Best Buy Q2 Entertainment Revenue Soars 36%

Best Buy Aug. 24 reported a 36.4% increase in entertainment segment revenue for the second quarter, ended July 31. The unit, which includes products such as DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software, generated revenue of $550 million, compared with revenue of $403 million in the prior-year period.

CEO Corie Barry attributed the increase to comparison with an “unusual quarter last year” as stores were limited to curbside service or in-store appointments for roughly half the quarter.

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“The [consumer] demand was bolstered by the overall strong consumer spending ability, aided by government stimulus, improving wages and high savings levels,” Barry said in a statement.

Based the double-digit same-store sales increases throughout the company, CFO Matt Bilunas said management was raising the fiscal outlook for the year.

“For the second half of FY22, we expect our comparable sales to be in the range of flat to down 3% versus last year, compared to our previous annual outlook that implied a high single-digit decline,” Bilunas said.

GameStop Q4 Profit Skyrockets, Driven by E-Commerce

GameStop on March 23 disclosed fiscal results for the fourth-quarter, ended Jan. 30, which saw net income skyrocket 391% to more than $80 million, from a profit of $21 million in the prior-year period.

The increase was driven by a  175% rise in e-commerce sales, which represented 34% of net sales in the quarter versus 12% of in the previous-year quarter. Same-store sales increased 6.5%.

GameStop, the nation’s largest video game retailer, has been on a rollercoaster ride this year, the result of being in the crosshairs of third-party speculators manipulating the company’s stock price based little on actual performance and more on mob rule.

Revenue in the quarter dropped less than 4% to $2.122 billion, compared with $2.194 billion last year, reflecting an operating environment that included a 12% decrease in the store base due to the company’s “de-densification” efforts and a reduction of approximately 27% in European store operating days during the quarter in response to the COVID-19 pandemic. The company wound down operations in Denmark, Finland, Norway and Sweden.

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For the fiscal year, GameStop narrowed its fiscal loss nearly 55% to $215 million, from a loss of $471 million in 2019. Revenue declined more than 21% to $5.09 billion, from $6.5 billion.

“I am proud of how our entire organization came together in 2020 to adapt to the challenging pandemic environment, effectively serve our customers’ demand for gaming and entertainment products, and navigate through the year with strong liquidity and a strengthened balance sheet,” CEO George Sherman said in a statement.

Sherman said the retailer is off to a strong start in 2021, with same-store sales up 23% in February, led by global hardware sales.

“Our emphasis in 2021 will be on improving our e-commerce and customer experience, increasing our speed of delivery, providing superior customer service and expanding our catalog,” he said.


AMC Theatres Posts $4.58 Billion Fiscal Loss in 2020

There was only one fiscal winner at AMC Theatres in 2020: CEO Adam Aron. As expected, the world’s largest movie exhibitor March 10 reported a $4.58 billion loss for the fiscal year ended Dec. 31, 2020. The chain, which has been operating about 67% of its domestic screens with government-mandated limited seating capacity limited to 20% to 40% due to the pandemic, lost $946.1 million in the fourth quarter, despite reporting attendance of more 8 million moviegoers worldwide in the quarter.

Revenue for the quarter dropped 89% to $162.5 million from $1.45 billion in the previous-year period. For the year, revenue tumbled 77% to $1.24 billion, from $5.5 billion.

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AMC Theatres CEO Adam Aron

“This past year has presented AMC with the most challenging
market conditions in the 100-year history of the company,” Aron said in a statement. “As unprecedented as these times have been, so too is the unprecedented drive and commitment of the AMC team to take swift and decisive actions to ensure our survival and our success.”

Indeed, despite partial re-openings, attendance in the quarter plummeted 91% to 8 million, from 92.5 million in the previous-year period. For the fiscal year, attendance fell 79% to 75.1 million, from 356.4 million in 2019.

Aron, who saw his total 2020 compensation double to $20.9 million, which included $5 million in bonuses, said better days are just around the corner for exhibitors.

“As we sit here today, we see that vaccinations are occurring in the U.S. at a brisk clip, our theaters in New York City have finally opened, with theaters in Los Angeles likely opening shortly as well, blockbuster movie titles are currently scheduled to be released in significant quantity in the coming few months, and we have more than $1 billion of cash on hand,” Aron said. “Taking these facts together, we have reason to be optimistic about AMC’s ability to get to the other side of this pandemic.”

WWE Network Ups Q4 SVOD Subs 6%

WWE Feb. 4 reported that its branded subscription streaming VOD network averaged 1.5 million paid subscribers during the fourth quarter, ended Dec. 31, 2020, an increase of 6% from 1.41 million during the previous-year period. The SVOD service reached 1.8 million subs in 2016.

WWE recently announced a license agreement with NBCUniversal’s Peacock platform, making the AVOD/SVOD hybrid service the exclusive North American home for professional wrestling. WWE said the agreement enables the company to reach a larger audience and realize a greater economic return as compared to a standalone subscription service.

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“As we continued to adapt our business to the changing media environment, we completed an important agreement to license WWE Network content to Peacock, which we expect will expand the reach of our brands and enhance the value of our content,” CEO Vince McMahon said in a statement.

Wall Street firm Lightshed Partners believes WWE’s decision to partner with Peacock rather than go it alone as a SVOD service underscores the value of distribution scale versus content “arms dealer.”

“The WWE Network strategy was not a failure,” the company wrote in a recent blog post. “We still firmly believe in a direct-to-consumer streaming strategy. However, it requires far greater scale and resources, plus a different DNA than that of a content company.”

WWE will return hosting its branded “WrestleMania” live-event showcases April 10-11, 2021, at Raymond James Stadium in Tampa Bay, Fla., with ticket availability and safety protocols forthcoming.

Sony Pictures Home Entertainment Sees Revenue Gain for Nine Months of Fiscal Year

Sony Pictures Home Entertainment Feb. 3 reported that sales of packaged and digital media totaled $639 million through nine months of the fiscal year (ending March 31), up almost 4% from revenue of $615 million during the previous-year period.

The top-selling DVD/Blu-ray Disc movie in 2020 was Jumanji: The Next Level with $47.7 million in sales of 2.37 million combined units, followed by Bad Boys for Life with $27.8 million from 1.36 million units.

With scant new releases in physical and digital media due to the ongoing pandemic, SPHE reported third-quarter (ended Dec. 31, 2020) revenue of $149 million, down almost 42% from revenue of $255 million during the previous-year period.

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With just four theatrical releases in the quarter, theatrical revenue came in at $14 million, down 96% from revenue of $354 million during the previous-year period. The top-producing movie was Screen Gems’ Monster Hunter, with $13 million in global ticket sales. Sony Pictures has 10 theatrical releases slated to bow in 2021, led by Fatherhood, starring Kevin Hart, Alfre Woodard, Lil Rel Howery, DeWanda Wise, Anthony Carrigan and Paul Reiser, on April 16.

Separately, Sony Pictures Television generated three series for subscription streaming services in the quarter, including season two of “The Boys” for Amazon Prime Video; season four of “The Crown” for Netflix, and season one of “De Brutas Nada” for Lionsgate’s Pantaya.

From Jan. 1, Sony has 14 shows in production streaming on third-party SVOD platforms, including season one of “The Party” and seasons two and three of “For All Mankind” on Apple TV+; initial seasons of “A League of Their Own,” “Wheel of Time,” “Truth Seekers,” and seasons 1 and two of “Them: Covenant” for Amazon Prime Video.

Sony also has five shows in production for Netflix, including season four of “Atypical,” season one of “Behind Her Eyes,” seasons three and four of “Cobra Kai,” season three of “Sex Education,” and seasons five and six of “The Crown.”

Sony also produced season one of “Coyote” for CBS All Access; seasons five and six of “The Boondocks” for HBO Max, and season two of “Woke” for Hulu.

Apple Posts Record Q1 Revenue, Topping $111 Billion

Apple Jan. 27 reported record quarterly revenue for its services segment, which includes sales of movies and TV shows on iTunes, the App Store, Mac App Store, Apple Music, Apple Pay, Apple TV+, Apple Arcade and Apple News+, among others. The segment generated $15.8 billion in revenue for the first quarter, ended Dec. 26, 2020, compared with $12.7 billion in the previous-year period.

When factoring in more than $95 billion in product revenue, Menlo Park, Calif.-based Apple generated record $111 billion in revenue, up 21% from revenue of $91.8 million in the previous-year period.

Apple saw green throughout its product categories, with iPhone sales up 17% to $65 billion; Mac sales up 21% to $8.7 billion; iPad revenue up 40% to $8.4 billion; wearables (Apple Watch) up 29.5% to $15.8 billion.

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“We’re gratified by the enthusiastic customer response to the unmatched line of cutting-edge products that we delivered across a historic holiday season,” CEO Tim Cook said in a statement.


Best Buy Q3 Entertainment Revenue Up 17.5%

Best Buy Nov. 24 reported strong third-quarter (ended Oct. 31) sales, driven in part by a near 174% increase in e-commerce revenue and entertainment.

The entertainment segment, which includes products such as DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software, saw same-store sales increase 17.5% compared with a 20.8% decline during the previous-year period. The division generated 5% of domestic revenue, or $542.5 million, compared with $448.2 million last year.

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Internationally, entertainment sales skyrocketed 35.6% to $50 million, compared to a 31.1% drop at $40 million last year.

“Our comparable sales grew a remarkable 23% as we leveraged our unique capabilities, including our supply chain expertise, flexible store operating model and ability to shift quickly to digital, to meet what is clearly elevated demand for products that help customers work, learn, cook, entertain and connect in their homes,” CEO Corie Barry said in a statement.

Barry said the pandemic environment has underscored Best Buy’s purpose to “enrich lives through technology,” and the capabilities the consumer electronics chain is “flexing and strengthening” now would benefit it going forward.

One strategy is e-commerce, which saw revenue explode 173.7% to $3.82 billion, from $1.39 billion last year.


First Anniversary of Disney+ Finds Service’s Parent Grappling With Pandemic Fallout

Disney’s high-profile subscription streaming service Disney+ launched a year ago today (Nov. 12). Disney is set to report fourth-quarter financial results at the market close. With much of its businesses such as amusement parks, cruise ships, movie studio and television operations (and ad revenue) either shuttered or operating in limited capacity due to the coronavirus pandemic, streaming video is likely the only positive on what is expected to be a depressed corporate earnings call.

Disney+ had more than 60 million subscribers on the company’s last fiscal call, and CEO Bob Chapek has made it clear over-the-top video is at the core of company  going forward. Indeed, when combining Hulu and ESPN+, Disney’s SVOD subscriber base topped 100 million at the end of the previous quarter.

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The summer rollout of Disney+ Hotstar in India, which is operated by Disney subsidiary Star India, features two paid tiers: a VIP plan offering local language programs and live sports; and a Premium plan showcasing international (i.e. U.S.) movies and TV series from Disney, Showtime and HBO, among others. The service had nearly nearly 9 million subscribers in the last quarter.

“Disney+ has been the one shining star in the Disney empire in 2020,” Trip Miller, a managing partner at Gullane Capital Partners, told CNN Business. “The advent of the Disney+ platform could not have come at a better time.”

Yet, the SVOD platform is not projected to be profitable until 2024. The service could end up losing $2 billion in the just-concluded fiscal year — and even more in 2021.

“I think Disney+, and the rest of their direct-to-consumer assets like Hulu and ESPN+, are the most important units in the eyes of investors,” said analyst Michael Nathanson. “It’s a source of long-term growth and helps offset [pay-TV] cord-cutting and shifts in audience behavior.”

Nathanson, who believes ad-supported VOD is the streaming story in 2020, says Disney’s OTT platforms have the ability to expand with AVOD offerings depending on marketing conditions. Disney plans to launch an ad-supported international OTT service under the Star brand in 2021.

Indeed, growth of free ad-supported streaming TV (“FAST”) is exploding through services such as ViacomCBS’s Pluto TV, Comcast’s Xumo (and Peacock), Fox Corp.’s Tubi, The Roku Channel and IMDb TV, among others. And Disney doesn’t want to be left behind.

“They are really all in [streaming] now,” Nathanson said. “Disney has built a [OTT] lifeboat that gets them through the current storm in traditional media.”

AMC Theatres Posts $905 Million Q3 Fiscal Loss

Fiscally challenged AMC Theatres Nov. 2 revealed the ongoing hardships imposed upon the theatrical industry by the coronavirus pandemic led to the world’s largest exhibitor reporting a $905.8 million third-quarter (ended Sept. 30) loss, compared with a loss of $54.8 million during the previous-year period. Revenue plummeted 91% to $119.5 million, from $1.31 billion a year ago as theaters either remain shuttered in key markets or have limited seating capacity due to social distancing guidelines.

Through nine months of the fiscal year, AMC has lost $3.64 billion, compared with $135 million in 2019. Moviegoer attendance is down nearly 97% to 1.96 million, from 61.1 million a year ago. For the fiscal year-to-date, attendance is down 78% to 41.6 million, from 188 million.

“The magnitude of the impact of the global pandemic on the theatrical exhibition industry was again evident in our third quarter results, as theater operations in the U.S. were suspended for nearly two-thirds of the quarter,” CEO Adam Aron said in a statement.

While not high on the list of protected industries during the pandemic, AMC has proactively sought third-party financial lifelines. In March, the chain raised $900 million from new debt and equity capital, secured more than $1 billion of concessions from creditors and landlords, and raised more than $80 million from asset sales in the Baltic region.

Earlier today, AMC announced it would sell 20 million Class A common shares for $47.7 million.

“The liquidity enhancing and leverage reducing actions that we already have taken and will further need to take, combined with our relentless focus on efficiency and cash management, are all crucial to navigating through this storm,” Aron said.


Apple Generates Record Quarterly Services Revenue of $14.5 Billion

Apple Oct. 29 reported record quarterly revenue for its services segment, which includes iTunes, the App Store, Mac App Store, Apple Music, Apple Pay, AppleCare, Apple TV+, Apple Arcade and Apple News+, among others. The segment generated $14.5 billion in revenue for the fourth quarter, ended Sept. 26, compared to $12.5 billion in the previous-year period. For the fiscal year, services revenue increased 16% to $53.7 billion from $46.2 billion last year.

The Menlo Park, Calif.-based company posted record September quarter revenue of $64.7 billion, up 1% from $64 billion in the previous-year period. International sales accounted for 59% of the quarter’s revenue.

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“Despite the ongoing impacts of COVID-19, Apple is in the midst of our most prolific product introduction period ever, and the early response to all our new products, led by our first 5G-enabled iPhone lineup, has been tremendously positive,” CEO Tim Cook said in a statement.

CFO Luca Maestri said the quarter capped off a “remarkable” fiscal year in which Apple set all-time records for revenue, earnings per share, and free cash flow, in spite of a challenging macro environment.

“Our sales results … drove our active installed base of devices to an all-time high in all of our major product categories,” Maestri said.

The results glossed over the fact sales of iPhones fell almost 21% in the quarter to $26.4 billion, from $33.3 billion a year ago.  For the year, iPhones sales declined 3.3% to $137.8 billion, from $142.4 billion a year ago.