Disney Q2 Revenues Drop Double Digits, 'Mulan' Shifts To PVOD

Major second-quarter revenue declines came as expected to Walt Disney theme parks and movie-theater films, due to the COVID-19 pandemic. There was better news for its premium streaming businesses.

Disney+, the company’s big premium streaming business, climbed to 60.5 million subscribers as of August 3 -- up 2.5 million from June 27.

Results were helped by the July 3 addition of “Hamilton,” a filmed version of the big Broadway musical. ESPN+ more than tripled in size, climbing to 8.5 million subscribers from a 2.4 million level a year ago. Hulu’s video-on-demand service grew 25% to 32.1 million, and the Hulu+Live TV option was up 55% to 3.4 million.

Overall, totaling all its premium video services -- Disney+, Hulu and ESPN+ -- Disney has a total 100 million streaming subscribers.

Disney made a bold decision, after many delays, to shift its big summer theatrical movie “Mulan” to a premium streaming platform as a pay-per-view event starting September 4. For a one-time rental of $29.99, Disney+ subscribers can view the movie in many markets, including the U.S., Canada, Australia and New Zealand.



It will be releasing the film theatrically in other markets, where Disney+ has yet to start operations. But unlike other studios, such as Universal Pictures, which has long-term plans to move some intended theatrical films to streaming, Bob Chapek, CEO of Walt Disney said during an earnings phone call with analysts: “We're looking at ‘Mulan’ as a one-off in terms... [rather than] some new business window we model that we're looking at.”

Chapek added the move “not only gets us revenue from the original transaction from the PVOD [premium video on demand rental] but also acts as a fairly large stimulus to sign up for Disney+.” Disney’s Direct-to-Consumer & International business -- which includes Disney+, Hulu, and ESPN+ -- gained 2% to $4 billion in the period.

Disney says the average monthly revenue per paid subscriber for the Hulu SVOD-only service decreased from $12.68 to $11.39, due to lower per-subscriber advertising revenue. Although most major sports were off TV networks, leading to a major decline in advertising revenue, overall, Disney media networks revenues were down just 2% to $6.6 billion, with cable networks losing 10% and broadcast networks/TV stations up 12%. Operating income was up 50% and 55%, respectively, over a year ago.

The broadcast business was helped by growing affiliate revenue and higher program sales. Disney's parks, experiences and products  sank a massive 85% in revenues to $1 billion. Its U.S. parks and resorts, cruise line business and Disneyland Paris were  closed for all of the current quarter. Likewise, its studio entertainment business took a major hit -- due to movie-theater closures.

Revenues for the quarter decreased 55% to $1.7 billion. Overall, Walt Disney revenues were down 42% to $11.8 billion, with a quarterly net loss of $4.5 billion versus $1.7 billion in net income in the year before.

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