Walt Disney beat Wall Street profit expectations on Wednesday, thanks to record theme park results and continued cost cuts.
And it also announced a partnership to bring its characters to Fortnite.
Consumers will be able to “play, watch, shop and engage with content, characters and stories from Disney, Pixar, Marvel, Star Wars, Avatar and more,” Disney said in a press release.
“Our exciting new relationship with Epic Games will bring Disney’s beloved brands and franchises together with the wildly popular Fortnite in a transformative new games and entertainment universe,” CEO Bob Iger said in a statement.
In addition to the multi-year project, Disney will also invest $1.5 billion to acquire an equity stake in Epic Games.
Disney CEO Bog Iger said consumers can “play, watch, shop and engage with content, characters and stories from Disney, Pixar, Marvel, Star Wars, Avatar and more.”
Disney has previously worked with Epic to bring characters from Marvel, Star Wars and ‘The Nightmare Before Christmas’ to Fortnite
Iger added: “This marks Disney’s largest ever entry into the world of gaming and presents significant opportunities for growth and expansion. We can’t wait for fans to experience the Disney stories and worlds they love in groundbreaking new ways.”
Tim Sweeney, CEO and founder of Epic Games, said: “Disney was one of the first companies to believe in the potential of bringing their worlds together with ours in Fortnite, and they use Unreal Engine across their entire portfolio.
“Now we’re working together on something brand new to build a persistent, open and interoperable ecosystem that will bring the Disney and Fortnite communities together.”
“This will allow us to bring together our incredible collection of stories and experiences from across the company to broad audiences in ways we previously only dreamed of,” said Josh D’Amaro, chairman of Disney Experiences.
Epic Games’ industry-leading technology and Fortnite’s open ecosystem will help us reach consumers where they are, so they can interact with Disney in the way that’s most relevant to them.”
The closure was announced as Disney reported its quarterly results for the end of 2023.
Disney’s board of directors also approved a $3 billion stock repurchase program for the current fiscal year, and declared a dividend of 45 cents per share, payable on July 25 to shareholders of record on July 8. This represents an increase of 50% compared to the dividend paid out. in January.
The company posted earnings of $1.22 per share, excluding certain items, ahead of analysts’ consensus forecast of 99 cents per share for October through December.
Quarterly revenue of $23.5 billion was comparable to a year ago, but fell short of forecasts of $23.6 billion.
Disney said it reduced $500 million in costs across its operations during the quarter, and remains on track to achieve or exceed $7.5 billion in savings by the end of the current fiscal year.
The company is under pressure from activist investor Nelson Peltz, who is looking for Netflix-like profits for its streaming business, better performance of its films at the box office and more details about his plans to make ESPN a dominant digital platform.
“Just a year ago, we outlined an ambitious plan to return the Walt Disney Company to a period of sustainable growth and shareholder value creation,” Disney CEO Bob Iger said in a statement. “Our strong performance last quarter shows that we have turned the corner and entered a new era of growth for our company.”
The company’s Experiences unit, which includes its theme parks and consumer products, posted record revenue, operating income and operating margins.
Disney reaffirmed expectations that its streaming business would be profitable in September. It cut streaming operating losses to $138 million in the quarter, a dramatic improvement from a year ago, when it lost nearly $1 billion. Average monthly revenue per Disney+ user, outside India, increased by 14 cents.
Streaming service Disney+ lost 1.3 million subscribers, almost double the loss of 700,000 analysts forecast, after a price increase in October.
The company forecast it would gain 5.5 to 6 million Disney+ subscribers in the second quarter, with positive momentum in revenue per user.
The Entertainment division’s streaming business, which also includes Hulu and Disney+ Hotstar in India, reported revenue of $5.5 billion, just above expectations and a 15% improvement from a year ago.
Total revenue for the Entertainment segment, which includes Disney’s traditional TV, streaming and film businesses, fell 7% from a year earlier to $9.98 billion.
Results were hurt by lower advertising revenues at ABC and lower reimbursements due to continued cable subscriber losses, partially offset by lower programming costs related to the Hollywood strikes. The weak box office performance of ‘The Marvels’ and ‘Wish’, compared to the strong results a year ago of ‘Black Panther: Wakanda Forever’ and ‘Avatar: The Way of Water’, caused content and licenses led to a loss.
Disney’s sports division, which includes ESPN, streaming service ESPN+ and Star in India, reported revenue of $4.8 billion, a gain of 4% from a year ago, but an operating loss of $103 million, attributable to a mounting loss at Star in India.
Theme park results were positively influenced by the opening of the World of Frozen attraction at Hong Kong Disneyland and Zootopia at the Shanghai Disney Resort. The higher attendance at those parks offset a decline at Walt Disney World in Orlando, Florida. The unit reported revenues of $9.1 billion and operating income of $3.1 billion. (Reporting by Dawn Chmielewski and Lisa Richwine in Los Angeles Additional reporting by Akash Sriram and Pushkala Aripaka in Bengaluru Editing by Peter Henderson, Kenneth Li and Matthew Lewis)