Disney’s Q3 FY23 Earnings Results Webcast

[Sirwalterraleigh]

I'm comparing the runway to Netflix, which was already priced at 20 dollars/month on the top end domestically. 15.99 if we want to just stick to the "standard" plan.

Whether there is more runway beyond that is another matter, but Netflix has achieved adequate profitability right now and Iger is rushing to that goal-line. From 7.99 to 13.99 in less than 365 days. Park tickets have never experienced that kind of 'inflation'.

I think Netflix/hbo are at their ceilings…it’s around $20

More than that and you’ll get mass defections or “seasonal” subs. Which means way more content costs.

Let’s see how it plays

 

[BrianLo]

Not really… they told us the price was going up and to buy before it went up. So this isn’t 2 in a row, this is the first price hike for long term subscribers.

Very true, though I think you'd be surprised the number of people *actually* on an annual plan. Like we're talking maybe <10%.

The people who can afford annual plans, while price conscience and savvy, are actually strong consumers. They are probably more sticky than average and even represent a non-insignificant amount of original D23 subscribers. Those are the brand loyalist.

I even got 'forced' into a monthly plan when Amex started doing a kick-back here in Canada. I am the consumer who is literally paying peanuts, I think it's costing me 5CAD a month for essentially D+/Hulu (Star) ad-free up here right now.

 

[granfiesta]

For any of you who have the ad-tier on D+, how does it work? How many ads are there, say in an episode of Bluey or a movie? My kids watch a ton of D+, so I'll have to keep it, but considering in just over a year, the cost of a monthly D+ no ad sub has gone from $7.99 to $13.99, I'm seriously looking at the ad-tier. I'm just concerned with ad placement and appropriateness for my kids.

 

[TrainsOfDisney]

but Netflix has achieved adequate profitability right now and Iger is rushing to that goal-line. From 7.99 to 13.99 in less than 365 days.

While cutting content to save money and having nothing new in production.

 

[BrianLo]

Is there a detailed explanation on how Disney was able to dramatically decrease streaming losses this quarter?

Basically the price hike in Q1'2023 lead to increase revenue, that's been slowly helping to the tune of 600million. The subscriber loss has been almost exclusively India driven, which is almost irrelevant to revenue.

Then there has been some decreased spend but also significantly less marketing spend since Iger came back.

 

[Sirwalterraleigh]

View attachment 736595

Basically the price hike in Q1'2023 lead to increase revenue, that's been slowly helping to the tune of 600million (the subscriber loss has been almost exclusively India driven, which is almost irrelevant to revenue) and then there has been some decreased spend but also significantly less marketing spend since Iger came back.

So in reality they didn’t make more and spent what amounts to a little bit less?

I’ll really believe this streaming model when they make as much in a quarter as WOD at wdw

 

[Vegas Disney Fan]

They really want to shift more people to ad-tier, I think that speaks to how much money there is in ads. The new spread makes a more convincing argument to the consumer.

I think this too and I guess that’s my trouble with it, I own nearly everything Disneys ever put out on either Bluray or DVD (or in many cases both)… one of the big benefits of D+ is the convenience. They are trying to force me into ads but I’d rather dig out my old Bluray and DVDs than sit through commercials, that takes away a lot of the value in it.

 

[BrianLo]

So in reality they didn’t make more and spent what amounts to a little bit less?

I’ll really believe this streaming model when they make as much in a quarter as WOD at wdw

It's the whole concept of internal versus acquisition growth.

They've spent 11 billion on internally making D+ (and Star Internationally). Is it worth more than 11 billion? Well... currently based on the market value of Hulu, which is a US only brand, technically and resoundingly yet. Where the price tag stops is our guess, but it seems to be coming to a final talley pretty soon.


We've come to learn that what people thought they 'wanted', Iger to make new things internally, was not what they actually wanted. They just want Iger to buy shiny things that were already valuable and on the positive trajectory.

 

[BrianLo]

I think this too and I guess that’s my trouble with it, I own nearly everything Disneys ever put out on either Bluray or DVD (or in many cases both)… one of the big benefits of D+ is the convenience. They are trying to force me into ads but I’d rather dig out my old Bluray and DVDs than sit through commercials, that takes away a lot of the value in it.

I guess that's the thing though, the extremely cheap introductory prices that streaming in general embarked on did a lot of damage to the value of content. Consumers expect premium content for insultingly low prices. I guess that's a large part why half of Hollywood is on strike.

How many people would have gladly paid 120$ USD a year in the 90's (and I'm not even talking inflation adjusted) for Disney to ship them a copy of every VHS they produced that year.

One can make the argument that one owns that media and the discrepancy of digital rights. But there's also an argument those VHS tapes are long ago thrown in a garbage pale or collecting dust in a basement. Streaming is cheap. Streaming at 139 a year is still kind of too cheap in the grand scheme of Disney's history.


The other media sector that hasn't destroyed physical media entirely, but also has a bit of an unhealthy consumer relationship is video games. People still 'expect' consoles to come in at 90's pre-inflation dollars. They are incensed when game prices are raised 10$ after a decade. Despite the entire industry having lost serious ground, spending significantly more. Only overcome by that entire market segment growing enough to ignore the underlying problems.

 

[Sharon&Susan]

View attachment 736595

Basically the price hike in Q1'2023 lead to increase revenue, that's been slowly helping to the tune of 600million. The subscriber loss has been almost exclusively India driven, which is almost irrelevant to revenue.

Then there has been some decreased spend but also significantly less marketing spend since Iger came back.

Thank you. On the topic of subscriber loss, I see that Disney lost a few hundred thousand subscribers in North America both this quarter and the last. Likely to stop soon or just not a concern right now when they still have tens of millions of subscribers?

 

[BrianLo]

Thank you. On the topic of subscriber loss, I see that Disney lost a few hundred thousand subscribers in North America both this quarter and the last. Likely to stop soon or just not a concern right now when they still have tens of millions of subscribers?

I think when you have sharp price increases there is expected to be some attrition. They'd need to lose 10 million domestic subscribers to come out behind the next increase from a revenue perspective. It's a balancing act for sure, but I think they've been pleased it's been so minor despite one relatively shocking large increase experienced so far.

International numbers seem unaffected, though the price increase may not be as shocking since Hulu/D are already more or less integrated in those markets.

 

[monothingie]

I think when you have sharp price increases there is expected to be some attrition. They'd need to lose 10 million domestic subscribers to come out behind the next increase from a revenue perspective. It's a balancing act for sure, but I think they've been pleased it's been so minor despite one relatively shocking large increase experienced so far.

International numbers seem unaffected, though the price increase may not be as shocking since Hulu/D are already more or less integrated in those markets.

They are more or less copy/pasting the Netflix approach. Netflix grew subscribers by 6-7M and made $1.6B. The question is will Disney be able to squeeze more $ from fewer subs with expensive content that less people are watching.

Also I’m curious to know, since the Indian subs pay pennies on the dollar, how much does Disney get from the domestic carrier subsidized subs?

 

[monothingie]

Thank you. On the topic of subscriber loss, I see that Disney lost a few hundred thousand subscribers in North America both this quarter and the last. Likely to stop soon or just not a concern right now when they still have tens of millions of subscribers?

It’s a major problem. Subscriber growth is directly tied to content. Look at the Nielsen numbers for DTC. Find where expensive tentpole content like Secret Invasion ranks. Bluey, which they license, doubles the amount of minutes streamed.

There’s a direct correlation between minutes watched and subscriber growth across DTC platforms.

TOP 10

Discover what Americans are watching and playing.

www.nielsen.com

 

[MarvelCharacterNerd]

Did I catch correctly that they said people at the parks were spending more on food but less on merch?

That tracks with my experience. Smaller food portions now cost bigger prices, so while I still have to eat, I don't have to shop. And I'm not. There was a button down shirt/jacket I REALLY wanted. But not for $70. And there's a current t-shirt I really want. But not for $30. Not when I have to spend stupid money on food and am still hungry afterward. #thankschristine

 

[erasure fan1]

That tracks with my experience. Smaller food portions now cost bigger prices, so while I still have to eat, I don't have to shop. And I'm not. There was a button down shirt/jacket I REALLY wanted. But not for $70. And there's a current t-shirt I really want. But not for $30. Not when I have to spend stupid money on food and am still hungry afterward. #thankschristine

I was there for a week last month and I bought myself exactly NOTHING. And the sad part is there was nothing I saw that I wanted. The only shirt I saw that was cool was a muppet shirt. But when we asked about it the lady said they sold out instantaneously and haven't gotten any back. I was also hoping the store by muppet vision would have something cool, but it was still closed.

 

[HauntedPirate]

Are subscribers still tied cell contracts? If so is it never ending or I wonder what % would renew out of pocket when it expires.

I would be one who would not subscribe if it wasn’t for my Verizon deal. Not a damn thing work subscribing for on Disney- except for a binge-and-purge month now and then.

 

[BrianLo]

Also I’m curious to know, since the Indian subs pay pennies on the dollar, how much does Disney get from the domestic carrier subsidized subs?

We don't know for sure but the average across all domestic users is now over 7 dollars a month when the price has been 9.99 for a while now. Bundling and annual subscriptions drag down that total as well, I'm sure. Netflix ARPU is 16 dollars on the other hand so they are recovering far more per use than just the price differential alone, though there is nothing to bundle Netflix with.

 

[Sir_Cliff]

Valid losses at the box office is all on Iger... Disney stopped creating movies and driving the market, instead Iger took them on the "buy creation aka buy your competition" path, the bought Pixar, Marvel, lucas etc... and proxy their creativity to them.

If only Disney hadn't of bought Pixar and Marvel they would have been a powerhouse over these past few decades. Damn you Iger!

 

[Sirwalterraleigh]

It's the whole concept of internal versus acquisition growth.

They've spent 11 billion on internally making D+ (and Star Internationally). Is it worth more than 11 billion? Well... currently based on the market value of Hulu, which is a US only brand, technically and resoundingly yet. Where the price tag stops is our guess, but it seems to be coming to a final talley pretty soon.


We've come to learn that what people thought they 'wanted', Iger to make new things internally, was not what they actually wanted. They just want Iger to buy shiny things that were already valuable and on the positive trajectory.

That’s gonna mean more acquisition costs in perpetuity then

Here’s my guess what people want from stream:

1. Lots of great new content
2. Unlimited old content
3. low costs
4. No ads

What’s hard about that?

And remember: in some millennium Bob will leave

 

[Sirwalterraleigh]

Did I catch correctly that they said people at the parks were spending more on food but less on merch?

That tracks with my experience. Smaller food portions now cost bigger prices, so while I still have to eat, I don't have to shop. And I'm not. There was a button down shirt/jacket I REALLY wanted. But not for $70. And there's a current t-shirt I really want. But not for $30. Not when I have to spend stupid money on food and am still hungry afterward. #thankschristine

The profit is in the merch at parks

Why do you think they build parks in authoritarian sweatshop countries?

Ok…enjoy breakfast