Disney’s Q2 FY22 Earnings Results Webcast

[Sirwalterraleigh]

Can't believe I actually agree with the analyst on CNBC. He basically he said he was worried about the path to profitability with DIS+ and chasing Netflix and HBO Max. Mentioned it would be smarter to keep classic content and play to the 'super fans.' I've always thought they should play to their strength with classic content, take the profit and invest the capital elsewhere.

If there was profit in just old cartoons…they’d do it.

But that’s just the “easy” answer…the hard one is how does Disney maintain its dominant position in family/saturation.

They have Star Wars and marvel and Pixar for a reason…it to get new eyes to sell other stuff. “This is the way”

They can’t grow and not have new, expensive content. It would very much help if they would hire the absolute best people to make it “not suck”. That hasn’t always been the case.

 

[Sirwalterraleigh]

When?

For parks? Every seven years - not sure if the number has mattered - since the opening of DL/WDW had regulated price/value and spurred investment from Disney.

Mutually beneficial in the long term in every way.

 

[pdude81]

For parks? Every seven years - not sure if the number has mattered - since the opening of DL/WDW had regulated price/value and spurred investment from Disney.

Mutually beneficial in the long term in every way.

I was questioning whether people would ever stop buying after hours

 

[Sirwalterraleigh]

I was questioning whether people would ever stop buying after hours

Only if they start serving “brain juice” with meals at pecos bills

 

[mikejs78]

That is not correct. You're not trying to optimize "attractions experienced," you're trying to optimize "minutes of guests entertained."

I've never seen this metric mentioned anywhere by anyone. Wasn't part of the purpose of FP+ originally to take people out of lines and attractions and have them spend more time (and $) on shopping and dining? Capacity is capacity.

(Queue time would also contribute to this, because queuing guests are at least "occupied" if not "entertained." But Disney has made the inexplicable decision to go VQ only for Guardians. Horrible, horrible decision.)

I don't agree. I suspect the VQ won't be in use long, it's just a way of them keeping lines reasonable and managing early shakedown downtime. Even with a VQ I suspect the wait for an attraction will be about 45 minutes (that's what it was for Remy).

I suspect that the VQ will be gone by August or September.

 

[Sirwalterraleigh]

I don't see how they could just sit by and let cable/satellite profits dwindle as traditional TV dies off. They should also overpay for Sunday Ticket to juice ESPN+ but there's only so much cash to spread around.

Well that’s the problem that both Disney and Comcast get when they become “conglomerates”…

No way to avoid it.

Broadcast is still where the profits are…but it’s on the downward arc and they could never not go to the next thing: which was streaming.

The next thing will be some sort of “virtual”…

Hopefully it’s not a super computer in Columbus, Ohio?

 

[jmp85]

If there was profit in just old cartoons…they’d do it.

But that’s just the “easy” answer…the hard one is how does Disney maintain its dominant position in family/saturation.

They have Star Wars and marvel and Pixar for a reason…it to get new eyes to sell other stuff. “This is the way”

They can’t grow and not have new, expensive content. It would very much help if they would hire the absolute best people to make it “not suck”. That hasn’t always been the case.

I agree, they can't grow without new, expensive content. My concern is that growth does not equal free cash flow / profitability. Growth is at the cost of very large capital expenditures. At a certain point, you need to be able to cut back on content spending to make the platform actually profitable. How do you get off the treadmill while maintaining a health number of subscribers?

 

[Sirwalterraleigh]

That is not correct. You're not trying to optimize "attractions experienced," you're trying to optimize "minutes of guests entertained."

If I can ride Attraction A for 30 minutes and Attraction B for 5 minutes, Attraction B needs to have 6x the hourly throughput of Attraction A to break even.

(Queue time would also contribute to this, because queuing guests are at least "occupied" if not "entertained." But Disney has made the inexplicable decision to go VQ only for Guardians. Horrible, horrible decision.)

Easy off on the parks ops theory, boss…it’s actually way more of a balancing act than that. It’s everything in the park and predicting/managing flow. They used to be the best at that.

But there’s another example in Orlando that quietly has become more efficient.

 

[CastAStone]

Guardians, on the other hand, has a ride capacity somewhere between 2500 and 2800 pph (according to estimates by @lentesta). That should be near 100% utilization. Even if that number is a little lower (say, 2200 pph), if it's fully utilized it services the park better.

Lens source on that revised himself to 2400 THRC. At 2800 they’d be launching too frequently for the breaking segments to keep the cars separated in an estop

 

[pdude81]

I've never seen this metric mentioned anywhere by anyone. Wasn't part of the purpose of FP+ originally to take people out of lines and attractions and have them spend more time (and $) on shopping and dining? Capacity is capacity.

They can't be out of lines if they're already off one ride and getting in line for another though. So both parts of the equation are important. Riders per hour and ride duration. This is why shows are so helpful to balance demand, since they keep a decent number of people occupied for a long time.

 

[CastAStone]

I was speaking of a typical pre pandemic Q2, not a pre pandemic (halloween/Christmas/New Year) Q1
It would be interesting to see what Q2 2018 and Q2, 2019 was.

Oh gotcha. 93% was Q2 2019.

 

[Sirwalterraleigh]

I agree, they can't grow without new, expensive content. My concern is that growth does not equal free cash flow / profitability. Growth is at the cost of very large capital expenditures. At a certain point, you need to be able to cut back on content spending to make the platform actually profitable. How do you get off the treadmill while maintaining a health number of subscribers?

And that’s the problem Netflix is running into buzzsawing on…sorta. But not quite because they’re not content based. Same with Amazon.

And HBO…maybe more so…but they have the cable channels to fall back on. I think Viacom is the parent?

And Comcast has that problem…sorta…but they are also still a huge chunk utilities/infrastructure


So none of these examples are 1:1. Which might explain why Wall Street is having trouble exploiting it for $100 in 10 minutes.

 

[Jrb1979]

They can't be out of lines if they're already off one ride and getting in line for another though. So both parts of the equation are important. Riders per hour and ride duration. This is why shows are so helpful to balance demand, since they keep a decent number of people occupied for a long time.

Shows are helpful to balance demand. What they really need is more attractions in parks not named MK and not take 5 years to build it. I know it will never happen but they need to focus on adding more C level attractions then 1 E ticket.

 

[Sirwalterraleigh]

Now I’ve seen two posts “hinting” that capacity isn’t the issue and that somehow they “get it”?

Woah…woah here.

It’s 1000% a capacity issue. The feel in the parks is a direct result of 25% more attendees since 2000 with near a net zero add in capacity space.

Let’s not get silly.

 

[Sirwalterraleigh]

Shows are helpful to balance demand. What they really need is more attractions in parks not named MK and not take 5 years to build it. I know it will never happen but they need to focus on adding more C level attractions then 1 E ticket.

Bingo.

I could go deeper on this…but it’s been said

 

[Sirwalterraleigh]

Lens source on that revised himself to 2400 THRC. At 2800 they’d be launching too frequently for the breaking segments to keep the cars separated in an estop

And the problem is 2000 is not enough for Orlando. It never actually was and certainly isn’t now.

They probably have to process at least 3000 minimum now to actually help flow. That’s “conservative”

 

[CaptainAmerica]

Wasn't part of the purpose of FP+ originally to take people out of lines and attractions and have them spend more time (and $) on shopping and dining? Capacity is capacity.

Paging @lazyboy97o to school us up on "instantaneous capacity." He describes it better than I do.

I don't agree. I suspect the VQ won't be in use long, it's just a way of them keeping lines reasonable and managing early shakedown downtime. Even with a VQ I suspect the wait for an attraction will be about 45 minutes (that's what it was for Remy).

I suspect that the VQ will be gone by August or September.

I don't want them to keep lines reasonable. If people are willing to wait six hours to ride Guardians, I want them waiting six hours to ride Guardians so they're not clogging up the rest of the park.

 

[CastAStone]

And the problem is 2000 is not enough for Orlando. It never actually was and certainly isn’t now.

They probably have to process at least 3000 minimum now to actually help flow. That’s “conservative”

It’s not, but it is honestly a lot for a roller coaster, and I will take ANY capacity adds at WDW as a positive.

And yes UOE was higher capacity but it wasn’t being fully utilized much of the time so it wasn’t helping disperse crowds as well as this will.

 

[Jrb1979]

It’s not, but it is honestly a lot for a roller coaster, and I will take ANY capacity adds at WDW as a positive.

And yes UOE was higher capacity but it wasn’t being fully utilized much of the time so it wasn’t helping disperse crowds as well as this will.

I will agree with you there. They still need new capacity and not replacing old capacity.

 

[CaptainAmerica]

And yes UOE was higher capacity but it wasn’t being fully utilized much of the time so it wasn’t helping disperse crowds as well as this will.

Epcot didn't need crowd dispersal. Now it does.

And as we've learned, sticking a new E-ticket in Epcot doesn't make it any less congested trying to walk past the Tangled bathrooms at 12:30 in the afternoon. Even if we concede that Guardians is "new capacity," which I don't, they're not addressing their pinch points.