Disney is turning its attention to streaming after further fallout from the pandemic has adversely affected its Parks, Experiences and Products segment in Q3. Overall, Disney’s third fiscal quarter, which ended June 27, 2020, saw a revenue drop of 42% to US$11.7 billion compared to Q3 2019.
The Parks segment experienced the biggest decline, including a roughly US$3.5-billion impact on operating income due to park closures, suspended cruises and guided tours. The segment’s revenue dropped 85% to US$983 million in Q3.
Disney also delayed, shortened or cancelled theatrical releases for some marquee movies and had to suspend stage plays. Overall, the Studio Entertainment segment saw a 55% drop in revenue this quarter to US$1.7 billion. The fallout will likely continue for this division as the company also suspended production on its live-action film and TV content.
On a positive note, revenue for the Direct to Consumer & International segment increased by 2% to US$4 billion this quarter, offset partially by declines in ad dollars.
Disney+ has reached 60.5 million global paid subscribers since launching in November 2019, said CEO Bob Chapek on the company’s earnings call. Disney had originally given itself a five-year window to reach 60 million subscribers, besting its goal by four years.
In anticipation of further lockdowns and delays, Chapek said Disney will now release its live-action Mulan movie (pictured) in September on the streamer, ending the film’s rolling release cycle that had been delayed as a result of the pandemic. The film will be made available at an additional cost to audiences (US$29.99), which is a new strategy for Disney+.
Disney also plans on rolling out a new international streaming service for adults under its Star brand. The SVOD will launch in September and include content from ABC, FX, Freeform, Searchlight and 20th Century Studios. It will not carry any licensed content, though little else is known about the service at this point.
Disney’s focus on a separate adult-targeted streamer comes as Disney+ struggles to place some of its older-skewing content. Love, Victor, a spinoff of the popular Love, Simon film, was moved to Hulu, though it was originally created for Disney+. The Lizzie McGuire reboot, meanwhile, experienced staffing shuffles when showrunner Terri Minksy stepped down. The show was reportedly deemed too grown-up for Disney+ and has been on hold since January.