ZenithOptimedia’s annual ranking has shown that Alphabet Inc. has improved its lead as the largest media company all over the world, with 166 percent more media revenue compared to Walt Disney Co. (NYSE: DIS). Based on the annual ranking by the media planning firm, Walt Disney came in second and is followed by Comcast.
After 9 straight quarters of reaching revenue estimates of analysts, Disney failed to meet the analysts’ expectations during the second quarter. The corporation posted revenue of $12.97 billion, close to $220 million below the estimates of analysts. Yet, it still displayed growth of 4 percent on a year-over-year basis. In comparison to the first quarter of the current fiscal year, the company’s revenue plunged by 15 percent.
According to Walt Disney, it has not managed to post greater revenue because of the downbeat performance in the networks segment. Recently, the company has experienced a plunge in the subscribers’ growth of ESPN because of a recent trend of cord-cutting. This trend means subscribers are transitioning towards online streaming services, such as Netflix. During the last quarter, media networks revenue posted flat results of $5.8 billion.
Regardless of this, we believe that the company has a chance to attain significant growth in revenues during the following quarters.
In order to bolster the declining performance of its networks units, Walt Disney has undertaken valuable contracts with key sports leagues worldwide. The majority of Disney subscribers intends to watch top sports programming live with these pricey contracts and agreements.
The management of Disney is attempting to transition consumer demand through various venues. ESPN is already working on its way to skinny-TV streaming bundles, including Sony’s PlayStation Vue and Dish’s Sling TV.
Walt Disney’s management stated that the figures on these new platforms are upbeat, which is why ESPN posted flat growth in subscribers instead of discouraging data. With this, it is likely that this may potentially drive incremental growth when it comes to subscribers for ESPN during the following quarters.
During the month of July in the previous year, the Walt Disney CEO Mr. Bob Iger stated in an interview that the corporation is planning to offer ESPN directly to clients in the future. Yet, it may take some time to become effective. As long as the company provides valuable programming, Walt Disney will not find any difficulties adapting to the new watching habits of clients. Although in the short run, it is likely that Disney’s network segment might stay under pressure, this division could rapidly expand in the long term.
With the success of “Star Wars: The Force Awakens” and “Zootopia”, the company will certainly provide more titles in the following year, which is anticipated to continue driving revenue.
In June, Walt Disney is launching its first theme park in Mainland China dubbed Shanghai Disney Resort. The company’s management stated that the initial response from customers has been “absolutely phenomenal,” and the theme park will have its official inauguration on the 16th of June. We strongly believe that this newest theme park could be a major contributor to Disney’s revenues in the coming years.