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

[MisterPenguin]

Netflix’s ability to create an almost steady stream of original content, and then hitting a good batting average on the percentage of that content that became popular, is what led to that.

You mean for every 100 shows Netflix creates, only 27 are good and the other 73 are bombs?

Yep, that tracks!!

 

[Touchdown]

You mean for every 100 shows Netflix creates, only 27 are good and the other 73 are bombs?

Yep, that tracks!!

Name the last Disney+ show hit.

 

[MisterPenguin]

Name the last Disney+ show hit.

 

[Sirwalterraleigh]

You mean for every 100 shows Netflix creates, only 27 are good and the other 73 are bombs?

Yep, that tracks!!

Like bombing 11-13 out of 15 big budget movie releases a year?

 

[HauntedPirate]

…ummm…on what?…exactly?

Shanghai - $5.5B
DCA re-do
2x Galaxy’s Edge ($1 billion each)
Pandora
New Fantasyland
Dream/Fantasy ($1.5 billion combined)
HKDL - $1.4B
Aulani - $800M

That is roughly $12 billion. I’m sure there are other things that add up to $30 billion… right? NextGen? DVC resorts? Do we know how much was spent on WDI research trips to Louisiana?

 

[SamusAranX]

You mean for every 100 shows Netflix creates, only 27 are good and the other 73 are bombs?

Yep, that tracks!!

They no doubt were throwing spaghetti in some ways, but my point was D+ will need to create incentive in terms of a lot more original content that’s popular if they want to avoid a plateau.

 

[Disney Irish]

Wait, what?

You said:



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?

Except if the middle class is shrinking (which was the conversation you came into) that group is getting smaller and smaller, so even if they still exist its not a good business strategy long term to keep prices lower just so an ever shrinking consumer base can afford to go. It'll cause the reverse perception problem that you all complain is happening now, ie if its seen as too cheap for the upper middle and upper class, they won't go at all because they don't want to be seen with the "riffraff". Its why you don't see many of those same folks going to Dollar Tree or other discount venues.

Its a tough call for a company trying to maintain its status as a premiere vacation destination.

 

[MisterPenguin]

They no doubt were throwing spaghetti in some ways, but my point was D+ will need to create incentive in terms of a lot more original content that’s popular if they want to avoid a plateau.

Well, I subscribe to Netflix's YouTube channel and there is a constant barrage for trailers for new shows. The vast majority look awful (to me, IMHO). And that vast majority rarely breaks through to popular media. They go through lots and lots of forgettable content until another Stranger Things comes along.

The other thing to remember that at starting, at least 3 years ago, the plan was to merge D+ with Hulu (already happening internationally with "Star" being the international version of Hulu). So, any of the more general audience content (Hollywood-speak for 'adult' -- for 'children' they use 'Family') it got shunted to Hulu rather than the more adult area of D+.

So, a lot of the break-out content of Disney streaming (e.g., Only Murders in the Building) went to Hulu rather than D+, making D+ a wasteland of adult content (with a few exceptions).

Blessed be Bluey.

 

[Disney Irish]

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.

The first to the market is always the toughest. However its not as tough as you make it seem. Netflix didn't get into the content creation business originally, that came later. Their original strategy was to license content from others, same as Hulu.

I don't think its unfair to look at the peers for historical reference. Tesla for example didn't have the infrastructure beyond roads for their model, they had to setup all the charging stations, so they build all that from the ground up, ie it cost major money which is why margins were low (even negative for a lot of it) for its first 10-15 years. Funny how that works, they road on the backs of others that came before it but still had to build up to become where they are now, just like Disney.

 

[HMF]

Its a tough call for a company trying to maintain its status as a premiere vacation destination.

Especially when they have stopped aspiring to create a premiere product.

 

[Sirwalterraleigh]

Shanghai - $5.5B
DCA re-do
2x Galaxy’s Edge ($1 billion each)
Pandora
New Fantasyland
Dream/Fantasy ($1.5 billion combined)
HKDL - $1.4B
Aulani - $800M

That is roughly $12 billion. I’m sure there are other things that add up to $30 billion… right? NextGen? DVC resorts? Do we know how much was spent on WDI research trips to Louisiana?

New fastpass scanners and touchpoint POS terminals to buy horse jockeys at pest relations?

 

[Disney Irish]

Especially when they have stopped aspiring to create a premiere product.

Guess it depends on who you ask, $10B in revenue seems to indicate that many still thinks the Disney experience is a premiere product.

 

[UNCgolf]

Tesla is an interesting mention because they're moving away from building cars now. Not that they're stopping entirely, but they're cutting back and focusing on other things.

 

[Chi84]

Especially when they have stopped aspiring to create a premiere product.

They’ve stopped aspiring to create the same product. That doesn’t mean they don’t still provide a premium experience.

 

[MrPromey]

The first to the market is always the toughest. However its not as tough as you make it seem. Netflix didn't get into the content creation business originally, that came later. Their original strategy was to license content from others, same as Hulu.

I don't think its unfair to look at the peers for historical reference. Tesla for example didn't have the infrastructure beyond roads for their model, they had to setup all the charging stations, so they build all that from the ground up, ie it cost major money which is why margins were low (even negative for a lot of it) for its first 10-15 years. Funny how that works, they road on the backs of others that came before it but still had to build up to become where they are now, just like Disney.

Oh really?

So Telsa ran those power lines down tens of thousands of miles of highways and established the system of conventional gas stations for traditional fossil fuel vehicles and existing retail parking lots that they contracted to be the location of many of their charging stations?

Please tell me more.

 

[MrPromey]

Except if the middle class is shrinking (which was the conversation you came into) that group is getting smaller and smaller, so even if they still exist its not a good business strategy long term to keep prices lower just so an ever shrinking consumer base can afford to go. It'll cause the reverse perception problem that you all complain is happening now, ie if its seen as too cheap for the upper middle and upper class, they won't go at all because they don't want to be seen with the "riffraff". Its why you don't see many of those same folks going to Dollar Tree or other discount venues.

Its a tough call for a company trying to maintain its status as a premiere vacation destination.

That's the problem. For the audience they are more and more chasing, it is NOT a premiere vacation destination.

Why would it be?

All those people you see standing sweaty in lines at the parks 10 months out of the year? That's the "riffraff" you speak of. I'm still trying to figure out how anyone here thinks WDW continues to exist at its current scale if those people* go away.

*which I'd wager many of us would find ourselves a part of, to be clear.

 

[Sir_Cliff]

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.

I think the broader point, though, is that a large middle class with a disposable income for things like vacations that existed during the first few decades of WDW's existence no longer exists. The trend for travel in general and really most businesses that sell luxuries (in the sense of non-essential products) is thus to pitch to that 10% that has increasing disposable income and get as much out of them as possible. It makes far more sense than going after people with little to no disposable income. There is a reason Universal is doing exactly what Disney is doing (raising prices, introducing uncharges, and then using things like APs and promotions to pick up the slack as necessary) rather than trying to pick up a massive middle class market Disney is ignoring/alienating.

As I mentioned earlier, I do think that they have noticed consumer backlash to rising prices and a feeling of decreasing value and are trying to manage that in various ways. I think they do also want to remain a mass market product because they see how the emotional connection the parks help establish with people has been important to the company's success. At present, though, it doesn't look like they are facing the prospect of having to close off large parts of the resort anytime soon because the market they are primarily hoping to attract is too small. In fact, they are investing in expanding capacity, in part likely so they do have more ability to bring in those lower-margin customers from whom they're not going to make enough to keep the investors happy but who they want to subscribe to Disney+, etc.

 

[Sirwalterraleigh]

Tesla is an interesting mention because they're moving away from building cars now. Not that they're stopping entirely, but they're cutting back and focusing on other things.

Yeah..they’re building T1000 now

 

[DCBaker]

Josh was in Disneyland this morning mingling it seems. And possibly Bob also.

A post from Iger:

A morning at Disneyland with Josh D'Amaro, the new CEO of The Walt Disney Company. I can’t think of a better way to celebrate Josh’s appointment!

 

[BrianLo]

…ummm…on what?…exactly?

Shanghai - $5.5B
DCA re-do
2x Galaxy’s Edge ($1 billion each)
Pandora
New Fantasyland
Dream/Fantasy ($1.5 billion combined)
HKDL - $1.4B
Aulani - $800M

That is roughly $12 billion. I’m sure there are other things that add up to $30 billion… right? NextGen? DVC resorts? Do we know how much was spent on WDI research trips to Louisiana?

A good third of that disappears by maintaining the products they have. Drydocks, hotel refurbs, painting Main Street, bus fleet replacements etc. at least based on how they “60B” is “allocated”.

So it’s really only 20B (at best) of things we’d account for. Or 8B you are missing.

Bigger line items I think you’ve missed;

-Riviera/Skyliner/Hollywood Studios writ large including MMRR construction and TSPL.
-Your Galaxies Edge estimates are probably a little low
-They wasted money on that Star Wars Hotel
-Avengers Campus
-A bulk of Epcot spending occurred last decade
-Money was spent on Paris, even with their partial ownership most of the decade
-Entertainment
-Animal Kingdom and was a lot more than just Pandora
-Almost every WDW park had some grand guest flow related overhaul. MK Hub, DHS/DAK ticketing and parking.
-Internet Infrastructure modernization at WDW.
-Disney Springs was a bigger one
-A smaller smattering of DVC conversion.
-Hong Kong had two major project tranches, not one.

Edit— art of animation and Pixar pals garage are two more projects in the 100s of millions

third theatres, Disneyland 60th, FEA, a Smaller portion of Tron all probably cost small change.