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Crowds fill Main Street USA in front of Cinderella Castle at Magic Kingdom during Walt Disney World's 50th anniversary on October 1, 2021 in Lake Buena Vista, Florida.
CNN
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Disney continues to struggle even after CEO Bob Iger returned from a brief retirement. But media veterans said Wednesday that Disney is finally back on the road to success.
The company surprised investors this year by announcing a whopping 20% increase in earnings per share, easily beating Wall Street analysts' expectations.
“Our strong performance this quarter signals that we have turned a corner and entered a new era, strengthening ESPN for the future and building streaming into a profitable and growing business. “We are focused on revitalizing our film studios and accelerating the growth of our parks and parks,” Iger said in a statement.
But the company still faces a number of significant headwinds, from continued losses in streaming to questions about succession plans should Mr. Iger one day take over the company's second leadership.
Disney reported fiscal first-quarter earnings per share of $1.04, beating Wall Street's expectations of $0.99, according to FactSet. Earnings per share increased 49% from 70 cents a year ago.
However, Disney reported revenue of $23.5 billion for the quarter, which was roughly in line with the same period a year ago and fell short of Wall Street's expectations for the first quarter.
Disney shares rose 7% in after-hours trading.
Wednesday's earnings call included a series of additional announcements, including that Taylor Swift's Ellas Tour concert film will make its streaming debut exclusively on Disney+ on March 15th.
However, while Disney continues to lose money on its streaming services business, the losses have decreased compared to last year. Operating losses for Disney's direct-to-consumer streaming products, which include Disney+, Hulu, ESPN+ and Indian streaming platform Hotstar, narrowed to $216 million from about $1.1 billion last year.
Disney has never made a profit in the division since launching Disney+ in 2019, but the company expects its streaming business to be out of the red by the end of this year. Activist investors have begun pressuring the company to change in recent quarters.
The company is trying several things to monetize streaming.
Last month, Disney updated the user agreements for Disney+, Hulu, and ESPN+ to officially prohibit users from “impersonating” someone by sharing passwords.
Anyone suspected of having borrowed passwords will be warned of a crackdown on password sharing this summer, according to Disney's earnings call on Wednesday.
Disney CEO Bob Iger said in an interview with CNBC on Wednesday that the impact of the password-sharing crackdown won't be felt until 2025.
The move comes after Netflix's successful crackdown on password sharing forced those who “borrowed” passwords to create their own subscriptions, leading to an explosion in new subscribers.
“Netflix was more than 10 years ahead of us,” Iger told CNBC. Disney's streaming service is “still a nascent business in many ways.”
Iger also said Disney plans to launch a standalone ESPN streaming service in 2025, which will “offer a more immersive experience” for sports fans, including the integration of betting and fantasy sports leagues.
Iger said the service will eventually be offered as a bundle with Disney+ and Hulu. “If you're a Hulu subscriber and want to take advantage of this new service, you can purchase it as an add-on to Hulu,” Iger said on a conference call with investors Wednesday. “We think that's a really positive thing.”
ESPN Service Plans Announcement: ESPN makes the once-unthinkable announcement that it is partnering with Fox Corporate and Warner Bros. Discovery (CNN's parent company) to launch a new streaming service that will bring the three companies together. It was held the next day. sports assets. Both companies will own one-third of the new business.
Iger told CNBC that when he returned to the company a year ago, “I found a company that was really struggling.” He pointed to the studio's problems, loss-making operations, questionable balance sheets, disgruntled shareholders, and many other problems. “Morale was bad.”
Paul Verna, principal analyst at Insider Intelligence, said Disney's strong first-quarter results bode well for Mr. Iger's ability to fend off pressure from activist investors.
“There are big battles ahead for Disney this year and beyond,” Verna said. But Wednesday's results “will undoubtedly bring a sigh of relief to the company's management and shareholders.”
Disney also announced Wednesday its big foray into video games. The entertainment giant announced it will invest $1.5 billion to acquire a stake in Epic Games, the maker of the popular video game Fortnite.
As part of the partnership, Disney and Epic Games will collaborate on a “world of games and entertainment” using Disney stories and characters.
“This represents perhaps our largest ever foray into the gaming space. This is not only timely, but also in line with demographic trends and how Gen Alpha, Gen Z, and even Millennials are spending more time on media. I think it's an important step considering how much we're spending.” It's pretty dramatic in terms of time spent on games,” Iger said on CNBC.
Disney's move into the video game field comes at a time when rival Netflix is also expanding into video games.
In December, Netflix launched three mobile-friendly games of Grand Theft Auto, one of the best-selling video game series of all time. In Netflix's latest quarterly earnings report, the company said its GTA service has been at the top in mobile game downloads for several weeks.
This story has been updated with additional development and background.
– CNN's Ramishaa Maruf contributed reporting.
