Walt Disney’s quarterly revenue from its movie studio unit dropped 27% but earnings beat analysts’ estimates as the company looks to expand its streaming services.
For the first quarter, Disney earned $1.84 per share, excluding items, which was down 3% from a year ago. Total revenue was flat at $51.30 billion.
Analysts had expected earnings of $1.55 per share on revenue of $15.14 billion.
Movie studio revenue fell to $2.51 billion from $1.82 billion as such films as “Mary Poppins Returns” and “The Nutcracker and the Four Realms” failed to replicate the success of “Star Wars: The Last Jedi” in the first quarter of 2018.
Revenue from the direct-to-consumer and international businesses dropped 1% to $918 million and the segment’s operating loss widened to $136 million from $42 million. But CEO Robert Iger said on an earnings call that subscribers to the ESPN+ sports streaming service had doubled to 2 million since September.
The company is also preparing to launch Disney+, which will stream new movies and shows from brands including “Star Wars,” Pixar, Marvel and Fox’s National Geographic.
“Building a robust direct-to-consumer business is our top priority, and we continue to invest in exceptional content and innovative technology to drive our success in this space,” Iger said in a news release.
As CNBC reports, Disney is expanding its direct-to-consumer offerings as “more consumers drop their pay-TV package in favor of cheaper options that can be watched through an internet connection.” On the earnings call, it said that it expects investment in those ventures to negatively impact the segment’s year-over-year operating income by $200 million in the second quarter.
“It’s hard to turn a profit on streaming services, which usually entail high content and technology costs but offer lower prices than traditional cable to attract consumers,” CNBC noted.
Among Disney’s other segments, media networks revenue increased 7% to $5.9 billion in the first quarter though operating income decreased 6% to $743 million due in part to higher programming costs at ESPN. Theme parks revenue rose 5% to $6.8 billion.