Disney’s Q1 FY24 Earnings Results Webcast

[JD80]

Just to put things in perspective Bob spent 3
E tickets worth of cash to put Disney into Fortnite, something absolutely nobody was asking for.

LEGO Fortnite, which released two months ago had, in it's release week, 2.5 Million concurrent players. That's not total players, that's players playing AT THE SAME TIME.

That's incredibly massive for a video game (or anything). It's a great investment for Disney. It's a massively profitable company with a massively brand building platform with a massive audience.

Just to put things in perspective.

 

[monothingie]

Just to put things in perspective Bob spent 3
E tickets worth of cash to put Disney into Fortnite, something absolutely nobody was asking for.

Buy something popular and ruin it.

 

[Nubs70]

Streaming..... linear without the cable.

 

[Laketravis]

Damn. I don't know what the answers are, but I know what the questions are and thus far they have not been answered.

From a simplistic point of view, among other things I was really disappointed last month to see what use to be an interactive part of Epcot turned into nothing more than a shopping mall.

If that's the strategy for the parks going forward, I'm even more disappointed. I'll be there again on Monday, acutely aware of the current "proposed strategy of spending billions" while actually observing the experience I'm currently being provided. Like many others, I'll base my comparison on three factors - what I remember as value, what I now experience as value, and what I'm promised as value for the future.

So far, I'm not very optimistic.

 

[JD80]

Streaming..... linear without the cable.

It's... not. At all. It's a massively different business model.

 

[WoundedDreamer]

I’ll post the clip…
This is the most dead on analysis of the issue at play here…
You won’t get a better take

Absolutely brutal takedown. Those ESPN stats were jaw dropping. Only 1% of American households watch 12 or more hours of ESPN a month. It's a wild number. I'm not a sports fan, but I would have guessed the number would have been 10x-20x that much. Only 10% of households watch 6 hours or more of ESPN. It's a fascinating point. I imagine social media is responsible for the shift. Who needs to watch the whole game when you can watch the best moments on Tik-Tok or X?

Watching the best few plays from a game is just one dopamine hit after another. Watching an entire game takes concentration, patience, and waiting through commercials.

Either way, the sports streaming service is a good business. But can it replace the millions of cable buyers who never even look at ESPN, but are still paying $9.40 a month for it through cable? We know at least one percent of households will probably pay the $40 dollars a month (just throwing that number out there). But can they get 30 or 40 million households to sign up?

I'd still lean yes, but Rogers makes a compelling counterargument. It's a pretty wild stat.

And the resistance to the sports streaming service is beginning. NFL and NBA must be peeved, since they leaked this news to WSJ.

https://www.wsj.com/business/media/streaming-venture-from-espn-fox-and-warner-blindsides-sports-leagues-e6c1fbcc

 

[TalkingHead]

I love when people on here whine about streaming.

Really comes across like the “old person yells at cloud” meme.

Or it’s detached amusement stemming from the similarities between late-era Iger and late-era Eisner.

 

[WoundedDreamer]

Sell it off and just focus on content creation and parks. Let others pay you billions for licensing the DTC rights.

Let Netflix pay for your $200M Marvel Series.

And let Netflix be the bad guy when prices go up. Disney had the best deal in the world with cable. When cable prices went up, who did people blame? Not ESPN or the other channels. No, they blamed Comcast, DirectTV, and Charter. It was a beautiful system that left people with warm and fuzzy feelings for Disney, and bad feelings for the cable company.

Now the middleman is gone. Every price increase is directly tied to the Disney brand. Ouch.

I agree…I think they messed up by deciding licensing wouldn’t yield what an in-house platform would

Maybe in some ways…but you defer all your costs

And then print it and pump it in your parks and on Amazon

People think I call him “cable Bob” to be cute

No…I’m serious…that’s what he is. It’s his history

Broadcast -> cable was tons of free money. The link is broken with streaming. Technology and habit changes don’t make it that lucrative.

Why do we have D+?

Was it an exciting new profit machine?

No…it was Bob struggling to compensate for the free money of the demise of cable. It was HALF their money. It was easy. Play it and advertisers gave you money. Really simple.

But it collapsed. Too many factors killed it.

It’s in the Rogers clip - nobody watches espn (hard numbers)…the money is in gambling and regionals. But nobody here seems to understand that.
Ads? It’s in the clip. Hula ad revenue falling…with huge advantages. But no one is understanding that either.

D+was an understandable mistake. It sounds good. But what he did was try to plug a hole by opening up a new one.

I think this is really fair summary. Disney+ was an understandable error. I got on the hype for a while. But man, was I so wrong. Let Apple, Netflix, Amazon, Comcast and whoever bid for Disney content. Let the deepest pockets win. Conduct this bidding war every 10 years or so. Disney could reliably receive a check every year with a preset amount. Talk about a sweet business! You could even split the Marvel content from the Disney/Pixar content and have them in two separate bidding wars. Suppose Apple could pick up the Disney content and Netflix could pick up the Marvel content. The two firms could likely pay more than a single firm could. And then Disney could axe all their management costs associated with advertising and running the mechanics of the streaming service.

 

[Trauma]

LEGO Fortnite, which released two months ago had, in it's release week, 2.5 Million concurrent players. That's not total players, that's players playing AT THE SAME TIME.

That's incredibly massive for a video game (or anything). It's a great investment for Disney. It's a massively profitable company with a massively brand building platform with a massive audience.

Just to put things in perspective.

Since this is so “massive” I figured I would check the Fortnite forums.

The majority of the Fortnite fan base comments are “Hope Disney doesn’t ruin Fortnite like everything else they touch.”

Sounds like they are really looking forward to it !!

 

[WoundedDreamer]

Since this is so “massive” I figured I would check the Fortnite forums.

The majority of the Fortnite fan base comments are “Hope Disney doesn’t ruin Fortnite like everything else they touch.”

Sounds like they are really looking forward to it !!

Haha It's not too surprising. Some fandoms have some "trauma" after what Disney has done to them!

 

[Serpico Jones]

And let Netflix be the bad guy when prices go up. Disney had the best deal in the world with cable. When cable prices went up, who did people blame? Not ESPN or the other channels. No, they blamed Comcast, DirectTV, and Charter. It was a beautiful system that left people with warm and fuzzy feelings for Disney, and bad feelings for the cable company.

Now the middleman is gone. Every price increase is directly tied to the Disney brand. Ouch.

I think this is really fair summary. Disney+ was an understandable error. I got on the hype for a while. But man, was I so wrong. Let Apple, Netflix, Amazon, Comcast and whoever bid for Disney content. Let the deepest pockets win. Conduct this bidding war every 10 years or so. Disney could reliably receive a check every year with a preset amount. Talk about a sweet business! You could even split the Marvel content from the Disney/Pixar content and have them in two separate bidding wars. Suppose Apple could pick up the Disney content and Netflix could pick up the Marvel content. The two firms could likely pay more than a single firm could. And then Disney could axe all their management costs associated with advertising and running the mechanics of the streaming service.

Iger isn’t going to have a choice but to move in this direction.

 

[MisterPenguin]

Taylor Swift isn’t a bad idea depending on how much they paid.

Disney's been known to also offer movie roles (producer, director, actor) to entice talent.

 

[MisterPenguin]

They are still reeling from their own sudden realization of something we've already known - parks is in trouble.

Yeah, domestic parks and experiences only profited $2B this past quarter!

 

[WoundedDreamer]

Probably the biggest positive piece of news was the announcement of Moana 2. I was reading the press release and instantly thought "they're repackaging a Disney+ show aren't they?" And sure enough, later in the press release it noted just that! I think this is fantastic news for the beleaguered Walt Disney Animation Studios. After the debacles of Strange World and Wish, Walt Disney Animation needs a reset.

Something that does give me pause is that some of the principal people responsible for the original Moana film are not returning. The writer Jared Bush (wrote Moana, Encanto, and Zootopia) is replaced with Christopher Yost (Thor: Dark World, Thor Ragnorok, Mando). Legendary directors John Musker and Ron Clements (Little Mermaid, Aladdin, Hercules, and on and on) are replaced by Dave Derrick (head of story Strange World). While some members of the music-writing team are returning, notably absent is Lin-Manuel Miranda (overrated or not, his sound is all over the highly successful original soundtrack). I doubt you have "You're Welcome" without him. Producer Osnat Shurer is returning, but much of the core leadership team is new.

Is that a dealbreaker? No, not at all. This new team might have the chops to execute just as well or better than the original team. It is something to watch out for. The other concern is that it might feel too much like a Disney+ show, instead of one cohesive movie story. I don't think this is a forgone conclusion though. I'm willing to give Disney the benefit of the doubt here.

This is some desperately needed good news for Disney's 2024 film slate, which was feeling a little sparse. Mufasa is feeling a little precarious, so ending the year with Moana 2 could go well.

There's also some accounting reasoning for this change too... Now the entire development of this Moana series is no longer on the streaming side. The charges for the Moana series are not going to hit the books in Q4 and make Disney+'s precarious profitability that much more precarious. It's the movie studio's problem. The same is true with the Mandolorian movie that might have also started life as a streaming series. Expect other streaming projects to be shoehorned into the movie business. Profitability must be attained!

But even with the accounting trick, I still view this as a positive thing for Disney. This should get families back to theaters.

 

[MisterPenguin]

Things are coming. There is money.

Indeed.

Three quarters ago, Disney's cash on hand was $10.4B, and people worried about Disney having to pay $9B+ to Comcast for the rest of Hulu. Will Disney have enough?!?!

Two quarters ago, Disney CoH was $11.5B.

Previous quarter: $14.1. Whew! Disney can pay for Hulu!

And now? CoH is $7.2B. And that's *after* already paying Comcast $8.6B for Hulu. (Disney may have to pay a few Billion more depending on Hulu's final valuation.)

So, after paying for Hulu, Disney has $7.2B in CoH. And DTC (streaming) went from $1.5B loss for a quarter under Chapek's last quarter, down to $0.2B for this past quarter. And all expectations it will be profitable by Q4 of this fiscal year.

This is why the parks have no new and big greenlit projects now, and the promise of $17B for WDW and some $2B for DL and $60B for all parks globally had to wait until 2025.

The purchase of Hulu and getting all DTC profitable had to happen first. And its just about done.

(Not to mention a savings of $7B in lay-offs.)

 

[MisterPenguin]

Streaming..... linear without the cable.

I hope that was a joke.

Video on demand changes everything about the home entertainment market and consumer experience.

 

[MisterPenguin]

Probably the biggest positive piece of news was the announcement of Moana 2. I was reading the press release and instantly thought "they're repackaging a Disney+ show aren't they?" And sure enough, later in the press release it noted just that! I think this is fantastic news for the beleaguered Walt Disney Animation Studios.

Some critiques of D+ series has been that they seemed like a movie chopped into six or eight bits because there was one overarching plot, rather than self-contained episodes.

If the Moana series was going to be one overarching story, then putting it all in one movie may be the right move.

 

[MisterPenguin]

For people who read a book for the pictures....

https://thewaltdisneycompany.com/app/uploads/2024/02/Q1_FY24_Earnings_Presentation.pdf

 

[Vegas Disney Fan]

It is certainly interesting.

California parks are seeing growth (Disneyland and Universal Hollywood both show gains), Florida parks seem to be declining (WDW and Universal Florida both show declines).

Is it a waiting game for next year? Are tourists skipping Florida simply due to Epic (which only really just had its splashy announcement, so the general public are really only now learning more about the new park), or are other... factors keeping people away?

I recall many discussions about how long the “revenge travel boom” would last, I think we now have our answer. Florida opened about a year before Califonia, a bit longer before cruising rebounded, and even longer before international travel came back.

Most people rotate between Disney trips, international travel, domestic travel, etc and due to Covid a disproportionate amount went to WDW over the last few years, it’s going to take a while for those trips to get spread out again.

People are visiting Florida in general but avoiding the parks. That tells me price is keeping them away.

This is definitely a huge factor also, we used to visit WDW once or twice a year but it’s become so expensive it now competes with much bigger trips, it’s been over a year since our last trip and we still don’t have one planned, last year we took the money we’d have spent on 2 week long WDW trips and took a nearly 3 week long trip to Europe instead.

 

[MisterPenguin]

Q1 FY24 Prepared Remarks

Supplemental Information for Entertainment Direct-to-Consumer

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