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Disney Q2 Home Entertainment Revenue Slips Due to Lower Catalog Sales

The Walt Disney Company May 11 said “content sales/licensing and other” revenue, which includes packaged media and transactional VOD, declined 3% to $1.9 billion, compared with $1.84 billion in revenue in the prior-year period. Segment operating income plummeted almost 95% to $16 million, from $312 million a year ago. The decrease in operating income was due
to lower TV/SVOD distribution results and, to a lesser extent, a decrease at home entertainment due to lower sales of catalog titles in the current quarter.

In the prior-year period, top-selling Disney titles included Mulan and Soul, while animated musical Encanto and residual revenue from Shang-Chi and the Legend of the Ten Rings were the top-selling packaged-media titles in Q2.

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The decrease in TV/SVOD distribution results was due to a decrease in sales of episodic television content driven by higher sales of “Modern Family” and “How I Met Your Mother” in the prior-year quarter.

Speaking on the May 11 fiscal call, CFO Christine McCarthy said the decline in home entertainment revenue included management’s “strategic decision” to re-direct Disney titles to direct-to-consumer streaming channels, rather than legacy retail channels.

“As a reminder, these results are deliberately aligned with our decision to utilize our content on our own direct-to-consumer services,” McCarthy said.

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