How Does Disney Make Money?

In the House of Mouse, things are starting to recover from coronavirus for now, but where did Disney see its biggest losses and how does it make its money?

Disney’s most recent earnings were an expected disappointment for investors as revenue came in at a low $11.7 billion in comparison to the $20.2 billion generated in the same quarter last year. 

However, Disney+ has more than 60.5 million subscribers after just 9 months, already reaching its goal of 60-90 million paying customers by 2024. As it does well on the digital media front, its $30 price tag to stream the latest blockbuster, Mulan, comes as a shock. If it has to rob our bank accounts to help recover its losses then it leaves one to wonder: how does Disney make its money? 

Business Model

Disney has several different segments which bring in revenue. It is this diversification which has perhaps saved Disney from being truly devastated by the current pandemic. Whilst Disney’s stock price continues to climb back to its pre-COVID levels, its revenue is still suffering as a result of global shutdowns. So let’s look at each segment and see where the money comes from. 

Media Networks

Its media networks consists of multiple broadcast and networks including National Geographic, ESPN, and FX, as well as the National Geographic Magazine and a 50% equity investment of the A&E network. This quarter it brought in $6.2 billion, which is 2% less than the same quarter a year ago. For the fiscal year 2019, Media Networks made up 35% of its Disney’s revenue. 

This segment brings in revenue through affiliate fees, advertising and licensing. It is a consistent segment despite having multiple competitors, primarily other broadcasting networks, as well as local media outlets, as well as being subject to strict regulations.  

Parks and Resorts

The Parks & Resorts segment brings in revenue from all theme parks, resorts and cruise lines — this includes the National Geographic Expeditions and the Adventures by Disney and Aulani. The revenue can then be broken down again into sales of tickets, food, night-stays, and rentals of property. 

Although a huge sector of business, the revenue for this segment is not always predictable as it is influenced by many other factors such as travel conditions, the exchange rate, and other economic conditions — pandemics would now also qualify. In Q2 2020 Parks and Resorts only brought in $983 million compared to the same quarter in 2019 where it brought in $6.5 billion and comprised 37% of the total revenue for 2019. It has gone from being, on average, the largest sector in terms of revenue, to the smallest. This was Disney’s worst-hit area of business.  


Full-year 2019 revenue in the Studio Entertainment sector was $11.1 billion, this year’s most recent quarter only generated $1.7 billion. To put that into perspective, it would only make up 15% of last year’s revenue from this sector. This is a slight downer since Disney broke the world record (previously set by itself) for box office sales last year, comprising 40% of all ticket sales in U.S. cinemas alone.

This sector generates revenue through the production of movies under the Walt Disney Pictures, Pixar, Marvel, Touchstone, Lucasfilm, and UTV banners. It also generates revenue from live performance events and recorded music. 

Direct-to-consumer and Products

Disney licenses its characters, trade names, as well as literary or visual properties to retailers and publishers around the world. Also, it runs English language centres for children in China on top of the children’s books and magazines that it publishes. As for merchandise, it sells these both in retail stores and wholesale. 

Full year 2019 revenue was $9.3 billion in this segment, with Q3 making up more than one third of that. This year, Q3 was actually up 2% on that $3.8 billion sum, coming in at just under $4 billion. This is the only sector which saw growth this quarter and can be mainly attributed to Disney+’s huge increase of paying subscribers, and maybe a small amount to the plethora of Baby Yoda toys that became a global internet obsession.

What’s next for Disney?

In the latest earnings call CEO Bob Chapek stated that as a company it will be reviewing expenditures and tweaking the business model to cope with the new world we are living in now. For example, a bigger focus will be placed on continuing the construction of the Star Wars Hotel, which can generate high revenue for a small customer base.

As for Disney+, there will be a plethora of new and old content added to the streaming platform, keeping many Disney, Marvel, and Pixar fans entertained for months to come.

MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.

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