Walt Disney Co. announced its earnings for the first quarter of fiscal 2018, beating Wall Street forecasts on earnings, but falling short on revenue. The House of Mouse reported net income of $4.4 billion on revenue of $15.4 billion for the quarter ending December 30, compared with net income of $2.5 billion in the same period a year prior.
More specifically, out of the media giant’s four business units, only its Parks and Resorts division posted a revenue increase (13%). Its Studio Entertainment unit, home of Marvel and Lucasfilm, actually saw its revenue decrease in the quarter by 1% year-over-year to $2.5 billion (from 2016’s $2.52 billion).
Studio Entertainment’s relatively flat quarter may come as a surprise to many, especially given the box office success of its blockbuster films Star Wars: The Last Jedi and Thor: Ragnarok. Those two films combined for over $2 billion gross at the worldwide box office, outperforming Rogue One: A Star Wars Story and Doctor Strange from the prior-year quarter. Disney’s Coco was also another significant release during the quarter, performing relatively similar to the prior-year’s Moana.
As it turns out, none of those films were the cause of Disney Studio Entertainment’s flat quarter. So why the 1% dip?
According to Disney, “an increase in theatrical distribution results was more than offset by decreases in home entertainment and TV/SVOD distribution results as well as lower income from Consumer Products & Interactive Media segment revenue share.”
The decrease in home entertainment results was driven by lower unit sales reflecting the performance of Cars 3 in the current quarter compared to Finding Dory in the prior-year quarter.
Lower TV/SVOD distribution results were primarily due to a decrease from pay television driven by the domestic availability of two key titles in the prior-year quarter compared to one key title in the current quarter. The prior-year quarter included Captain America: Civil War and Jungle Book, while the current quarter included Guardians of the Galaxy Vol. 2.
Star Wars: The Last Jedi has earned over $1.3 billion at the worldwide box office, while Thor: Ragnarok grossed over $850 million. Even with both films in 2017’s top 10 for worldwide box office gross, it’s clear that the future is bright for Disney’s Studio Entertainment division. After all, it’s a future that includes two new Star Wars film trilogies (a new one announced yesterday), another phase of Marvel blockbusters, and, of course, the recently acquired X-Men.