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"Zootopia 2", "Toy Story 5", "Snow White"...

At the just-concluded "D23: Disney Global Fan Convention" (hereinafter referred to as the D23 Fan Convention), Disney released the developments of a series of important new works.

With global box office growth sluggish, Disney has stabilized the summer movie market with three films: "Rise of the Planet of the Apes", "Inside Out 2" and "Deadpool & Wolverine". In addition, Disney also announced a number of information about the expansion of cruise ships and theme parks.

"Disney's philosophy is 'the never-ending Disney', and it has only one purpose: to keep users feeling fresh forever." Lin Huanjie, director of the China Theme Park Research Institute, analyzed in an interview with the "Daily Economic News" reporter that Disney's Asian business has already taken up the banner of park visitor numbers, and the most important of these is the Chinese market.

"In 2023, the passenger flow and revenue of theme parks in the Chinese market doubled compared to 2022," a senior industry insider also told reporters.

Disney, which just turned 101, has also recently delivered a good financial report. Recently, Disney (DIS.N, stock price $89.3, market value $162 billion) released its third-quarter financial report for fiscal year 2024 ending June 29, 2024. In the third quarter, the company's revenue increased by 4% to $23.155 billion; net profit turned from loss to profit, from a loss of $460 million in the same period last year to a profit of $2.621 billion in this period.

With global box office weak, can Disney save the market?

In the field of content creation, Disney has announced a series of highly anticipated sequels and original projects, such as the Walt Disney Animation Studios' "Zootopia 2" and Pixar Animation Studios' "Toy Story 5." In addition, Disney's live-action film "Snow White" and the Marvel TV series "Agatha All Along" are also on the agenda.

As of 18:00 on August 19, data from Lighthouse Professional Edition showed that the domestic summer box office was about 10.3 billion yuan, of which two of the top ten films were Disney films, namely Pixar Animation Studios' "Inside Out 2" and Marvel Studios' "Deadpool and Wolverine", with a total box office of 760 million yuan. The above two works performed well in the overseas market, topping the domestic US box office in June and July respectively.

The reporter learned that since 2005, the number of Disney films with global box office exceeding US$1 billion (27) has exceeded the total of its peers (22), including 4 films with box office exceeding US$2 billion.

However, due to various factors, the current film market is slowing down. From the perspective of the domestic market, the 2023 summer box office was 20.63 billion yuan. Now there are only 12 days left before the end of the 2024 summer season, and the current box office has just reached half of the 2023 box office, which is far below industry expectations. Some industry insiders predict that the total box office for the whole year of 2024 will be far lower than the total box office of 55 billion yuan in 2023.

In the global market, Box Office Mojo data shows that although the North American film market is recovering from 2021 to 2023, the recovery speed has declined rapidly. As of August 19, this year's North American total box office was US$5.386 billion, less than half of the total box office of US$11.363 billion in 2019.

This means that Disney also needs a more diversified development path to continue to maintain its position as a global entertainment giant. The reporter of "Daily Economic News" learned that at the D23 fan conference, Dai Mingzhe, chairman of Disney Experience, introduced the development plans of Disney theme parks, cruise ships and other fields. Among them, the Disney Cruise expansion plan means that four new cruise ships will join the Disney Cruise fleet between 2027 and 2031.

“Disney Experience is accelerating its ambitious growth and innovation. We have so many amazing Disney stories yet to be told,” said Dai Mingzhe. “We are excited to see an unprecedented number of new projects in the near future, whether it’s theme parks, cruise ships or our digital partnership with Epic Games.”

In addition, several themed expansion projects of Disney parks were also unveiled one by one, including the "Coco" themed project at California Adventure Park, the world's first "Monsters, Inc." theme park to be built at Walt Disney World in Florida, the debut of the new Disney villains theme park "Villains Land", and the simultaneous launch of new Avengers themed experiences in California, Shanghai and Hong Kong.

The streaming media business made a big comeback, with net profit in the third quarter turning around year-on-year

Although Disney has announced multiple theme expansion projects, judging from the financial report data, the most surprising thing is the streaming business.

Disney's third-quarter financial report for fiscal year 2024 showed that the company's revenue in the third quarter increased by 4% to US$23.155 billion, and its net profit turned from loss to profit, increasing from a loss of US$460 million in the same period last year to a profit of US$2.621 billion in this period.

Disney said that the main reason for the increase in revenue and performance was the increase in DTC subscription revenue and advertising revenue. In the third quarter of fiscal year 2024, the revenue of the three major businesses of Entertainment, Sports and Experiences were US$10.58 billion, US$4.558 billion and US$8.386 billion, respectively, up 4%, 5% and 2% year-on-year; the operating profits of the three businesses were US$1.201 billion, US$802 million and US$2.222 billion, respectively. The entertainment sector increased significantly by 194.36% year-on-year, while the sports and experience sectors decreased by 6% and 3%, respectively.

In the entertainment sector, in the third quarter, the DTC business revenue was US$5.805 billion, a year-on-year increase of 15%; the operating profit of the DTC business decreased from a loss of US$505 million last year to a loss of US$19 million. This is also one of the reasons why Disney turned losses into profits in the third quarter of fiscal year 2024.

From the data, although the entertainment sector is the main source of revenue, the experience sector including theme parks is still the business with the largest profit contribution. In the third quarter, the revenue of theme park tickets, vacations, retail and wholesale of the experience sector were US$2.78 billion, US$2.115 billion and US$2.246 billion respectively.

Disney CEO Robert Iger said: "Our streaming business as a whole has achieved profitability for the first time, and it is one quarter ahead of the previous guidance target. Although the Disney experience performed flat in the third quarter, the company's adjusted earnings per share increased by 35%. With a complementary and balanced business portfolio, we are confident that we will continue to drive profitable growth through unique and powerful assets."

Zhang Yi, CEO and chief analyst of iMedia Research, said: "The changes in audiences' viewing needs and habits are a huge challenge to the traditional entertainment and film and television industries. Disney+ raised its price because it is 'qualified' to do so. To be honest, streaming media is not closely related to user loyalty. The most important thing is to have good works."

In addition to streaming media, there have been rumors of price increases at Disneyland. Take Shanghai Disneyland as an example. Since its opening in 2016, there have been at least five price adjustments. From the initial two-tier pricing system, weekday tickets were 370 yuan and peak tickets were 499 yuan. In 2018, holiday peak day tickets were added, and it became a three-tier pricing system; in 2020, it became a four-tier ticket price structure; in 2022, the four-tier ticket price was adjusted again; the latest regulations stipulate that starting from November 24, 2024, Shanghai Disney Resort will use a new six-tier ticket price structure, adding two new tiers of ticket prices, with the highest ticket price of 799 yuan.

(Cover image source: Photo taken by reporter Zheng Yuhang from Meijing)

Daily Economic News