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Canox HK - Down 50%, the moment appears to be ripe for a return
The stock of The Walt Disney Company (DIS) has taken a beating following the release of its latest earnings report. The entertainment behemoth posted a $4 billion loss in its streaming sector for the fiscal year
Disney+ is slated to debut its ad-supported tier in the United States on December 8, but the firm is adopting a different strategy than most of its streaming competitors. Typically, the ad tier is priced lower than the ad-free tier, as Netflix Inc. (NFLX) just did with their streaming launch. Instead, DIS is selling an ad-supported Disney+ version for the same $7.99/month as the ad-free tier, and it is hiking the ad-free tier's pricing from $7.99/month to $10.99/month.
Subscribers who wish to keep their monthly fee at $7.99 will have to accept the ad tier. With 46.4 million domestic Disney+ subscribers, the move might result in an additional $1.7 billion in yearly income.
Similarly, the DIS streaming package, which includes Disney+, Hulu, and ESPN+, will be more expensive. The firm is introducing a new ad-free premium tier that will cost $19.99/month, while the existing ad-based tier will cost $12.99/month.
DIS's stock is tough to appraise. It's a multifaceted company with theme parks, consumer items, and a video entertainment section that's split between a highly successful but decreasing conventional media part that includes theatrical releases, broadcast and cable TV, and a fast-growing but unprofitable streaming segment.
DIS is clearly not a broken corporation. Rather, the business is momentarily harmed as a result of the streaming changeover, which necessitates an upfront marketing and content expenditure, and it should benefit from the reopening of Shanghai Disneyland on November 25.
The stock of DIS is presently down nearly 50% from its peak last year, but the firm could be in a much stronger position in a year or two due to the return of its much acclaimed CEO, the inclusion of the ad tier, and the inflection point in its streaming business.
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Page Updated Last on: Apr 24, 2023