The Underpants Gnomes are not a Walt Disney Co. property, but their money-making formula of “Collect Underpants + ??? = Profit” more or less exemplifies the entertainment giant’s plight right now.
A year ago, Disney made bazillions of dollars cramming people into movie theaters, amusement parks, and cruise ships. You get zero guesses what happened next. But the home of the Magic Kingdom has magically replaced some of this lost business with Disney+, which has enjoyed five years of growth in one year, thanks to all those people cramming into living rooms instead of movie theaters, amusement parks or cruise ships.
One big problem, though: Disney+ still doesn’t make any money, writes Tara Lachapelle. Soaring user growth pushed direct-to-consumer revenue up 73% in the latest quarter.
But that surge only turned a $1 billion quarterly loss a year ago into a $466 million loss this quarter. Four hundred sixty-six million dollars is still, most experts agree, a lot of money to be setting on fire. And Disney will need to burn more cash to produce content to keep all these new users around. Like, have you seen “WandaVision”? That is an expensive show to produce. Now Disney+ just needs, say, 50 more like it. The missing variable in the Disney+ Gnomes equation will probably involve you, the viewer, paying a lot more for “WandaVision.”
(Bloomberg)
