Once upon a time, Disney's (DIS 1.68%) parks and experiences segment was its main revenue driver. But life these days is far from a fairy tale, and with some parks having closed for more than a year and all of them still operating at limited capacity, Disney's top line is suffering.
The good news is that third-quarter park sales were triple the 2020 number. The bad news is that that's still two-thirds of the 2019 number. But even when they do get to full functioning, they may never be as important as they were pre-pandemic. Let's see why, and whether it matters.
Image source: Getty Images.
A lot more than parks
Disney consolidated the parks and experiences segment with products in 2018, and out of four segments, it provided the largest portion of total sales for the years 2017, 2018, and 2019.
| Metric | 2017 | 2018 | 2019 |
|---|---|---|---|
| Total sales | $55.1 billion | $59.4 billion | $69.6 billion |
| Parks sales | $23 billion | $24.7 billion | $26.2 billion |
| Parks sales as a % of the total | 42 | 42 | 42 |
Data source: Disney annual reports. Fiscal year 2020 ended Oct. 3; fiscal year 2019 ended Sept. 28; fiscal year 2018 ended Sept. 29; fiscal year 2017 ended Sept. 30.
For these fiscal years, the other segments were media networks, which comprises revenue from television networks and print journalism; studio entertainment, which refers to film production; and direct-to-consumer and international, which includes streaming, other DTC services, and international media.
Disney+ burst onto the scene in 2020. As a result of the streaming success combined with the slowdown in traditional networks and parks, the company reorganized into new groups: parks, experiences and products, and media and entertainment distribution. This last segment groups together content creation for distribution among all networks, both traditional and streaming. It also accounted for 75% of total sales in Q3 2021.
Disney has high hopes for streaming. It expects upwards of 230 million subscribers for Disney+ by the end of 2024, more than double the number as of the ending of Q3, and up to 350 total streaming subscribers, including Hulu and ESPN+. It's expanding its Star streaming channel, which targets international households. And it's sending some films straight to streaming, as well as creating streaming-only content, such as the wildly popular The Mandalorian series.
Still the greatest theme parks in the world
Disney operates 12 global theme park complexes and nine resorts as well as a cruise line and other vacation destinations. When these fully reopen, their sales should skyrocket.
However, even in a growth state, they may never match the new combined media sales. Streaming is just growing too fast. They're not likely to dominate sales ever again, but they remain an important element of the overall business. That's because they're a growth driver at full operation -- the segment posted 8% growth in the quarter preceding the pandemic. They're also a key part of the Disney brand entertainment colossus. Even under the current circumstances, the company is pumping money into growth, opening new rides and launching new cruise ships.
With Disney's parks set to fully reopen and grow, even though they're returning as a smaller part of the overall business, investors should expect a lot from Disney stock for a long time.
