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Disney (DIS) to Release Pixar's Soul Exclusively on Disney+

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Disney (DIS - Free Report) recently announced that the latest movie from Pixar Animation Studios – Soul – will debut exclusively on Disney+ on Dec 25. The Christmas release from this popular studio is expected to further provide a boost to the platform’s subscriber-base growth rate.

Markedly, Disney is benefiting from ongoing momentum in its streaming platform. As of Aug 3, Disney+’s subscriber base was 60.5 million, which had already surpassed the lower end of Disney’s initial expectation of 60-90 million subscribers by the end of fiscal 2024.

Undoubtedly, Disney+ has gained from coronavirus-driven spike in media consumption. Moreover, the streaming service has been benefiting from Disney’s bundle offering that comprises of ESPN and Hulu. Additionally, a solid content portfolio has been a game changer.

Markedly, availability of movies like Onward, Artemis Fowl, Hamilton and Mulan has helped Disney+ win a significant number of subscribers.

According to Sensor Tower, downloads of the Disney+ app spiked 68% from Sep 4 through Sep 6 from the prior-weekend levels, with the launch of Mulan. Moreover, consumer spending on Disney+ also spiked 193% over the same period.

Further, Mulan’s success strengthens Disney+’s competitive position in the global video-streaming market, currently dominated by Netflix (NFLX - Free Report) . Streaming competition has also intensified with the launch of Comcast’s (CMCSA - Free Report) division NBCUniversal’s ad-supported streaming service Peacock and Apple’s (AAPL - Free Report) strengthening Apple TV+ content lineup.

Can Disney+ Offset Coronavirus Impact on Disney?

Coronavirus-led disruption has negatively impacted Disney’s majority of businesses including Studio Entertainment, Theme Parks, cruise and advertising.

The pandemic affected Disney’s segmental operating income by $3 billion net of cost mitigations in third-quarter fiscal 2020. Moreover, this Zacks Rank #3 (Hold) company had to raise a significant amount of debt to remain afloat and was compelled to suspend dividend payment in the first half of fiscal 2020. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Notably, Shanghai Disney Resort re-opened in May and Hong Kong Disneyland Resort despite reopening in late June, was closed again in July.

Moreover, Disney has updated its release calendar to factor in the continued uncertainty over the reopening of theaters in the United States amid the coronavirus pandemic.

Set to debut on Nov 6, Black Widow, starring Scarlett Johansson, reportedly will now open on May 7, 2021. Meanwhile, Legend of the Ten Rings and Shang Chi, Marvel’s first film with an Asian lead, both have moved from May 7, 2021 to Jul 9, 2021.

The Studio Entertainment business is expected to suffer delayed releases. In third-quarter fiscal 2020, Studio Entertainment segment (14.8% of revenues) revenues decreased 54.7% to $1.74 billion.

Further, the time by which film and content production can resume is uncertain. Despite a healthy portfolio of new releases, the lack of visibility poses a challenge to Disney’s Studio business.

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