Disney’s Q3 FY22 Earnings Results Webcast

[fgmnt]

With as much (well-earned) cynicism I have surrounding the development of the domestic parks, you have to wonder if they will actually seriously invest in a capital program for the domestic parks. Probably not, but man, they see they can keep turning the dial up on prices and not get burned.

I can't really foresee any additional sites for domestic parks and resorts in the current political and literal climate. Texas can't handle extreme stressors on their power grid, it can snow there now... just can't see anything happening there.

With regards to sportsbetting... you have to imagine they would love to turn the NBA vanitydome into an ESPN Zone that is powered by Caesar's Sportsbook, but they would need the blessing of Herr DeSantis or whomever else could become governor.

 

[peter11435]

I was only using that as an example. I know they aren't booking 100% (or the normal 96-98%) of the rooms because anyone that has common sense can see that. The 'same number of guests trying to book' is what I was estimating, not the fact that less rooms are available.

You are assuming that available room nights are significantly lower than normal. You don’t actually have tangible evidence of that let alone the ability to speculate on what that number might actually be.

Disney always had rooms out of service for refurbishment both pre and post COVID.

You are also misunderstanding what was meant by that 50% number regarding housekeeping and you also are assuming several things regarding scheduling. Why do you assume that housekeepers aren’t working more than 40 hours per week. Mandatory and voluntary overtime are common across WDW.

 

[HauntedPirate]

With as much (well-earned) cynicism I have surrounding the development of the domestic parks, you have to wonder if they will actually seriously invest in a capital program for the domestic parks. Probably not, but man, they see they can keep turning the dial up on prices and not get burned.

I can't really foresee any additional sites for domestic parks and resorts in the current political and literal climate. Texas can't handle extreme stressors on their power grid, it can snow there now... just can't see anything happening there.

With regards to sportsbetting... you have to imagine they would love to turn the NBA vanitydome into an ESPN Zone that is powered by Caesar's Sportsbook, but they would need the blessing of Herr DeSantis or whomever else could become governor.

They have billions of reasons NOT to invest in the parks. The sheep think everything is great and keep giving Disney their money, why spend a penny on them?

 

[peter11435]

If you only have two bartenders you can't just schedule them both Thurs-Mon because those are the busiest days because then you can't open on Tues & Weds.

This analogy doesn’t scale up. When dealing with two bartenders you are correct. With dealing with a workforce of hundreds of housekeepers it doesn’t apply. Even if you did cut the workforce by half that doesn’t mean you suddenly have days with 0 housekeepers. It means you suddenly have days with 900 housekeepers instead of 1800.

 

[erasure fan1]

They have billions of reasons NOT to invest in the parks. The sheep think everything is great and keep giving Disney their money, why spend a penny on them?

Exactly. Disney is, and has been, in full on push it to the limit mode when it comes to profit maximizing. Even well before Covid. Covid just ended up being a blessing for them from a cost cutting standpoint. It gave them a real convenient excuse to cut cut cut with no real intent on bringing things back. And with the business they've been getting, fat chance we see them add value anytime soon. I still believe the mentality Disney has is push it till it breaks. Then back off and say, look how great we are with these "discounts"!

 

[MisterPenguin]

1. D+ subscriber goals: 100 million by 2024. They hit that goal in the first month of Disney+.

2. Revised goal #2: 230-260M subs by the end of 2024.

3. Revised goal #3: because of Hotstar in India being a bit iffy, by choosing not to over pay for the cricket streaming rights (tho, Disney retains the linear TV broadcasting rights), Hotstar is being teased out of the equation. The new goal is:

A) 135-165M Disney+ subs by then end of fiscal 2024​

-at which point D+ is profitable​

-this fiscal year of 2022 is peak losses while building the infrastructure​

B) 80M Hoststar subs.​

4. Note that the new combined Hotstar and D+ goals are pretty much the same as the old. Adding them together, the goal is 215-265M subs.

 

[Magenta Panther]

1. D+ subscriber goals: 100 million by 2024. They hit that goal in the first month of Disney+.

2. Revised goal #2: 230-260M subs by the end of 2024.

3. Revised goal #3: because of Hotstar in India being a bit iffy, by choosing not to over pay for the cricket streaming rights (tho, Disney retains the linear TV broadcasting rights), Hotstar is being teased out of the equation. The new goal is:

A) 135-165M Disney+ subs by then end of fiscal 2024​

-at which point D+ is profitable​

-this fiscal year of 2022 is peak losses while building the infrastructure​

B) 80M Hoststar subs.​

4. Note that the new combined Hotstar and D+ goals are pretty much the same as the old. Adding them together, the goal is 215-265M subs.

I'm not an expert on this kind of stuff, but I just read that, according to the breakdown of the earnings report, Disney+ only added 100,000 new subscribers in Q3, whereas in Q2, it added 1.5 million. Seems like a heck of a drop to me?

 

[mikejs78]

I'm not an expert on this kind of stuff, but I just read that, according to the breakdown of the earnings report, Disney+ only added 100,000 new subscribers in Q3, whereas in Q2, it added 1.5 million. Seems like a heck of a drop to me?

Not sure where you're getting your numbers, but they added 14.4 million in Q4, compared to 7.9 million in Q2. So almost double.

 

[MisterPenguin]

I'm not an expert on this kind of stuff, but I just read that, according to the breakdown of the earnings report, Disney+ only added 100,000 new subscribers in Q3, whereas in Q2, it added 1.5 million. Seems like a heck of a drop to me?

That's only for D+ domestically, which is already a saturated market for them. Saturating your markets is why Netflix is plateauing and going down. Netflix has already penetrated all markets.

D+ is still expanding internationally.

Last quarter...

And current quarter:

Disney has two years to gain at least 75M more subs to meet its goal.... of subs.

If ad-supported subs bring in more revenue than the amount of the subscription fee... then D+ will become profitable long before it hits that 2024 goal.

 

[Magenta Panther]

Not sure where you're getting your numbers, but they added 14.4 million in Q4, compared to 7.9 million in Q2. So almost double.

The bulk of that addition was overseas, as I understand it - Disney opening new streaming markets. The drop I'm referring to is domestic. Here's the word from Variety.com:

Most of the Disney+ gains in the most recent quarter were outside the U.S. and Canada, where the service picked up just 100,000 to reach 44.5 million. International Disney+ subscribers increased by 6 million in the quarter, to 49.2 million, while Disney+ Hotstar — available in India and Southeast Asia — picked up 8.3 million to hit 58.4 million.

Disney Beats Quarterly Expectations, Disney+ Soars to 152 Million Subscribers

Disney packed on 14.4 million Disney+ streaming subscribers in the June quarter and topped Wall Street earnings expectations.

variety.com

 

[flynnibus]

They could be at 100% of rooms and still have a staffing shortage. They are operating at 50% housekeeping service. So they can have half the number of housekeeping they used to have and still service all the rooms. But they know they need to get housekeeping back to daily.

they were running less frequent before covid too - don’t remember the payoffs? They have to be able to turnover rooms within time limits - that limits what you can operate.

You think the shaping of demand stops at the park turnstiles??

 

[Magenta Panther]

That's only for D+ domestically, which is already a saturated market for them. Saturating your markets is why Netflix is plateauing and going down. Netflix has already penetrated all markets.

D+ is still expanding internationally.

Last quarter...

View attachment 659476

And current quarter:

View attachment 659477

Disney has two years to gain at least 75M more subs to meet its goal.... of subs.

If ad-supported subs bring in more revenue than the amount of the subscription fee... then D+ will become profitable long before it hits that 2024 goal.

BUT...if the market is, as you say, already saturated...?

I mean, Disney is going to start charging people over 10 bucks a month for ad-free programming now. Not such a good deal anymore. I used to subscribe to Amazon until I decided that the $14.99 was too much because I wasn't watching enough of its programs to make the price worthwhile. I'm still subscribed to Apple+, but it's only $4.99 a month. I'm just saying that, given the anemic growth in Q3, it seems kind of dumb to raise prices for ad-free streaming and then add another service where customers pay the more-reasonable original price but with ads tacked on. But again, I don't know much about this stuff...(and I'm not a subscriber to Disney+ anyway...)

 

[matt9112]

Dude, that article was written in 2021 and last updated in February. And it's speculation.

There’s more evidence than not that disney holds back rooms….have done it for years. Even before Covid occasionally would have rooms out of service if it was a slower part of the year etc.

 

[Magenta Panther]

Recession will be in full swing by than. All the expendable income will be on its way out soon.

That's depressing. But probably accurate.

 

[fgmnt]

Recession will be in full swing by than. All the expendable income will be on its way out soon.

Inflation was flat last month and energy prices are coming down. The inflation we have seen can be pegged pretty significantly on oil, so if that can at least zero out through the year, we might avoid a recession that also brings in significant unemployment and curtailed consumer spending.

In addition, So many Disney trips are booked and have major expenses hit the credit card 6+ months in advance. Not out of the realm of logic that Q3 and Q4 will be light (reaction to recent high inflation) but Q1 and 2 of 2023 will be fine.

 

[mikejs78]

There’s more evidence than not that disney holds back rooms….have done it for years. Even before Covid occasionally would have rooms out of service if it was a slower part of the year etc.

I never said they weren't holding back some rooms. All I am saying is that there isn't evidence that what's being held back now is any more than it was pre-pandemic. (It may be, I just haven't seen any evidence of it and it was asserted here as fact without any supporting data..)

 

[mikejs78]

they were running less frequent before covid too - don’t remember the payoffs? They have to be able to turnover rooms within time limits - that limits what you can operate.

You think the shaping of demand stops at the park turnstiles??

You are completely missing my point.

 

[MisterPenguin]

Most of the Disney+ gains in the most recent quarter were outside the U.S. and Canada, where the service picked up just 100,000 to reach 44.5 million. International Disney+ subscribers increased by 6 million in the quarter, to 49.2 million, while Disney+ Hotstar — available in India and Southeast Asia — picked up 8.3 million to hit 58.4 million.

Disney+ has always had increases in subs every quarter. The number of new subs varies. So, some quarters will be more than others. And math says that means that there must be a quarter whose gains is less than the quarter before.

Calling that "a drop" is what's misleading, because overall domestic subs didn't drop... just the rate of additions.

Bob and Christine have said several times in previous calls that the accrual of new subs varies, especially by season.

Netflix, OTOH, had actual drops in total subs for two quarters in a row.

Remember, D+ came on the scene right before the pandemic started, which, with everyone staying home, drove up subs at a fantastic rate (for all streamers). The pandemic party for streamers is over and the unemployment rate is now back to where it was pre-pandemic.

Once D+ penetrates all the foreign markets like Netflix already has, it too will plateau. And Disney's guidance is that it will at least make it to 215 - 265 M by 2024.

 

[GCTales]

Disney+... Christine: Ad-support looks good. And we're starting slowly, ease viewers in. And so, we may not be getting as much money as we could, but, we don't want to tick people off. And we're able to ramp up depending how it goes.

Hmmmm.. sounds like how you boil a frog.

Raise the temp slowly and the frog won't notice until it is too late.

 

[Vegas Disney Fan]

BUT...if the market is, as you say, already saturated...?

I mean, Disney is going to start charging people over 10 bucks a month for ad-free programming now. Not such a good deal anymore. I used to subscribe to Amazon until I decided that the $14.99 was too much because I wasn't watching enough of its programs to make the price worthwhile. I'm still subscribed to Apple+, but it's only $4.99 a month. I'm just saying that, given the anemic growth in Q3, it seems kind of dumb to raise prices for ad-free streaming and then add another service where customers pay the more-reasonable original price but with ads tacked on. But again, I don't know much about this stuff...(and I'm not a subscriber to Disney+ anyway...)

That’s about when I dropped Netflix and Prime also, under $10 a month was a great deal, over $10 (along with a dozen other $10 subscriptions) is much harder to justify.