to dig the group out of future scrapes as consumer’s increasingly turn to digital alternatives.”