Disney’s Q1 FY23 Earnings Results Webcast - Wednesday, Feb 8, 2023

BrianLo

Well-Known Member
To put some numbers on it, they basically need to make ~$2.25 (a little less but I'm rounding up) per month more per subscriber worldwide on Disney+ to break even for streaming. They just jumped it by $3/mo in December in the US and seemed to not adversely affect sub rate - and the quarterly report had less than a month of those increased rates included. So, I think they will likely get closer to their target price and have less loss the next quarter. And if they can do a similar jump in price - whether in 1 or 2 steps - by the end of 2024, they should be able to reach their target timeframe for being profitable.

I do not think $13.99/mo for ad free Disney+ seems unreasonable given the streaming market. That is cheaper than HBO Max or standard Netflix is now.

(Also, this isn't even considering any increase in revenue from Hulu or ESPN+ to balance the streaming books.)

I expect a noticeable improvement next quarter. None of the US price increase has really been in play yet.

I do think they need to work on some foreign markets.

Also if the US dollar ever settles back to reality, their revenues will increase dramatically.
 

doctornick

Well-Known Member
I expect a noticeable improvement next quarter. None of the US price increase has really been in play yet.

I do think they need to work on some foreign markets.

Also if the US dollar ever settles back to reality, their revenues will increase dramatically.

Yep. I think that since this quarterly report doesn't even fully benefit from the recent price hike - plus the unfavorable exchange rate in regards to foreign country revenue - and it might look a good bit rosier next quarterly report even with no particular changes. Thus any future price hikes needed to break even/profitability might be even more conservative than I suggested.

But my point is more that I don't understand the sentiment that Disney streaming will "never" be profitable or that it seems like an unattainable goal. Just getting their sub rate in line with other major streaming products would probably do the trick if they can keep the bulk of their subscribers. The goal of being profitable by 2024 seems like a fairly reasonable target.
 

MrPromey

Well-Known Member
If you’re not making someone mad, you’re probably not addressing something relevant to the society (in terms of social commentary, not necessarily a basic moral).
Ah yes, I remember that very quote from Walt when someone asked him about making Cinderella.
 

doctornick

Well-Known Member
On the assumption that Disney will buy the remaining stake in Hulu, Bob says he is suggesting that isn't necessarily the case.

So, I actually kinda like the idea of selling Hulu from Disney's prospective. I mean, let me just state: they could keep it and buy the rest from Comcast as planned and that would be fine too. So, I'm not saying they need to sell it or anything, but I could see it making sense...

First of, the main value of Hulu is IMHO the Live TV portion. That's the unique thing about Hulu as a streamer, especially since the other similar services (e.g. Sling, YouTubeTV) aren't quite the same with an attached robust general interest streamer with originals and a library. But Disney has never had much interest in being a middle man for network delivery and it would put them in a situation where they have to regularly negotiate with other networks. And who knows how beneficial these (via internet) TV network providing services will be if more people decide they don't need a suite of cable networks? Live sports is increasingly moving to streaming and that's really a big holdout that is keeping people tied to old media networks - and ironically if Disney via ESPN bails on cable networks and pushes a lot of their live sports to ESPN+ it will probably crush all these Live TV providers.

Second, they don't need the Hulu "brand" since even if they wanted to put more general content on Disney+ in the US (like they have in other countries) they have no reason they couldn't use "Star" as the branding. Hulu has some value as a name but I'm not sure it's enough value to Disney. Ironically, it probably would have more value to other services who are looking to be more competitive in the streaming business who could use Hulu and 40-50M subscribers as a good basis to become a bigger player in the streaming wars.

Third, selling Hulu not only cashes in on what they own - can help to erase a bunch of the remaining debt from the Fox purchase while keeping a bunch of Fox assets like the film library and production studios - but also could provide a source of revenue without cost by licensing content to Hulu as they are currently doing but without having to pay to run the service. Which with the mention of being open to licensing, that might fit with that strategy.

Once upon a time, Disney had aspirations of rolling out Hulu internationally, but there's no reason for that now since they are using Star/Hotstar instead and they realized that doing so would only jack up the price they'd be obligated to pay Comcast for the rest of the service. I think their prospective has changed in the years since they made the original plan to get all of Hulu.

Interestingly, it seems like Comcast is the perfect partner to buy given this stuff. They already own a third of the service of course, but regarding the first point - Comcast is already into the content delivery business (I mean it is their core) so Hulu Live TV complements that and they have the market share to get the best (lowest) rates from networks to include on that. The second point is Peacock which is actually a nice service pretty much is floundering and merging that into Hulu would actually be a pretty solid offering in the crowded marketplace. I think it actually could make a lot of sense.

If Disney were to sell, I wonder how much Fox content they could strip from Hulu to put onto Disney for a "Disney + Star" general interest service while still leaving enough on Hulu to make it worth purchasing by another party. Obviously, the stuff already on D+ would stay and all of the Hulu originals would go with Hulu but there's a squishy in between of a bunch of stuff that they might want to retain and other they'd be willing to license out. I guess we'll see.
 

BrianLo

Well-Known Member
Yep. I think that since this quarterly report doesn't even fully benefit from the recent price hike - plus the unfavorable exchange rate in regards to foreign country revenue - and it might look a good bit rosier next quarterly report even with no particular changes. Thus any future price hikes needed to break even/profitability might be even more conservative than I suggested.

But my point is more that I don't understand the sentiment that Disney streaming will "never" be profitable or that it seems like an unattainable goal. Just getting their sub rate in line with other major streaming products would probably do the trick if they can keep the bulk of their subscribers. The goal of being profitable by 2024 seems like a fairly reasonable target.

It's just a silly thought that people who don't actually understand the financial reports are repeating. D+ has been severely underpriced and still is. Like saying the parks can't be profitable when the ticket price is 5 dollars.

As you mentioned I totally agree with the math. Its profitability does not even rest on getting in line with Netflix ARPU, probably billions of profit will occur at that stage.

The fact subs didn't shed last quarter, despite a massive hike AND a rather bad content quarterly slate is very positive permission to hike more if they need to.
 

Elijah Abrams

Well-Known Member
In the Parks
Yes
So, I actually kinda like the idea of selling Hulu from Disney's prospective. I mean, let me just state: they could keep it and buy the rest from Comcast as planned and that would be fine too. So, I'm not saying they need to sell it or anything, but I could see it making sense...

First of, the main value of Hulu is IMHO the Live TV portion. That's the unique thing about Hulu as a streamer, especially since the other similar services (e.g. Sling, YouTubeTV) aren't quite the same with an attached robust general interest streamer with originals and a library. But Disney has never had much interest in being a middle man for network delivery and it would put them in a situation where they have to regularly negotiate with other networks. And who knows how beneficial these (via internet) TV network providing services will be if more people decide they don't need a suite of cable networks? Live sports is increasingly moving to streaming and that's really a big holdout that is keeping people tied to old media networks - and ironically if Disney via ESPN bails on cable networks and pushes a lot of their live sports to ESPN+ it will probably crush all these Live TV providers.

Second, they don't need the Hulu "brand" since even if they wanted to put more general content on Disney+ in the US (like they have in other countries) they have no reason they couldn't use "Star" as the branding. Hulu has some value as a name but I'm not sure it's enough value to Disney. Ironically, it probably would have more value to other services who are looking to be more competitive in the streaming business who could use Hulu and 40-50M subscribers as a good basis to become a bigger player in the streaming wars.

Third, selling Hulu not only cashes in on what they own - can help to erase a bunch of the remaining debt from the Fox purchase while keeping a bunch of Fox assets like the film library and production studios - but also could provide a source of revenue without cost by licensing content to Hulu as they are currently doing but without having to pay to run the service. Which with the mention of being open to licensing, that might fit with that strategy.

Once upon a time, Disney had aspirations of rolling out Hulu internationally, but there's no reason for that now since they are using Star/Hotstar instead and they realized that doing so would only jack up the price they'd be obligated to pay Comcast for the rest of the service. I think their prospective has changed in the years since they made the original plan to get all of Hulu.

Interestingly, it seems like Comcast is the perfect partner to buy given this stuff. They already own a third of the service of course, but regarding the first point - Comcast is already into the content delivery business (I mean it is their core) so Hulu Live TV complements that and they have the market share to get the best (lowest) rates from networks to include on that. The second point is Peacock which is actually a nice service pretty much is floundering and merging that into Hulu would actually be a pretty solid offering in the crowded marketplace. I think it actually could make a lot of sense.

If Disney were to sell, I wonder how much Fox content they could strip from Hulu to put onto Disney for a "Disney + Star" general interest service while still leaving enough on Hulu to make it worth purchasing by another party. Obviously, the stuff already on D+ would stay and all of the Hulu originals would go with Hulu but there's a squishy in between of a bunch of stuff that they might want to retain and other they'd be willing to license out. I guess we'll see.
The concern I have with Disney selling Hulu but keeping the Fox stuff is that Iger said in his recent CNBC interview that he is concerned of managing (or whatever he said) "general entertainment" content, and the Fox stuff he bought would be considered "general entertainment" content.
 

MagicHappens1971

Well-Known Member
The concern I have with Disney selling Hulu but keeping the Fox stuff is that Iger said in his recent CNBC interview that he is concerned of managing (or whatever he said) "general entertainment" content, and the Fox stuff he bought would be considered "general entertainment" content.
Disney isn’t selling Hulu. If anything it will be consolidated into Disney+.
 

doctornick

Well-Known Member
Disney isn’t selling Hulu. If anything it will be consolidated into Disney+.

I think they are more likely to keep it than sell, but I think the comments by Iger today definitely put into question whether they are all in with Hulu. Having Star as a back up brand for "general content" - if they want to buff up D+ in the US - really eases the potential downside in losing Hulu.
 

TalkingHead

Well-Known Member
Here's the image about the final structure of the company under Iger. According to Variety, they have different tasks according to each business divisions, and it contained the memo from him.

View attachment 697464
When’s the #DisneySoWhite campaign starting?
 

Magenta Panther

Well-Known Member
Some people have criticized Zootopia as "copaganda." The conversation around race and policing has greatly evolved since 2016 and I too wonder how Zootopia 2 will address this. There is potential for the sequel to be VERY controversial, among both left and right leaning people.

I'm not saying a Zootopia sequel can't be good. It definitely can. But I think it's a bigger can of worms than one might think. I think we are much, much more polarized as a society than we were in the spring of 2016.

I reluctantly agree with this, and I loved Zootopia. I want a sequel. But I do remember reading that when the movie The Bad Guys trended on Twitter some time ago, some people there were saying that The Bad Guys was much better than Zootopia because Zootopia was about cops. Obviously, those people are idiots, but I do wonder how Disney will handle any controversy over the sequel. Hopefully, the whole "cops are evil" stuff will have died down by then. Let's hope so...for all kinds of reasons.
 

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