Daily Brief: The Happiest Place On Earth Sure Isn’t Disney Right Now

Daily Brief: The Happiest Place On Earth Sure Isn’t Disney Right Now

over 2 years ago3 mins

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Entertainment giant Disney reported worse-than-expected earnings late on Wednesday, thanks to a – ahem – Minnie audience subscribing to the Mouse House’s magic movies.

What does this mean?

Disney’s streaming service – Disney+ – had a roaring time during the pandemic, as locked-down fans were pushed out of the entertainment giant’s theme parks and towards their screens instead. But that’s slowing down now: Disney+ added just two million subscribers last quarter – its smallest quarterly gain since launching two years ago – bringing its total count to a lower-than-predicted 118 million.

Disney subscriber growth
Source: Bloomberg

Things aren’t much better for Disney’s big screen business either: high marketing costs meant its film studio made a loss last quarter. And, sure, vaccinated vacationers have headed back into Disney’s theme parks, but the segment’s profit still came in below expectations. Overall profit, then, came in lower-than-expected too, so investors initially sent its stock down 4%.

Disney stock

Why should I care?

The bigger picture: Misery loves company.

Lockdown’s streaming boom is fading fast, and industry giants are struggling to attract new subscribers – especially in mature markets like the US and Canada. Look at Netflix: it brought in just 88,000 North American subscribers this year, versus the three million and six million it added in 2019 and 2020 respectively. Plus, with the industry getting even more competitive, streaming services are having to fork out more than ever on marketing and content production to lure in new subscribers and keep existing ones around. And those increased costs won’t help their bottom lines…

Netflix paying streaming subscribers in the US and Canada from Q1 2013 to Q3 2021
Netflix paying streaming subscribers in the US and Canada from Q1 2013 to Q3 2021

Zooming in: Mickey’s going Meta.

Good thing, then, that Disney’s got its iconic gloved fingers in many pies: it announced plans this week to build its own “metaverse”, a virtual reality experience that companies like Facebook are already investing in. Disney reckons it's got strong enough brands and characters to get customers interested, but it might be a while until the virtual magic arrives: the company’s yet to spell out any specifics about its venture.

Keep reading for our next story...

The UK Economy Is Desperately Seeking The End Of Shortages

UK image

Data out on Thursday showed that UK economic growth was slower-than-expected last quarter, so the country might want to issue an urgent plea.

What does this mean?

The UK’s been battling shortages of, well, just about everything recently, which pushed up prices last quarter and dented consumer spending. And businesses weren’t confident splashing the cash either: their investment last quarter was well below levels from before the pandemic. That’s partly why the economy grew by a weaker-than-expected 1.3% last quarter, leaving it 2.1% below pre-pandemic levels – a bigger shortfall than in many other developed countries.

UK GDP

The Bank of England (BoE) might be feeling vindicated: last week it made a surprise decision not to raise interest rates, and Thursday’s data suggests that was a good call. But the BoE’s got another tricky choice ahead: raising rates next month should cool rising prices, but could end up slowing economic growth even more.

Why should I care?

The bigger picture: America could be next.

America’s dealing with sky-high inflation too: data out this week showed that US prices of goods and services rose by 6.2% last month versus the same time last year – the fastest annual rise in over thirty years. The issue is wages aren’t rising at the same rate, with Americans finding their hard-earned cash isn't going quite as far as it used to. And if consumer spending gets impacted, the US economy might end up following Britain’s lead – which means slower economic growth going forward.

US inflation

Zooming out: Steeling the show.

Rising prices are good news for some: a boom in steel prices helped ArcelorMittal – one of the world’s largest steel producers – report its highest quarterly profit in 13 years on Thursday. And it’s spreading the joy to investors: it’s upping its share buyback program by $1 billion, which – by reducing the supply of shares out there – should send the price of the remaining ones higher.

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