Disney CEO says metaverse is ‘top of mind’ as digital drives growth at company
Disney’s first quarter 2022 results were incredibly strong, with its streaming service Disney+ now providing content to 129 million subscribers.
The Walt Disney Company stunned investors this week with its first quarter 2022 results, bringing in $7.2 billion of revenue, up $3.5 billion on this time last year - but more surprisingly, also higher than its pre-pandemic levels - as digital experiences help drive growth at the company.
CEO Bob Chapek told analysts that the blending of physical and virtual experiences - or what's being labelled ‘the metaverse' - is also top of mind for Disney in the future.
And whilst Chapek spoke at length about storytelling and content being the foundation of the company's ongoing success, it's also clear that digital distribution (streaming) and digital experiences at Disney's parks and entertainment resorts.
For instance, Disney+ now has 129 million subscribers and Chapek is targeting up to 260 million paid subscribers by the end of 2024. Netflix currently has approximately 222 million subscribers. The figures will be a boon to Disney, as there had been some hesitation from the market as to whether there was space for another streaming platform.
But as Chapek points out, Disney is having success across both in-theatre distribution and on streaming services. For instance, Spider-Man: No Way Home was a box office smash (despite still being in the midst of a pandemic), whilst Encanto was released on Disney+ and has gone on to be a popular musical hit.
I want to talk about this unique moment in the history of The Walt Disney Company. It is perhaps fitting that our 100th anniversary comes at a time of significant change for us and our industry. In the midst of a global pandemic, fast-changing consumer expectations and a leadership transition, we reimagined our Parks business, substantially increased our investment in content creation and executed a reorganization that will facilitate our ongoing transformation.
Each of those actions has helped set the stage for our second century, and as we approach that remarkable milestone, I am filled with optimism.
We have the world's most creative storytelling engine, an unmatched collection of brands and franchises and an ability to tell stories that form deep emotional connections with audiences. We have a portfolio of distribution platforms, including powerful and growing streaming services. We have diverse revenue streams that span business models and industries, but which all are interconnected to create entertainment's most powerful synergy machine.
In short, our collection of assets and platforms, creative capabilities in unique place and the cultural zeitgeist give me great confidence that we will continue to define entertainment for the next 100 years.
Chapek said that Disney is being guided by three strategic pillars: storytelling excellence, innovation and audience focus. And whilst Disney's parks, by their very nature have a physical element, the company is already seeing gains by making use of technology. Chapek said:
I could not be more pleased with the performance of our Parks, Experiences and Products segment, which posted its second best quarter of all time. Over the last several years, we've transformed the guest experience by investing in new storytelling and ground-breaking technology and the records at our domestic parks are the direct result of this investment.
At the same time, we're giving guests new tools to personalize their visits and spend less time in line and more time having fun. While we anticipated these products would be popular, we have been blown away by the reception. In the quarter, more than 1/3 of domestic park guests purchased either Genie+, Lightning Lane or both. That number rose to more than 50% during the holiday period.
However, Disney is already thinking about how the metaverse (whatever that really means) could benefit the company in the future - blending physical and digital storytelling. Chapek said:
While multiplatform television and streaming will continue to be the foundation of sports coverage for the immediate future, we believe the opportunity for The Walt Disney Company goes well beyond these channels. It extends to sports betting, gaming and the metaverse.
In fact, that's what excites us, the opportunity to build a sports machine akin to our franchise flywheel that enables audiences to experience, connect with and become actively engaged with our favorite sporting events, stories, teams and players.
It is absolutely top of mind because we realize that in the future, you can call it what you want…you want to call it metaverse, you can call it the blending of the physical and digital experiences…I think Disney should excel at [this]. We realize that it's going to be less of a passive type experience where you just have playback whether it's a sporting event or whether it's an entertainment offering and more of an interactive lean forward, actively engaged type experience.
And this is a very top of mind thing for us because we are continuing over time to augment our skills and the types of people that we attract into The Walt Disney Company to reflect the aggressive and ambitious technology agenda that we have.