Will a reopened U.S. economy prove a minus for Disney+?
This is the core question facing Walt Disney Co. before its second-quarter earnings report Thursday, which should offer Wall Street fresh insight on how the world’s largest entertainment company is faring, as its biggest markets emerge from quarantine.
For the past 14 months, stay-at-home orders and closed entertainment venues lifted Disney’s streaming services to new heights. Disney+ in March passed the 100 million subscriber mark after just 16 months of operation, cementing its status as the most successful streaming entrant since Netflix Inc. defined the field years ago.
But last month, Netflix reported slower-than-expected growth in subscribers, as consumers headed out of the house—a vulnerability facing Disney as well. The company has provided some notable signs that the dampening effects of the Covid-19 era are fading. Disneyland in Southern California has been reopened at reduced capacity since last month. And “Cruella,” a delayed movie starring Emma Stone as the dog-hating villain of “101 Dalmatians,” is scheduled to hit theaters on May 28.
Disney’s quarterly earnings have lately provided a glimpse of a company at a crossroads. Covid-19 immediately shut down two of its core businesses—parks and movies—but also accelerated focus and investment toward streaming services seen by Wall Street as critical to its post-pandemic future. Good news about its streaming growth kept the stock price soaring despite steep losses seen in other divisions. However, summer travel and pent-up demand for live events could depress sign-ups at Disney+ and its other services in the months ahead.
