After a disaster movie of a quarter, Disney hopes Mulan rides to the rescue

The Disney+ streaming service constituted one of the few pluses in an ugly quarter for Disney that saw revenues slump to $11.78 billion from $20.26 billion a year ago. So the company is placing a round of new bets on streaming—including an unprecedented direct-to-home debut for the delayed drama Mulan on that service.

That live-action movie will premiere on Disney+ starting Sept. 4 as a $29.99 “premiere access” extra for subscribers to the $6.99 service.

Disney had already responded to the pandemic with dramatically shorter windows between theatrical release and streaming availability, but here it’s giving up on conventional distribution on a meant-to-be blockbuster that Disney began promoting in trailers last July.

“We are very pleased to be able to bring Mulan to our consumer base that has been waiting for it for a long, long time as we've had to unfortunately move our theatrical dates several times,” said CEO Bob Chapek during the earnings call. “But we're looking at Mulan as a one-off in terms of, as opposed to say trying to say that there is some new business window we model that we're looking at.”

Chapek added that Disney will “see what happens not only in terms of the uptake of the number of subscribers that we get on the platform, but the actual number of transactions on the Disney+ platform that we get on that PVOD offering.”

In markets where Disney+ isn’t available but theaters are open, Disney will proceed with traditional theatrical releases.

Disney will also launch a direct-to-consumer streaming service outside the U.S. named after its Star brand but modeled after Disney+.

Said CFO Christine McCarthy during the call: “We've learned a lot with the launch of Disney+.”

That streaming service now counts 60.5 million paid subscribers worldwide, blowing past such earlier estimates as MoffettNathanson’s (admittedly conservative) May estimate that it could hit 55 million paid subscribers by year-end.

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At the end of its third quarter on June 27, Disney+ stood at 57.5 million subs worldwide, followed by the SVOD version of Hulu at 32.1 million, ESPN+ at 8.5 million, and Hulu + Live TV at 3.4 million.

Average monthly revenue per subscriber among those services: $68.11 for Hulu + Live TV, $11.39 for Hulu SVOD-only, $4.62 for Disney+ and $4.18 for ESPN+.

But while Disney+ is rapidly amassing subscribers for its streaming services, it’s not making money off them yet. It reported an operating loss of $706 million in its DTC and international” segment, and McCarthy predicted “about $1.1 billion in operating losses for the fourth quarter.”

Most of Disney’s other numbers were worse. Pandemic-enforced shutdowns crushed most of its theme-park business, leading that sector to a $1.96 billion loss. Media networks, however, generated $3.15 billion in income despite being hurt by pandemic-enforced production shutdowns, allowing the company to scrape to $1.01 billion in operating income.

But that turned into a $4.72 billion net loss including one-time charges for buying Fox’s film and television studios plus most of its TV channels last year. That left investors looking at a loss of $2.61 per share, or a tiny profit of 8 cents a share after factoring out those costs.

As Chapek said in opening the call: “These continue to be challenging times for our world.”