It’s been a tough year for The Walt Disney Company. Theaters are empty, blockbusters are delayed, merchandise sales are way down and visiting a theme park is a potential death sentence. Throughout 2020, they’ve tried to figure out ways to mitigate the effects of COVID-19, reopening some of their parks with closed rides, social distancing in place and antiviral measures. It didn’t go so well, though, with the ensuing promotional videos widely dubbed as creepy and the company being condemned as irresponsible.
Now, financial analyst Michael Nathanson, founding member of firm MoffetNathanson, has projected the cost of COVID-19 closing the Disneyland resort. In mid-March, the entire complex shut down, though various wings of the park like the Downtown Disney shopping mall have since reopened. Still, the shutdown adds up to an eye-watering $2.2 billion loss for Disney in 2020, which will have devastating consequences for the employees.
In September, the House of Mouse announced that they’re laying off 28,000 workers from their parks divisions, resulting in Abigail Disney (granddaughter of company co-founder Roy Disney) commenting that:
“Disney management talks about the ‘family’ that works at Disney, and about the ‘magic’ they make together. I guess that is easier when things are going well. The real magic will have to be made by the men and women who are trying to feed their families without salaries.”
We don’t know exactly how many of those layoffs will be in the California resort, but Nathanson estimates it at 8,700 employees. Beyond that is the wider damage to the Californian economy, which looks set to take a hit of approximately $5 billion.
The cherry on top of this exceedingly un-cheery cake is that a 2021 recovery is by no means guaranteed. Nathanson explains that:
“One of our core beliefs that we’ve observed in all the previous recessions and crises is that the park recovery takes time. People don’t instantly, when the economy goes back to growing, go to the parks. They basically look at their family balance sheets, they look at what damage has been incurred and hold on to their cash.”
It’s stark reading and Disney will likely have to change gears in order to maximize profits in these difficult times. A rare bright spot for the company in 2020 has been Disney+, with Mulan doing solid business on VOD. If the future continues to look bleak, expect to see many more major movies debut on the service and the company reconfiguring itself to take advantage of online revenue streams.