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Disney reveals SVOD details, reports 12% Q4 revenue hike

On top of a 50% increase in studio revenue in Q4, Disney's upcoming streaming service has been dubbed Disney+ and will feature new Star Wars and Marvel projects.
November 9, 2018

Driven by the box-office success of Incredibles 2 and its theme parks business, revenue for Disney’s fourth quarter  climbed 12% to US$14.3 billion. And the House of Mouse used is Q4 earnings call to unveil some more details about its upcoming SVOD service, including (finally) a name.

The new platform is to be called Disney+, and it will feature two new untitled live-action series that tap into the Marvel and Star Wars franchises. Chairman and CEO Bob Iger confirmed that Lucasfilm is in development on a second live-action Star Wars series set before the events of Disney’s 2016 box-office hit Rogue One: A Star Wars Story. Expected to go into production next year, the new show will see Diego Luna reprise his role as Rebel spy Cassian Andor and explore the formative years of the Rebellion.

And Disney will also lean on everyone’s favorite god of mischief for another new live-action series in development that will put Tom Hiddleston back in the role of Loki that he made famous in five Marvel Studios films for Disney.

Disney+ is expected to launch in the US towards the end of 2019, but release dates for both series will be announced at a later date. The projects join a growing slate of exclusive Disney+ content that already includes live-action Star Wars series The Mandalorian from showrunner Jon Favreau (The Lion King, Iron Man); Disney Channel’s new High School Musical: The Musical series; a TV adaptation of Pixar’s popular movie Monsters Inc.; and 12 episodes of returning animated hit Star Wars: The Clone Wars.

As Disney’s content and marketing costs for its streaming platform continue to rise, operating income for its Cable Networks segment fell by US$77 million to US$1.2 billion in Q4. The loss was due to the ongoing consolidation of Disney’s 2017 acquisition of BAMtech, which is currently developing Disney+ and previously developed Disney’s new ESPN+ streaming platform. Despite the operating decline, Disney’s Cable Networks revenue for the quarter rose 5% to US$4.1 billion, compared to a 2% increase in Q3.

On the Studio Entertainment side of the business, revenue shot up 50% to US$2.2 billion, driven by the box-office success of Incredibles 2 and Ant-Man and the Wasp. And the division’s operating income spiked US$378 million to US$596 million as a result of theatrical distribution growth, lower film cost impairments and higher television, SVOD and home entertainment distribution results.

Parks and Resorts had another successful quarter, with revenue going up 9% to US$5.1, billion following a 6% increase in Q3. The increase was attributed to higher attendance at Disney’s Hong Kong and Paris locations. Disney’s Broadcasting revenue, meanwhile, increased 21% to US$1.8 billion, and operating income rose US$150 million to US$379 million. The operating lift was due to higher program sales and affiliate revenue growth.

Rounding out the results, Consumer Products & Interactive Media revenue for the quarter dipped 8% to US$1.1 billion. A 10% operating income decrease to US$337 million was the result of asset impairments and lower income from licensing activities, partially offset by lower general and administrative costs at Disney’s games business. The income decline from licensing was due to lower revenue from Star Wars and Cars products.

Disney’s better-than-expected Q4 results come just as the company is wrapping up its US$71.3-billion purchase of 21st Century Fox’s film and television assets. It moved a step closer earlier this week, when the European Commission approved the acquisition, but with a stipulation that it sell its factual TV interests in Europe. The deal is expected to close early next year.

While Iger didn’t divulge any new details about how Disney plans to integrate Fox in his earnings call with analysts, the company is continuing to place more Fox execs in Disney positions ahead of the merger. Emma Watts, Nancy Utley, Stephen Gilula and Elizabeth Gable  joined Disney’s Entertainment Management team on October 19. And earlier this month, an executive reorg of the Media Networks division was announced that will see current Fox president and Fox Networks Group CEO Peter Rice become chairman of Walt Disney Television and co-chair of Disney Media Networks. It was announced that Fox Television Group CEO and chairman Dana Walden will assume the chairman’s role for Disney Television Studios and ABC Entertainment.

About The Author
Jeremy is the Features Editor of Kidscreen specializing in the content production, broadcasting and distribution aspects of the global children's entertainment industry. Contact Jeremy at jdickson@brunico.com.

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