A Huge Blow to Disney’s Business: The Shutdown of its Parks Amidst the COVID-19 Pandemic
The COVID-19 pandemic has affected various industries around the world, and the entertainment sector is no exception. The Walt Disney Company, one of the largest media and entertainment conglomerates in the world, announced the temporary closure of its theme parks in March 2020 in response to the pandemic. The closure has had a significant impact on the company’s business, leading to a loss of revenue and jobs.
The Immediate Effect on Disney’s Business
With the closure of its theme parks, Disney faced an immediate loss in revenue. The company’s theme park division contributed nearly a third of its overall revenue, with the parks generating $26.2 billion in fiscal year 2019. The shutdown of the parks is estimated to cost the company $500 million a month in lost revenue.
Moreover, the closure of the parks has also led to job losses across the company. Disney announced that it would stop paying more than 100,000 employees in April 2020 due to the closure of the parks. The company also furloughed an additional 43,000 workers, including theme park staff, in April 2020.
Disney’s Response to the Closure
To mitigate the effects of the pandemic, Disney has taken several measures. The company has implemented cost-cutting measures by reducing executive salaries and suspending stock buybacks. Moreover, Disney announced that it would defer payments for its CEO, Bob Chapek, and other top executives until the end of the year. In addition, Disney launched its streaming service, Disney+, to increase revenue during the pandemic.
The company also announced its plan to reopen its parks and resorts in July 2020. However, the reopening was met with criticism from employees and customers, who cited concerns about the safety measures in place.
The Larger Implications
The closure of Disney’s parks amidst the pandemic highlights the impact of a global crisis on even the largest companies. It underscores the need for diversified revenue streams to manage risks that are beyond a company’s control.
The pandemic has also accelerated the shift towards digital entertainment, and Disney’s launch of Disney+ shows the importance of online streaming in the future of entertainment.
Conclusion
The closure of Disney’s parks amidst the pandemic has had a significant impact on the company’s business, leading to a loss of revenue and jobs. Disney’s response to the crisis shows the importance of agile business strategies and diversified revenue streams. The larger implications extend to the future of entertainment, highlighting the importance of online streaming in a world where physical gatherings are not always feasible.
