Disney’s Q2 (Jan/Feb/Mar) FY 2020 Earnings Results Webcast on Tuesday, May 5, 4:30ET

[seascape]

Disney+ pays full price to the The Walt Disney Studios for the content. Studios then reports that gross price as part of their income. They then true up the margin in a separate column (eliminations) to calculate the final overall company operating/net income.

That way it shows the true performance of the Studios business, i.e. the studios doesn't loose money just because they are forced to sell to Disney+ vs Netflix. Which is why you get into the silly situation of Peacock (NBC) bidding against Netflix for the rights to NBC's The Office.

Similarly, the Parks/Consumer Products business pay the studios royalties for the use of their IP.

Disney+ (Part of Disney Direct-to-Consumer & International) has to pay the other divisions of the company (parts of both studio entertainment and media networks) for content. Just as Netflix or any other service would have had to pay them for that content before.

Additionally the company is no longer being paid by outside services such as Netflix for content it now distributes in house.

Thank you for answering the question. I would like to know how Disney decides on the money paid to the studios because that could have a major effect of bonuses and other compensation to people in different Divisions. Put another way, how does The Walt Disney Company allocate your monthly payments for Disney Plus because right now with 54.5 million subscribers they only need $0.50 a month from each customer to exceed the $300,000,000.00 Netflix was paying.

Going forward and using only the number of Subscribers on March 28, 2020 and the RPU numbers Disney provided, Disney's streaming revenue from Disney+, ESPN+, Hulu and Hulu with live TV over a 12 month period would be $9.516 billion dollars a year. However, that excludes the 21 million customers added to Disney+ since then and customers added to ESPN+ and Hulu. It also excludes Hotstar revenue. I wish Disney would have included Hotstars numbers separately so we could know their total streaming revenue but the Direct to Consumer and International Division had $4.123 billion in revenue and lost $812 milion or $271 month. However, since March 28, 2020 Disney+ has added 21 million subscribers and with the launch in Japan in June Disney+ should end June with 63 million customers an increase of just under 30 million customers in 3 months. Disney+ will be profitable by the end of the year but Hulu and ESPN+ will still be negative. The question is what about Hotstar? Regardless, thanks to Disney+, The Walt Disney Company is making more from streaming than they did last year with Netflix.

 

[Bill in Atlanta]

Agree...

It was always going to be the “deal”

I also believe those parks have zero to do with growing business or generating fan bases in China.

I think Eisner and then Iger tried to get “ahead of the Curve” and offer American acceptance for the regime in favor of the very best sweatshop deals. Remember that 20 years ago when they were pitching the parks in China...merchandise was their easy money cash cow...and espn. They make a fortune off cheap produced product.

Now that is not as big a deal after consumer habits have begun to change...still lucrative though.

Fascinating. I never thought of it that way.

Looking forward, what do newer consumer habits tell us about what Disney's next focus might be?

 

[drew81]

For those that never seen it, this was only shown for the "Disney FanDaze" event
.

That was an amazing show. The costumes, lighting and pyro were top notch.

 

[Sirwalterraleigh]

Fascinating. I never thought of it that way.

Looking forward, what do newer consumer habits tell us about what Disney's next focus might be?

Same as we have seen...digital media and IP to push in as many formats a possible.

But consumer products are evolving a lot...for instance: kids no longer really desire toys...the numbers decline year over year. That void is being filled in other ways.

 

[Sirwalterraleigh]

Sure that was necessary

Of course not...

Neither is cutting everyone off on every Disney related subject as a sole authority either...

And just so I’m not comfortable in the glass House...i do this too. And have to be reminded/jerked back from gravitating towards that tendency as well.

 

[peter11435]

Of course not...

Neither is cutting everyone off on every Disney related subject as a sole authority either...

And just so I’m not comfortable in the glass House...i do this too. And have to be reminded/jerked back from gravitating towards that tendency as well.

Never claimed to be the sole authority.

But if something is posted that is incorrect then it needs to be corrected.

I realize your post was referencing how you wish things were and not how things are and need to be.

 

[Sirwalterraleigh]

Never claimed to be the sole authority.

But if something is posted that is incorrect then it needs to be corrected.

I realize your post was referencing how you wish things were and not how things are and need to be.

Oh lovely then...it just seemed “edgy”...like you had a bad taco that was repeating on you

 

[peter11435]

Oh lovely then...it just seemed “edgy”...like you had a bad taco that was repeating on you

I would love a taco

 

[Sirwalterraleigh]

I would love a taco

 

[MisterPenguin]

WRT Disney+...

Don't forget not everyone is paying full price. A lot of people jumped on the discounted 3-year and 1-year deals. Some are getting it "free" from Verizon (and I'm sure Verizon is paying Disney+ for those subs... at a discount). This is all a 'loss leader' on D+'s part in order to get market saturation.

Then there's the cost of running the network. Disney paid for the infrastructure to host D+ in North America. In Europe, they're paying a license to have other providers carry D+.

Then there's the full cost of original programming. Unlike licensing the shows produced by the various Disney studios, which went first through a theatrical release, then pay per view, then premium cable, then DVD, then broadcast; original programming doesn't go through all those profit windows. D+ had to pay not just a licensing fee for The Mandalorian, e.g., but the full $100M cost to produce it.

There are nine Marvel series in the works. There are 3 live action Star Wars series in the works and two more seasons of The Mandalorian. Then all the 'made for TV movies.' I won't count all the reality shows since they're dirt cheap to make in comparison. But you're starting to talk billions in production costs.

But it's that investment which will drive up subs... eventually all paying full price.

 

[MisterPenguin]

WRT Park "Capacity"...

I'm aghast that that is not a known public figure simply from the point of view of safety.

Isn't there some state or county Fire Marshall who has that figure? And thus, wouldn't that figure be known via a FOIA request?

 

[Sirwalterraleigh]

...I managed to figure out what “WRT” is in your word soup. Lost me there for a blink, mate

They will never cop to capacity in Orlando. Funny how the reedy creek law made it so they never have to...

Wonder about Anaheim though?

 

[GoofGoof]

View attachment 468907

The day after when you are having trouble digesting all those tacos and Coronas is revenge of the 6th

 

[seascape]

WRT Disney+...

Don't forget not everyone is paying full price. A lot of people jumped on the discounted 3-year and 1-year deals. Some are getting it "free" from Verizon (and I'm sure Verizon is paying Disney+ for those subs... at a discount). This is all a 'loss leader' on D+'s part in order to get market saturation.

Then there's the cost of running the network. Disney paid for the infrastructure to host D+ in North America. In Europe, they're paying a license to have other providers carry D+.

Then there's the full cost of original programming. Unlike licensing the shows produced by the various Disney studios, which went first through a theatrical release, then pay per view, then premium cable, then DVD, then broadcast; original programming doesn't go through all those profit windows. D+ had to pay not just a licensing fee for The Mandalorian, e.g., but the full $100M cost to produce it.

There are nine Marvel series in the works. There are 3 live action Star Wars series in the works and two more seasons of The Mandalorian. Then all the 'made for TV movies.' I won't count all the reality shows since they're dirt cheap to make in comparison. But you're starting to talk billions in production costs.

But it's that investment which will drive up subs... eventually all paying full price.

Netflix has users being provided free service also. The model is not new. That is why the RPU, revenue per user, is different. In India the price is much lower that the US. However, the price is higher in some other countries that the US and lower in others. It all depends on the exchange rates. Additionally, for the fiscal year ending September 2020 The Walt Disney Company's Direct to Consumer Division should have 18 billion revenue which is anazing when compared to Netflix's revenue of 20.15 billion for all of 2019. Given the growth rate Disney is experiencing in streaming services, the Direct to Consumer and International Division alone should pass Netflix in annual revenue by 2024.

 

[GoofGoof]

WRT Park "Capacity"...

I'm aghast that that is not a known public figure simply from the point of view of safety.

Isn't there some state or county Fire Marshall who has that figure? And thus, wouldn't that figure be known via a FOIA request?

I brought the fire code up in the other thread and someone pointed out that fire code would only apply to indoor facilities that there is no official code for outdoor space. There has to be a limit which they use for phased closings but it’s a guarded secret.

 

[seascape]

Another interesting comparison of Disney versus Netflix is to just look at the March quarter. Netflix had 5.769 billion in revenue versus 4.123 billion for Disney's Direct to Consumer and International Division. Netflix also predicted growth to 6.048 billion for the June quarter. That growth of just 280 million in the current quarter is less than the revenue Disney will get from their new 21 million Disney+ customers and that excludes growth from Hulu and ESPN+.

 

[peter11435]

I brought the fire code up in the other thread and someone pointed out that fire code would only apply to indoor facilities that there is no official code for outdoor space. There has to be a limit which they use for phased closings but it’s a guarded secret.

The limit for phased closings is fluid based on observed factors.

 

[GoofGoof]

The limit for phased closings is fluid based on observed factors.

I would assume it’s also based on what is open. Each ride/store/show has an expected number of people both in line and inside. Less attractions would in theory reduce overall capacity.

 

[MisterPenguin]

The limit for phased closings is fluid based on observed factors.

E.g., how many hours long is the line for the bathrooms.

Never mind the Fire Marshall, where's the state Health Department!!

 

[Imagineer45]

It was a huge gamble for Disney to build in China. Everyone can pretend Disney owns those parks, but if relations deteriorate between China and other countries, China can take control of those parks at any time. Playing with real authoritarianism is always dangerous... and you're kidding yourself if you think that fire won't eventually burn.

This is why I have always questioned Disney's China plan. It will work well in the short run, but the long run is unknown and risky. I thought HKDL was perfect in accessing the Chinese market without being in mainland China, as Hong Kong operates semi-autonomously, but the park was, well, exactly what you would expect from an early 2000s Eisner park, and they are still living with the long term impacts from that even with the recent improvements. SDL is beautiful and right in the middle of 34 million people, but they threw a lot of money at it to get 43% ownership, so hopefully, they can make their money back before a potentially dangerous situation.