Disney has revealed heavy spending on its upcoming streaming service designed to compete head-on with Netflix and Prime.
Disney fell short of forecasts for earnings and revenues in the quarter but Bob Iger, chief executive, struck an optimistic tone, speaking at length about Disney’s ambitions for its own service after its acquisition of 21st Century Fox assets.
Iger assured investors that Disney will “thrive alongside Netflix, Amazon and anyone else in the market.” Iger said the launch of its streaming service, that some are callling “Disneyflix”, will come late next year and is the “biggest priority of the company”. Iger revealed plans for the Disney streaming service, saying that “we’re going to walk before we run” in terms of how many shows it would offer. The service’s price will “reflect a lower volume of product” compared with Netflix, he added.
In the first earnings report since winning the battle with Comcast to buy 21st Century Fox’s entertainment assets, Disney reported net income of $2.9bn,. This was a 23 per cent rise in profits from a year earlier; however, it missed Wall Street estimates. Disney’s studio entertainment business increased revenues 20 per cent to $2.9bn, thanks to hits.
But profits declined at its largest business unit, its television networks, which include channels such as ESPN and ABC. Revenues in the unit rose 5 per cent to $6.2bn, but operating income fell 1 per cent to $1.8bn. Disney blamed the decline on “higher content and marketing costs” for its sports streaming service. Disney’s revenue overall rose 7 per cent to $15.2bn in the three months ending in June.