News Disney announces strategic restructuring of media and entertainment divisions.

[UNCgolf]

Its been down because the company was aggressively trying to move from just being distribution to having in house content. This is the comapny investing to drive future value. This is not a sign of weakness or uncertainty, but in fact the opposite. It means investment. The company has moved past proving the distribution and commercial models work and is now doubling down to protect itself for the next wave which is where all the content is hoarded verse being broadly licensed. (Because everyone else is moving into the format)

They have to keep investing in original content to maintain/gain subscriber numbers. This isn't a one-time capital expenditure like Disney building a new ride. It is an ongoing expense for running their business. However, they aren't making enough money from subscribers to pay for that content, hence why they have negative cash flow. Thus, something will have to change (advertising, price increases, etc.) to make up the difference. They can't stop investing in original content or they will lose subscribers. It's not going to suddenly become cheaper to produce content; if anything, costs are going to continually increase.

That would not be an issue if Netflix (or Disney+, or whoever) were the only game in town. But it's a serious problem when you have 10 or 15 different services all competing for subscribers. Even if everyone subscribed long-term (and we already know they don't, and that the number of people doing so is apparently decreasing rather than increasing), they would certainly not all subscribe to every service. It's inevitable that some of them will fail, unless they make changes to their model (one option is several services coming together and bundling their offerings -- essentially a streaming version of a cable package).

I'm also not sure why you mentioned 2014. It sounds like you think I'm saying streaming isn't going to work, which isn't even remotely close to what I've said. I think you're arguing against a straw man.

 

[TrainsOfDisney]

A little off-topic but I don’t know why Disney doesn’t create a premium subscription to their brand. Include a worldwide annual pass, Disney+, D23 membership, etc.

Have a renewal rate that is a deep enough discount that people will continue to renew because they don’t want to pay the full price again in the future.

Honestly, I think they were foolish to try to compete with Netflix. It’s like trying to compete with six flags in the amusement park industry. The Disney brand should be a premium product and should be priced MORE than the competition.

 

[DVCakaCarlF]

A little off-topic but I don’t know why Disney doesn’t create a premium subscription to their brand. Include a worldwide annual pass, Disney+, D23 membership, etc.

Have a renewal rate that is a deep enough discount that people will continue to renew because they don’t want to pay the full price again in the future.

Honestly, I think they were foolish to try to compete with Netflix. It’s like trying to compete with six flags in the amusement park industry. The Disney brand should be a premium product and should be priced MORE than the competition.

Because price is everything right now.

 

[_caleb]

A little off-topic but I don’t know why Disney doesn’t create a premium subscription to their brand. Include a worldwide annual pass, Disney+, D23 membership, etc.

Have a renewal rate that is a deep enough discount that people will continue to renew because they don’t want to pay the full price again in the future.

Honestly, I think they were foolish to try to compete with Netflix. It’s like trying to compete with six flags in the amusement park industry. The Disney brand should be a premium product and should be priced MORE than the competition.

I love the idea of a membership spanning the streaming services and into the parks and fandom! D23 has always been a super niche thing, but it’s pure marketing- if Disney treated subscribers like fans, more of them might start demonstrating that die-hard pixie dust loyalty.

Add in automated birthday videos/calls to my kids from their favorite characters (based on what they watch). Additional digital assets like ambient background tracks and screen savers (like the old ones that were included on the Finding Nemo DVD) would be really cool, too.

I don’t think Disney+ has tried to compete with Netflix. They’re trying to be the premium family add-on that people combine with Netflix and whatever else. So the Six Flags/Disney parks comparison seems to bear out. The only problem is the number of people who see a trip to the parks as a once-in-a-lifetime thing. Disney wants D+ subscribers to be more like AP holders.

 

[_caleb]

Because price is everything right now.

Right. But adding in a D23 membership costs them nothing, right? Treating subscribers like fans rather than like customers would be much more Disney approach and would increase value without increasing costs.

 

[flynnibus]

They have to keep investing in original content to maintain/gain subscriber numbers. This isn't a one-time capital expenditure like Disney building a new ride. It is an ongoing expense for running their business. However, they aren't making enough money from subscribers to pay for that content, hence why they have negative cash flow. Thus, something will have to change (advertising, price increases, etc.) to make up the difference. They can't stop investing in original content or they will lose subscribers. It's not going to suddenly become cheaper to produce content; if anything, costs are going to continually increase.

That would not be an issue if Netflix (or Disney+, or whoever) were the only game in town. But it's a serious problem when you have 10 or 15 different services all competing for subscribers. Even if everyone subscribed long-term (and we already know they don't, and that the number of people doing so is apparently decreasing rather than increasing), they would certainly not all subscribe to every service. It's inevitable that some of them will fail, unless they make changes to their model (one option is several services coming together and bundling their offerings -- essentially a streaming version of a cable package).

I'm also not sure why you mentioned 2014. It sounds like you think I'm saying streaming isn't going to work, which isn't even remotely close to what I've said. I think you're arguing against a straw man.

You keep arguing that the idea of long term subscribers wont pan out... but it has.

Yet Netflix is regarded as being the strongest in the topic of churn - https://www.fool.com/investing/2020/09/15/netflix-is-killing-the-competition-in-this-one-key/

You keep talking as if these services are all doomed because of customer mobility. Yet the industry shift to this distribution model just continues to accelerate.

Content creation is not a one time thing... but it is also not one size. Netflix is also not alone in this area (but is why a conglomerate like twdc is so well positioned in this category). Netflix had to start from zero and infamously went hard trying to create a spark.

The failure of other studios to navigate the move to direct, or not being large enough to support it, helps independents like netflix as they will be the most interesting GTM.

There will be price escalation as the reality of consolidation happens.

 

[flynnibus]

A little off-topic but I don’t know why Disney doesn’t create a premium subscription to their brand. Include a worldwide annual pass, Disney+, D23 membership, etc.

Why discount what you dont have to yet?

Those most loyal like this... are going to be buying anyways.

 

[TrainsOfDisney]

Why discount what you dont have to yet?

Those most loyal like this... are going to be buying anyways.

Can you add me to your ignore list? Lol

 

[UNCgolf]

You keep arguing that the idea of long term subscribers wont pan out... but it has.

Yet Netflix is regarded as being the strongest in the topic of churn - https://www.fool.com/investing/2020/09/15/netflix-is-killing-the-competition-in-this-one-key/

You keep talking as if these services are all doomed because of customer mobility. Yet the industry shift to this distribution model just continues to accelerate.

Content creation is not a one time thing... but it is also not one size. Netflix is also not alone in this area (but is why a conglomerate like twdc is so well positioned in this category). Netflix had to start from zero and infamously went hard trying to create a spark.

The failure of other studios to navigate the move to direct, or not being large enough to support it, helps independents like netflix as they will be the most interesting GTM.

There will be price escalation as the reality of consolidation happens.

Based on that last sentence, it sounds like you agree with everything I'm saying and just don't realize you're agreeing.

There is not room in the market for 15 different streaming services all using Netflix's current model. It would be almost impossible for all of them to succeed. Netflix almost certainly isn't going anywhere, and neither is Disney+, but just about every other service is in a fight for survival.

Also, of course there are some long-term subscribers. I never said otherwise. There are likely to be less going forward (as I already said, there's been numbers to suggest that that is the case for younger generations, which could be an issue in the future if the number of streaming services continues to grow, but even if there aren't, it's irrelevant because that's not the problem. The problem is that there aren't enough long-term subscribers to go around for 15 services.

That, along with everything else I've been saying, is just an explanation of why some of these services are going to fail, and again, it sounds like you agree with me you're talking about consolidation.

 

[the.dreamfinder]

Bloomberg - Are you a robot?

www.bloomberg.com

 

[UNCgolf]

Bloomberg - Are you a robot?

www.bloomberg.com

Wow at Hulu losing over a billion dollars a year.

 

[_caleb]

Bloomberg - Are you a robot?

www.bloomberg.com

Interesting article. If Hulu gets bigger, Disney will have to pay more to Comcast when the bill comes due for their buyout of Comcast’s part of Hulu. That’s in 3 years.

So the speculation is that Disney won’t really invest much in Hulu in the meantime. But some of the info in the article hints that Disney isn’t exactly in a tough spot with Hulu (even if they did decide that Star, and not Hulu, will be their streaming brand internationally).

NBC Universal (owned by Comcast) approached Disney within the last couple months to ask about partnering in Hulu. As did a private equity firm. This shows that others see Hulu as a viable option, if maybe in a weaker position to negotiate. But Disney has options.

They could abandon Hulu in favor of Star in the U.S. They could move Hulu content over to Disney+. They could renegotiate the deal with Comcast, whose interest signals that they want to take streaming way more seriously than they have been (Peacock).

All of this will surely be something Kareem Daniel will be working on- determining the best way to distribute Hulu‘s content. I think the big differentiator (which Comcast likes) is the Live TV option Hulu has baked in. That’s the solution to the sports and news problem other streaming services face.

 

[UNCgolf]

Interesting article. If Hulu gets bigger, Disney will have to pay more to Comcast when the bill comes due for their buyout of Comcast’s part of Hulu. That’s in 3 years.

So the speculation is that Disney won’t really invest much in Hulu in the meantime. But some of the info in the article hints that Disney isn’t exactly in a tough spot with Hulu (even if they did decide that Star, and not Hulu, will be their streaming brand internationally).

NBC Universal (owned by Comcast) approached Disney within the last couple months to ask about partnering in Hulu. As did a private equity firm. This shows that others see Hulu as a viable option, if maybe in a weaker position to negotiate. But Disney has options.

They could abandon Hulu in favor of Star in the U.S. They could move Hulu content over to Disney+. They could renegotiate the deal with Comcast, whose interest signals that they want to take streaming way more seriously than they have been (Peacock).

All of this will surely be something Kareem Daniel will be working on- determining the best way to distribute Hulu‘s content. I think the big differentiator (which Comcast likes) is the Live TV option Hulu has baked in. That’s the solution to the sports and news problem other streaming services face.

They've been pushing Peacock a bit more recently -- they even had some coverage of the US Open exclusively on Peacock for the Thursday and Friday rounds. Beyond that, the Office and Parks and Recreation are now on Peacock (or will be soon; they're no longer on Netflix). Those two shows alone (especially the Office) are going to attract a lot of people especially with Peacock having a free, ad-supported version.

 

[_caleb]

Wow at Hulu losing over a billion dollars a year.

Yeah. That is a LOT of money! Obviously that’s part of some sort of plan, or wouldn’t they have unloaded it by now? I wonder if bundling Hulu with D+ and ESPN+ (which I still don’t quite understand) has helped or hurt that spending.

 

[UNCgolf]

Yeah. That is a LOT of money! Obviously that’s part of some sort of plan, or wouldn’t they have unloaded it by now? I wonder if bundling Hulu with D+ and ESPN+ (which I still don’t quite understand) has helped or hurt that spending.

It's not that surprising considering they've been ramping up production of their own content much like Netflix (although not on Netflix's level), and that's quite expensive. As I said in an earlier post, Netflix has been losing money (sort of -- it's more complicated than that because they've turned a profit, but they've had significant negative cash flow) the last several quarters as well, or at least they were pre-pandemic. COVID shutting down all production (along with people being stuck inside far more than usual) was probably a help to their bottom line in the short term.

I think losing that kind of money is considered okay for streaming right now, just like it is for Uber and Lyft. Uber/Lyft is a totally different business and they are losing far more money than that -- Uber lost like $8 billion last year alone -- but just from a business outlook standpoint. It's about building a subscriber base etc. and then they will figure out a way to make it profitable later.

 

[_caleb]

They've been pushing Peacock a bit more recently -- they even had some coverage of the US Open exclusively on Peacock on Thursday and Friday. Beyond that, the Office and Parks and Recreation are now on Peacock (or will be soon; they're no longer on Netflix). Those two shows alone (especially the Office) are going to attract a lot of people especially with Peacock having a free, ad-supported version.

Yeah. I agree those two series alone are a huge draw. They have become so much a part of pop culture and are so rewatchable, they’re even becoming super popular with high school kids.

But it seems to me like they’ve positioned Peacock as an add-on to the add-on. Almost like á la carte bundle of NBC shows. In my opinion, unless there’s a really strong central way to add/manage/view/delete these sorts of individual mini-bundles (HBO would be another), they won’t last. Disney+ smartly set up like this from the beginning by having Pixar, Disney, Marvel, Star Wars, National Geographic and now Fox sections. It would not be difficult to add an NBC section if they were to pursue a partnership. Of course, NBC’s content is a better fit for Hulu than for Disney+.

 

[_caleb]

By the way, we watched a couple episodes of Prop Culture on Disney+ tonight. It is exactly the sort of low-budget but deep dive into fandom that we’ve been talking about in this thread. I expect to see LOTS more of that sort of thing, and I’m really happy about that!

 

[TrainsOfDisney]

By the way, we watched a couple episodes of Prop Culture on Disney+ tonight. It is exactly the sort of low-budget but deep dive into fandom that we’ve been talking about in this thread. I expect to see LOTS more of that sort of thing, and I’m really happy about that!

That’s a great show! I loved seeing Christopher Loyd in the Roger Rabbit episode.

 

[UNCgolf]

Yeah. I agree those two series alone are a huge draw. They have become so much a part of pop culture and are so rewatchable, they’re even becoming super popular with high school kids.

But it seems to me like they’ve positioned Peacock as an add-on to the add-on. Almost like á la carte bundle of NBC shows. In my opinion, unless there’s a really strong central way to add/manage/view/delete these sorts of individual mini-bundles (HBO would be another), they won’t last. Disney+ smartly set up like this from the beginning by having Pixar, Disney, Marvel, Star Wars, National Geographic and now Fox sections. It would not be difficult to add an NBC section if they were to pursue a partnership. Of course, NBC’s content is a better fit for Hulu than for Disney+.

They've got plans to start pumping out original content for Peacock, though -- and they're going for the nostalgia factor, which may not be a bad idea considering that Full House sequel seems to have performed well for Netflix.

They have a Saved by the Bell sequel series with most of the original cast, a Clueless TV show, a reimagined Fresh Prince of Bel-Air (which will apparently be more of a drama than a comedy), and a Battlestar Galactica reboot, among others.

 

[the.dreamfinder]

Disney to cut back on TV, sports biz in India

The move follows a global announcement of the company’s intention to reorganize its media and entertainment businesses to “focus on developing and producing original content for the company’s streaming services”

www.livemint.com

It increasingly feels like buying the Fox assets was a waste of money.