The Walt Disney company has reported a 29% increase for year-on-year revenues thanks to its streaming bet, but COVID-19 has forced the team to withhold dividend payments.

The impact of the coronavirus pandemic is clear over the last three months, as Disney has been forced to close all theme parks and the majority of retail stores, while there have also been supply chain disruptions. The launch of Disney+ has offset much of the negative, while the suspension of dividend payments should save the company somewhere in the region of $1.6 billion in cash. This saving will become very useful as the team continues international launches for the streaming venture.

“While the COVID-19 pandemic has had an appreciable financial impact on a number of our businesses, we are confident in our ability to withstand this disruption and emerge from it in a strong position,” said CEO Bob Chapek.

“Disney has repeatedly shown that it is exceptionally resilient, bolstered by the quality of our storytelling and the strong affinity consumers have for our brands, which is evident in the extraordinary response to Disney+ since its launch last November.”

Source: Walt Disney Company Investor Relations

Looking across the business, Disney has been impacted quite severely by the coronavirus outbreak:

There does seem to be light at the end of the tunnel for the parks and retail business unit with business returning to normal in China. The Disneytown shopping and entertainment complex has been reopened, while Shanghai Disneyland is scheduled to reopen next week. The team will hope these timelines are replicated around the rest of the world.

There will of course be negative consequences for every business during this unique period, however, Disney does of course have positives to point to. Most notably, the launch and expansion of its streaming platform, Disney+, and new content which has been released on other content platforms.

ESPN has seen viewing figures increase by 11% year-on-year, thanks to the release of Michael Jordan and the Chicago Bulls docuseries, The Last Dance, and the NFL draft, which took place virtually. But it is Disney+ which steals the headlines here.

Over the first five months, Disney+ has bagged 54.5 million subscriptions, vastly exceeding expectations, while there are still lucrative launches in Japan, the Nordics and Benelux over the next few months. The team is not providing much insight on when it plans to break into profitability, but adoption trends around the world are very encouraging to date.

*Does not include April subscriber acquisition

This is a major growth asset for the business, especially under the current circumstances. Interestingly enough, there might be an opportunity to offset losses, by releasing certain titles directly on the streaming platform, cutting out theatrical release.

“As you know, we had seven $1 billion films in calendar year ’19,” said CEO Chapek. “But we also realize that either because of changing and evolving consumer dynamics or because of certain situations like COVID, we may have to make some changes to that overall strategy just because theatres aren’t open or aren’t open to the extent that anybody needs to be financially viable.

“So we’re going to evaluate each one of our movies on a case-by-case situation as we are doing right now during this coronavirus situation.”

Releasing in theatres is a big financial draw for Disney, but it also comes with a significant financial outlay. Marketing dollars will still have to be attributed to launches on the streaming platforms, but with content consumption trends shifting more to on-demand, in the living room and the real world, it might make more sense to skip the cinema for some titles.

NBCUniversal has already started releasing some titles on streaming platforms for an additional premium. It has been stated this is due to COVID-19, but it might not be a temporary trend for all titles. Not only is it likely to be cheaper, it satisfies consumer demand and makes the streaming platforms more attractive to subscribe to.

The content business unit is holding the Disney empire up as all the other pillars crumble in the background. Disney is not a company which will ditch its physical business, but success attracts dollars. Chapek has said he remains ‘bullish’ on international expansion of Hulu, while Disney+ is looking like a rip-roaring success. The Walt Disney Company could look like a very different organisation in a few years.