Disney’s Q1 FY24 Earnings Results Webcast

[Indy_UK]

6 Movies a year between all the movie divisions seem like a good amount. Not all are going to appeal to everyone. It's a shame that almost all for the next few years are sequels but I'll go with it if it means they are going to turn a profit on these films.

You can see DTC is going the right way. The losses do seem to be reducing at quite some rate so I prey they do turn to profit this year. Crackdown on password sharing should help and getting deals like Taylor Swift are the right choices. To maintain the numbers though, it can't be a one off, Disney+ needs to be the home of Taylor Swift. I still don't get why Disney are joining with Fox and Warner for the Sports App?

Guest attendance is lower at the parks because there isn't much new for people. I almost want to see a switch this year from where they go from pushing DTC to profit this year and at D23 they then switch to solid confirmed expansions starting in 2025.

DTC profits will start small but it needs to be self funding and not sucking from other divisions.

What makes absolutely no sense to be is the massive $1.5 billion in Fortnite? I get partnering for skins and stuff but that is a lot of money to invest into the game. The game platform is worth around $10 billion with turnover last year of over $5 billion so there is money there but do the majority of the players want Disney content? Licensing out the IP seems the most logical way for Disney. The PS5 Spiderman games make massive $$$ and there are loads of Star Wars, Marvel & Indy games that look of similar quality on the way. Stick to that.

Still no Whisper of a succession plan for Iger?

Has this earnings call fended off Peltz?

 

[ABQ]

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 !!

Just waiting to see Mickey Mouse with an AK bunny hopping around the place.

 

[JD80]

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 !!

Lol fortnite forums. Forums are for us old people. Vast majority of people playing these games don't even know they exist.

 

[JD80]

Just waiting to see Mickey Mouse with an AK bunny hopping around the place.

Go take a look at lego fortnite if you want an idea.

 

[monothingie]

We're seeing more and more, that they're transitioning away from outside studios and more towards internal content development.

The streamers ran the licensing route and it was good content at an high cost, because there was incentive to bring quality.

Then they tried to replicate it in house with expensive low quality content. (Rings of Power? Witcher?) and then they went low cost low quality.

It became solely a process to create content to fill up the service with. Little to no thought about if it actually was any good.

There are occasional successes, but just look at how much in house stuff was dropped or not renewed.

 

[JD80]

Just some headlines.

 

[Jrb1979]

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.)

What's profitable when it comes to streaming? Are we talking $1 or millions? Profitable for one quarter or consistently profitable? What happens when they have to start spending money on content again?

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

Cause of price increases and nickel and diming. Not cause of attendance increase.

 

[Dranth]

What's profitable when it comes to streaming? Are we talking $1 or millions? Profitable for one quarter or consistently profitable? What happens when they have to start spending money on content again?

Profitable with regards to streaming is the same as any other business or segment. It just means it makes more money than it costs in the given period so yes, making $1 is profitable for streaming. Obviously that is not acceptable long term which is why margins matter, but it is generally celebrated once a business crosses that line as it marks a transition.

As for what Disney expects, they said they are looking for double digit margins so if they are going to spend 20 billion a year for example, then they need about 22.23 billion in revenue to meet that goal. That gives them a couple billion in profit.

 

[JD80]

What's profitable when it comes to streaming? Are we talking $1 or millions? Profitable for one quarter or consistently profitable? What happens when they have to start spending money on content again?

Cause of price increases and nickel and diming. Not cause of attendance increase.

Streaming is profitable once it's revenue exceeds it expenditures. The amount of profitability that makes people happy is subjective. Current the target for D+ is that it has net positive revenue by end of FY 2024. So Wall Street expects it to be at least $1 because it'll prove that TWDC has done enough to go from the "spend and grow" phase to profitability. It's up to TWDC to keep that going.

TWDC is constantly spending money on content across all their studios, from last year their current target for FY 2024 is $25B. They are currently spending money, but LESS money. Saying "start spending money on content again" is an ignorant statement.

Regarding price increase, that's normal. Market prices for products and services are elastic and will grow or shrink to meet demand. DCL is booming, so increase prices based on demand and inflation are expected. WDW is down, probably because of prices (we can't prove it, but it's obvious I think). They have bandaided it by going after increase guest spend vs. increasing attendance and they are hurting.

 

[Nubs70]

Profitable with regards to streaming is the same as any other business or segment. It just means it makes more money than it costs in the given period so yes, making $1 is profitable for streaming. Obviously that is not acceptable long term which is why margins matter, but it is generally celebrated once a business crosses that line as it marks a transition.

As for what Disney expects, they said they are looking for double digit margins so if they are going to spend 20 billion a year for example, then they need about 22.23 billion in revenue to meet that goal. That gives them a couple billion in profit.

Profitable is return on capital employed in respect to others in the same competative space.

If you are returning 4% profit on every dollar spent and your competition is returning 11%, you are profitable but underperforming.

 

[CaptainAmerica]

D+ was sold to investors as this money printing machine that will change the company.

That's just false. One thousand percent false. Disney+ was ALWAYS going to lose money in the opening years. That's what happens. You need to invest huge amounts in content and technology while you build your subscriber base, and profitability comes way later.

Netflix launched Streaming in 2007. They were barely profitable until 2017, TEN YEARS later, and then they went vertical. Disney+ is at the same point in its life cycle as Netflix was in 2012.

 

[JD80]

Profitable is return on capital employed in respect to others in the same competative space.

If you are returning 4% profit on every dollar spent and your competition is returning 11%, you are profitable but underperforming.

Depends on set expectations. If the expectation set by Disney is that D+ will be profitable by X date, and it is regardless if it's $1 or $1M Wall Street will respond positively because it went from a revenue sink to a revenue generator. Expectations are independent of what a mature service like Netflix is.

At that point it will have a growth expectation it will set. If that benchmark is not met, it will have negative impact. If that benchmark is not high enough, it may reduce stock/investment growth.

Like anything in corporate america, it's complicated.

 

[JD80]

Wall Street after opening:

 

[Dranth]

Profitable is return on capital employed in respect to others in the same competative space.

If you are returning 4% profit on every dollar spent and your competition is returning 11%, you are profitable but underperforming.

In a strict market sense sure but that represents a snapshot in time and doesn't include a lot of important information that would provide context for how much weight to place on the difference between the two.

For example, how long has the company getting 11% been at it? How about the company at 4%? Is the lower one a newer business? What about the trajectory of the two? Both going up but one faster than the other? One up one down and on and on and on.

 

[JD80]

My uneducated view on the stock over the last 10ish years.

From 2015 to 2018 we saw a pretty steady stock value at around $95-$105 a share. It spiked after an unprecedented box office year in 2019. Post 2020 with dips because of the pandemic, it sky rocketed to crazy numbers that were juiced by D+ launch and subscriber number metrics they were chasing.

Disney stock crashed because of CEO nonsense, a shift to profitability vs. subscriber count in DTC and movies not rebounding to 2019 levels after big disappointments in 2022 and 2023.

Disney's recovery is going to come through investment in non-linear platforms and getting back to making good movies. But good movies that get people to the theatres because less people are going over all.

You see a positive outlook which is being rewarded - at least this morning - because the direction Disney is going with their spends.

 

[doctornick]

I just don’t know how much you can charge for ads going forward. I have never once watched an ad on a streaming service. If an ad comes on I instantly launch YouTube or something else on my phone.

Am I suppose to believe that everyone who has their phone in their hands is sitting there just watching an ad ?

Do you think people consistently sit and watch all the ads on network TV?

 

[Trauma]

Do you think people consistently sit and watch all the ads on network TV?

No idea I don’t know anyone who watches Network tv.

My guess would be they are a much older demo so they may be more likely.

But who cares network is the past.

 

[lentesta]

Roger goodell said two things in his impromptu presser yesterday

The eagles will play someone - Steelers or packers likely - in Brazil to start the season

And oh yeah…25 nfl league office employees disciplined or fired for gambling violations. I hear they’re all under about age 27…

Lead buried

Steelers' ownership has been pretty set on a road game in Ireland. My guess is the league goes with the Packers, unless they absolutely force the Steelers to do it.

 

[Serpico Jones]

My uneducated view on the stock over the last 10ish years.

From 2015 to 2018 we saw a pretty steady stock value at around $95-$105 a share. It spiked after an unprecedented box office year in 2019. Post 2020 with dips because of the pandemic, it sky rocketed to crazy numbers that were juiced by D+ launch and subscriber number metrics they were chasing.

Disney stock crashed because of CEO nonsense, a shift to profitability vs. subscriber count in DTC and movies not rebounding to 2019 levels after big disappointments in 2022 and 2023.

Disney's recovery is going to come through investment in non-linear platforms and getting back to making good movies. But good movies that get people to the theatres because less people are going over all.

You see a positive outlook which is being rewarded - at least this morning - because the direction Disney is going with their spends.

People aren’t going to the movie theater anymore. Just look at the numbers.

 

[Trauma]

That's just false. One thousand percent false. Disney+ was ALWAYS going to lose money in the opening years. That's what happens. You need to invest huge amounts in content and technology while you build your subscriber base, and profitability comes way later.

Netflix launched Streaming in 2007. They were barely profitable until 2017, TEN YEARS later, and then they went vertical. Disney+ is at the same point in its life cycle as Netflix was in 2012.

View attachment 767375

Netflix added 13 Millions subs last quarter.

Disney lost 1.3 Million.

Do you have a chart for that ?