Magic Touch

Image source: George Dolgikh and New Africa - Shutterstock

What's going on?

Disney reported better-than-expected quarterly earnings earlier this week, as its Genie+ makes good on all of the entertainment giant’s wishes.

What does this mean?

Mickey fans couldn’t wait to flock back to Disneyland last quarter. Literally: visitors were prepared to stump up for the company’s new “Genie+” service just so they could skip the lines. That helped Disney’s resorts segment double its revenue from the same time in 2020, topping pre-pandemic levels.

The magic didn’t end at Disneyland’s gates either: Disney+ added nearly 12 million subscribers last quarter – far more than the 8 million analysts were expecting, and bringing the total to 130 million (tweet this). And those subscribers were more than happy to fork out for the streaming service, with the average North American viewer paying 15% more last quarter than the same time the year before. That pushed Disney’s revenue up by a better-than-expected 34%, and investors initially sent its shares up 8%.

Why should I care?

Zooming in: Disney’s not resting on its laurels.
Disney’s investors are probably relieved as much as anything, having come into this update worried it’d forecast the same slowing subscriber growth that Netflix did last month. Instead, it revealed it’s going to spend big to keep that from happening: the company is expecting to put as much as $1 billion more into new shows and movies this quarter – part of a plan to reach as many as 260 million subscribers by 2024.

The bigger picture: There’s strength in numbers.
Some analysts argue that Disney needs to think outside the box to sustain last quarter’s momentum, not just throw money at production. After all, Netflix put out two massive crowd-pleasers last quarter – Squid Game and Red Notice – and it’s still expecting subscriber growth to slow down this quarter. Those analysts, then, are suggesting rival streaming sites might eventually need to think about teaming up to sell their products together, rather than competing on price.

Originally posted as part of the Finimize daily email.

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