Disney Hit Hard in Entertainment and Experience Sector
CEO Iger's Successful Rebuild... Performance Improvement Including OTT
'Quality Over Quantity' Continues Next Year... Release of 'Avatar 3' and More
"Having overcome a challenging period of trials and turmoil, we have secured a favorable position for growth. The future looks optimistic." These were the words of Bob Iger, Disney's Chief Executive Officer (CEO), as he released the Q4 (fiscal year, July-September) earnings report on the 15th. He declared the end of a long dark era.
Disney struggled through a severe slump over the past three years. The COVID-19 pandemic dealt a direct blow to its two main pillars: entertainment and experience sectors (consumer products and theme parks). The latecomer online video service (OTT) also failed to become an alternative, as its losses only widened.
During this period, Disney found itself at the center of controversy. It was shaken externally by being caught up in 'Political Correctness (PC)'. PC is a movement aimed at avoiding prejudice related to race, religion, gender discrimination, and other biases in language and usage. Disney faced criticism from fans for forcibly promoting a 'Black mermaid' and a 'Latinx Snow White.' Former CEO Bob Chapek also clashed with Florida Governor Ron DeSantis over bans on LGBTQ+ education.
Disney brought back former CEO Bob Iger to lead the reconstruction. He was the mastermind behind Disney’s rise to its current content empire. Serving as CEO for about 15 years starting in 2005, he led acquisitions of Pixar Studios in 2006, Marvel Studios in 2009, Lucasfilm in 2012, and 20th Century Fox in 2019. During his tenure, the stock price surged by 400%, marking a golden era.
Returning less than two years after stepping down, he focused on improving profitability. He dismissed underperforming employees and executed three rounds of large-scale layoffs. The number of sequels produced by Marvel Studios and others was also reduced, as it was judged that the quality of works had declined due to the flood of content released for a while.
CEO Iger also sought changes in the OTT business. Disney integrated its other OTT service Hulu into Disney+ and secured a fixed viewer base by acquiring sports broadcasting rights. He declared a break from Political Correctness as well. He emphasized, "Creators seem to have forgotten what their number one goal is," adding, "We should deliver enjoyment rather than messages."
With the system reset, the business has nearly returned to its normal trajectory. Disney posted Q4 revenue of $22.574 billion (approximately 31.6826 trillion KRW) and adjusted earnings per share (EPS) of $1.14 (about 1,600 KRW). These figures surpassed Wall Street analysts’ average estimates compiled by financial information firm LSEG (revenue $22.45 billion, EPS $1.10). Compared to the same period last year, revenue rose 6% and EPS increased 39%.
The stock price, which had fallen to its lowest level in about 10 years (in the $79 range) last October, also surged. On the day of the Q4 earnings announcement, shares traded at $110.27, up 7.35% from the previous day.
This achievement was made by turning a profit in key business segments. Entertainment revenue increased by 14%, thanks to Pixar Studios’ "Inside Out 2" and Marvel Studios’ "Deadpool and Wolverine," which ranked first (approximately $650 million) and second (approximately $630 million) respectively at the global box office this year. The content sales and licensing segment recorded an operating profit of $316 million.
The streaming business, including Disney+ and ESPN+, also rebounded with an operating profit of $321 million (about 450.6 billion KRW). This marks a significant improvement compared to a $387 million loss in the same period last year.
Disney expressed confidence, stating, "We will achieve a single-digit high adjusted EPS growth rate in the next fiscal year." This is not an impossible goal. At the ‘Disney Content Showcase 2024’ held on the 20th (local time) at Marina Bay Sands in Singapore, numerous new works utilizing verified intellectual property (IP) were announced.
These include "Avatar 3: Fire and Ash," scheduled for release on December 19 next year, as well as "Zootopia 2," the sequel to "Fantastic 4," the OTT version of "Daredevil," and "Tron: Ares." In the following year, new Star Wars series "The Mandalorian & Grogu," "Toy Story 5," a live-action "Moana," and in 2027, "Frozen 3" will be released.
CEO Iger formalized this year’s business plan, stating, "We will not only reach global audiences in theaters but also become a significant anchor on global streaming platforms." He confidently added, "We will drive subscriptions and engagement and promote growth in experiential businesses such as theme parks."
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