News Josh D’Amaro Named Next CEO of The Walt Disney Company

[MrPromey]

That very well could be, but that would mean they are moving into the upper middle class or higher, meaning they have more discretionary income and can absorb the price increases.

Or be able to afford other options they previously couldn't - like maybe going to see the real Paris instead of the one in World Showcase at costs that are similar.

 

[Disney Irish]

Apples to oranges. They were also, at the same time, literally inventing the market (positioning themselves as an add to people with cable rather than a cord-cutter solution) and tech while spinning down their disk-by-mail offerings with incredibly limited streaming original content and working to improve less than optimum third party content.

By the time Disney launched plus, they'd had their finger in the Hulu pie for nearly 15 years and had already been licensing content and IP to Netflix so they weren't exactly navigating uncharted waters.

And what were Hulu's margins before Disney took over control? Could it have been the same as Netflix was at the time? And so any new service all coming online wouldn't it also be assume that it would have lower margins initially?

Basically starting any new venture isn't automatically going to have high margins immediately, it takes time. Doesn't matter if its a new industry or coming into an already established industry.

 

[MrPromey]

And what were Hulu's margins before Disney took over control? Could it have been the same as Netflix was at the time? And so any new service all coming online wouldn't it also be assume that it would have lower margins initially?

Basically starting any new venture isn't automatically going to have high margins immediately, it takes time. Doesn't matter if its a new industry or coming into an already established industry.

Netflix launched their very first and incredibly limited streaming options in January of 2007 as a free add-on to their then core disk-by-mail service.

Hulu launched as a free ad supported platform in October of the very same year - both also at a time when the only viable option for viewing any of this was on a PC.

By the time Disney rolled around with Plus, their options were just about anything with a screen that had an app store including the living room and a cell phone in the passenger seat of a car driving down an interstate.

They built off the market that Netflix and Hulu created.

In terms of their history, tech, and market, Netflix and Hulu have far more in common with each other than either do Disney Plus.

Let's compare Tesla's development as a mass consumer automobile manufacturer to Ford while we're at it.

 

[Disney Irish]

Or be able to afford other options they previously couldn't - like maybe going to see the real Paris instead of the one on World Showcase at costs that are similar.

No doubt, but that basically proves my point. That even if Disney/Uni was built on top of repeat visits that is no longer the market that exists.

 

[MrPromey]

No doubt, but that basically proves my point. That even if Disney/Uni was built on top of repeat visits that is no longer the market that exists.

It does, just not at the margins Disney wants.

 

[HauntedPirate]

There appears to be an ongoing misunderstanding where their money comes and goes. I’ve seen you make a couple of insinuations about park underinvestment because of stock buybacks.

I’ve said to look at stock buyback numbers when pants get wet about $17 billion across a decade.

And there were deliberate decisions to not invest in the Parks while double-digit-billions were spent on stock buybacks in the 2010’s. While P&R generated a tidy $30 billion in profits in the same decade. But I guess I’m misunderstanding.

 

[BrianLo]

I’ve said to look at stock buyback numbers when pants get wet about $17 billion across a decade.

And there were deliberate decisions to not invest in the Parks while double-digit-billions were spent on stock buybacks in the 2010’s. While P&R generated a tidy $30 billion in profits in the same decade. But I guess I’m misunderstanding.

They also invested 30B in parks last decade. It’s all been entertainment diversion to shareholders. Not from Parks.

 

[HauntedPirate]

I must have missed the before times when Disney wasn't increasing prices. When was that era again?

I mean, prices have increased annually, except single day tickets in 1988 (at least back to 1982). Not sure how we survived those $1/day and $6-10 increases in 3-day and 5-day PH’s in the 90’s. That must have killed the middle class visitation numbers. They even jacked AP and premium AP prices in 1998 for no reason whatsoever. Evil Mike strikes again!!!

 

[HauntedPirate]

They also invested 30B in parks last decade. It’s all been entertainment diversion to shareholders. Not from Parks.

Please provide a list of what that $30 billion in the parks in the 2010’s entailed.

Shanghai
Pandora
New Fantasyland
Paradise Pier

What else ya got? I’m still looking for the other $23 billion. Can’t count anything in Paris, because Disney didn’t own it. Same with Tokyo.

ETA: ooo! $2 billion more for Galaxy's Edge's. $21 billion to go, I already did 1/3 of the work for you, it shouldn't be hard to find the rest.

 

[BrianLo]

Please provide a list of what that $30 billion in the parks in the 2010’s entailed.

Shanghai
Pandora
New Fantasyland
Paradise Pier

What else ya got? I’m still looking for the other $23 billion. Can’t count anything in Paris, because Disney didn’t own it. Same with Tokyo.

I’m not sure what your question is? I don’t doubt the money was spent. Whether it was spent wisely

The interval they used was 13-23; so after new fantasyland and DCA. The capital spend investment is documented in their financial statements and accounted for.

Shanghai Disneyland resort (through Zootopia) and the Paris buyout would be two larger line items. WDW would be the Springs redo, DAK/Pandora, DHS/SWGE and Epcot, then oodles of money on maintenance, new hotels, Skyliner and refurbs and some of the money pit at the tail end of My Magic Plus and the resorts infrastructure modernization. Disneyland would include the 60th window through avengers campus and Toontown. Hong Kong had a run of investments from their Tomorrowland to some of the frozen buildout. Some of the WDSP / DAW conversion falls in that window and the entirety of DCL Wish and a chunk of Lighthouse point.

 

[HauntedPirate]

I’m not sure what your question is? I don’t doubt the money was spent. Whether it was spent wisely

The interval they used was 13-23; so after new fantasyland and DCA. The capital spend investment is documented in their financial statements and accounted for.

Shanghai Disneyland resort (through Zootopia) and the Paris buyout would be two larger line items. WDW would be the Springs redo, DAK/Pandora, DHS/SWGE and Epcot, then oodles of money on maintenance, new hotels, Skyliner and refurbs and some of the money pit at the tail end of My Magic Plus and the resorts infrastructure modernization. Disneyland would include the 60th window through avengers campus and Toontown. Hong Kong had a run of investments from their Tomorrowland to some of the frozen buildout. Some of the WDSP / DAW conversion falls in that window and the entirety of DCL Wish and a chunk of Lighthouse point.

I specifically said the 2010's, not 2013-2023.

 

[BrianLo]

I specifically said the 2010's, not 2013-2023.

Then you’ll pull in two Dream Vessels, Aulani, New Fantasyland, DCA 2.0, My Magic Plus and the expensive HKDL redo. The early pandemic years reduced spending.

I mean, Disney has spent 16.445B since Oct 2023, the company quickly burns through money.

I’m still not sure if you are trying to say it’s not worth the spend or doubting the money was spent? You have a point for the former, but the company has basically been reinvesting all the parks make the entirety of the companies history. Just prior to this they were reinvesting large amounts of entertainment money too.

 

[Disney Irish]

It does, just not at the margins Disney wants.

Don't know if we can say that or not. However given that the head of Experiences just became the CEO, I think we can assume that the margins of the division is within the acceptable range.

 

[Sir_Cliff]

It does, just not at the margins Disney wants.

You could say that about tourism in the United States more generally, though, as high income earners have been consistently growing their share of the the tourism market and middle and lower income earners' share has been declining. Those trends are not being fuelled by Disney and Universal suddenly deciding they want higher margins. I think this is more about the distribution of income changing, which can clearly be seen. The top 10% of income earners now account for almost 50% of all consumer spending.

 

[BrianLo]

I specifically said the 2010's, not 2013-2023.

Sorry took me a hot second to add it up, I was just going with their other interval for ease of not having to find all the numbers.

Jan 2010-Dec 2019 capital spend on parks, resorts and cruises was 33.818 billion.

 

[Disney Irish]

Netflix launched their very first and incredibly limited streaming options in January of 2007 as a free add-on to their then core disk-by-mail service.

Hulu launched as a free add supported platform in October of the very same year - both also at a time when the only viable option for viewing any of this was on a PC.

By the time Disney rolled around with Plus, their options were just about anything with a screen that had an app store including the living room and a cell phone in the passenger seat of a car driving down an interstate.

They built off the market that Netflix and Hulu created.

In terms of their history, tech, and market, Netflix and Hulu have far more in common with each other than either do Disney Plus.

Yes agree, but the point is that any new addition to the industry doesn't start where the others left off, they start new and take time to ramp up. Hulu has now become additive to D+, but D+ alone was always going to take time to get to the same margins as Netflix or even Hulu.

Let's compare Tesla's development as a mass consumer automobile manufacturer to Ford while we're at it.

That is fine, and Tesla has a better margins than Ford at this point. Which shows that even a disruptor can get better margins in the long run, but it wasn't instant, it took time (about 10 years).

 

[Serpico Jones]

Multiple Disney sources told Puck’s Matt Belloni that Iger has been carrying himself like someone who was desperate for this day to come for some time. Belloni made it sound like Bob regretted coming back in the first place and singled out the flat stock price as a thorn at Iger’s side.

 

[MrPromey]

Don't know if we can say that or not. However given that the head of Experiences just became the CEO, I think we can assume that the margins of the division is within the acceptable range.

Wait, what?

You said:

No doubt, but that basically proves my point. That even if Disney/Uni was built on top of repeat visits that is no longer the market that exists.

My point was, that market does exist, they're just not the top 10%.

Disney would need to adjust their expectations on profits/margins in this segment to appeal to that still existing group that has been steadily getting priced out.

They still exist. Disney just doesn't want to charge what they can afford and instead, they're going after a group that has passports and isn't afraid to use 'em - those aren't the lifelong repeat customers they've built their brand and business on.

If anything, the argument you've been making is this has been a long time coming which just makes Disney management look even more foolish because it means they've been leaning in and accelerating the drop with pricing strategies - cash in today and tomorrow's problems are tomorrow's problems, I guess?

 

[MrPromey]

You could say that about tourism in the United States more generally, though, as high income earners have been consistently growing their share of the the tourism market and middle and lower income earners' share has been declining. Those trends are not being fuelled by Disney and Universal suddenly deciding they want higher margins. I think this is more about the distribution of income changing, which can clearly be seen. The top 10% of income earners now account for almost 50% of all consumer spending.

I'm not talking about higher margins. I'm talking about lower margins.

An increasing larger share of their audience can no-longer afford their product at the margins they want to hold onto. The ones they want to replace those with have literally more options than ever to choose from, of which Disney would not, in many cases be viewed as the pinnacle of vacation choices.

They were the top of a more modest audience's choices, now they're just another choice for who they want and not necessarily the most appareling for many of those people without minors.

In the future, unless they plan to start shutting down large portions of the resort and consolidating operations, they're going to need to figure out how to be happy with a new reality of lower margins because unless something magical happens to the economy, the audience they have left is going to be problematic without major ongoing investment to bring them back again and again which will eat into margins from the other end.

Spend more to charge more or charge less and still have to spend though probably not as much and with a little baked ininsurance since they'd be rebuilding a multi-generational audience.

I know which strategy I'd choose but I'll admit my bias because I'm a part of that second audience who's just about priced out.

 

[MrPromey]

Yes agree, but the point is that any new addition to the industry doesn't start where the others left off, they start new and take time to ramp up. Hulu has now become additive to D+, but D+ alone was always going to take time to get to the same margins as Netflix or even Hulu.


That is fine, and Tesla has a better margins than Ford at this point. Which shows that even a disruptor can get better margins in the long run, but it wasn't instant, it took time (about 10 years).

I'm just saying you were comparing Disney Plus to Netflix and I was making the point that Netflix had a much more difficult path because they had to invent both the tech and the market to make it all happen along with figuring out a content strategy and a means to produce a pipeline for it.

Remember, smart TVs basically exist today because of Netflix and Hulu.

It's unfair to look at where they were 5-6 years in and compare that to where Disney is 5-6 years in when the market is entirely different, the technology is mature and they have a back-catalog 100 years old and the ability to buy entire studios to get content.

Similarly, Tesla can thank Ford for the paved road and interstate system that provides them a market to sell their cars to when you look to compare how Ford was doing 23 years in vs. where Tesla is today at 23 years old.

It's a silly comparison that doesn't really prove anything one way or the other is all I'm trying to say.