Is attendance really down at WDW this or…

[BrianLo]

But what is the point of beating us down with the valuation if it can’t turn a profit or only breaks even or only makes a little bit? Disney would have been better off licensing their content ($$$) and establishing strategic partnerships with others (Apple) that could have absorbed the costs without the creating the mess of the past half decade.

That's your assumption or prediction. But like the levels of doubt that they would never make their profitability timeframe, I think your projections are still misinformed. We are playing in the realm of speculation though, but Iger and Co are not if anything good at wringing money out of their market share. ARPU incredibly lags what Netflix subscribers are tolerating in droves. There is still a lot more runway for pricing.

Disney would have been ahead licensing perhaps the last couple years, but no longer. All they'd have right now is no service, no 20 billion dollars (and growing) of direct consumer revenue to fine tune. No future growth in the space. Less control about what gets made or ordered. Plus still a rapidly dwindling traditional linear business. What you are not humouring me with is that they've spent the money, but have a 10 figure business to show for it. One that pays for itself and still licenses their content. With Apple or equivalent, they'd have no business, just the licensing fees. Net neutrality is where they are at now.

While DTC breaks even, the licensing fees are still paid out to the studios. There seems to be a lot of difficulty around that conceptualization that they are only making money if the DTC segment itself is making money. But they make money on licensing now AND DTC currently breaks even. Every dollar DTC starts producing moving forward puts them ahead of the pure licensing strategy.

How much did Tubi cost the roll out? If you said less than $600M, then you get a cookie! How much did D+ cost. And don’t forget to count the integration of Hulu in that.

What's more likely. Disney creating billions of operating income out of 20 billion dollar revenue or Tubi creating billions of dollars on 700m. They are not whatsoever the same sized businesses. D+ was expensive to upstart. Hulu established why it was better for them to have done so internally and not merely waited to acquire. As is they are almost 20 billion in the hole on Hulu. Plus a whole lot longer of a lead time. Which is why the slim fraction of D+ start-up was actually quite a good deal to my eyes.

How did they close out that $1.5? I read the quarterlies too. They like to offset a lot of things by raising prices and cutting expenses. That doesn’t seem like a growth strategy to me. But what do I know.

DTC still has not reduced content spend, that is still forthcoming due to the nature of amortization of programming and the delay from strikes. As well as inevitable price increases.

I agree, it is no longer a growth strategy. It's a profitability strategy. Which is one of Bob's few skills. The days of aggressive consumer acquisition and content spend out of whack to do so are over. Disney has their market share.

Experiences are (oddly) their current growth business. In theory. DTC is about to get the old parks red ocean experience.

 

[monothingie]

That's your assumption or prediction. But like the levels of doubt that they would never make their profitability timeframe, I think your projections are still misinformed. We are playing in the realm of speculation though, but Iger and Co are not if anything good at wringing money out of their market share. ARPU incredibly lags what Netflix subscribers are tolerating in droves. There is still a lot more runway for pricing.

Are they really? Their only move in this realm has been to raise prices and crack down on password sharing. Additionally while they’ve spent a ton of money on content development, because Disney can’t do anything for under $200M, even it is is well received like Mando seasons 1 and 2 (not 3) they automatically handicap themselves out of the gate. Cumulatively the problems add up. Not counting the larger percentage of wholesale customers (subsidized subscribers via service providers) the regular retail customers have reached the upper limit of pricing (where have we seen that before?), so where is the upward movement? There is none.

Disney would have been ahead licensing perhaps the last couple years, but no longer. All they'd have right now is no service, no 20 billion dollars (and growing) of direct consumer revenue to fine tune. No future growth in the space. Less control about what gets made or ordered. Plus still a rapidly dwindling traditional linear business. What you are not humouring me with is that they've spent the money, but have a 10 figure business to show for it. One that pays for itself and still licenses their content. With Apple or equivalent, they'd have no business, just the licensing fees. Net neutrality is where they are at now.

Except none of that is remotely a reality. Look at what Sony did with Spider-Man. Their licensing agreements have allowed them to make billions and pay for future content development without doing a single thing. Disney has the Premium IP and library to command significant licensing revenue. They’ve even caught onto this by doing this very thing with some of their IP in agreements with Netflix. Why? Because it makes them more money than keeping it in house. Linear has nothing to do with it, except that Disney has let all those assets fester and decay to the point of irrelevance y.

While DTC breaks even, the licensing fees are still paid out to the studios. There seems to be a lot of difficulty around that conceptualization that they are only making money if the DTC segment itself is making money. But they make money on licensing now AND DTC currently breaks even. Every dollar DTC starts producing moving forward puts them ahead of the pure licensing strategy.

Disney licensing content to itself is like paying yourself by taking money from the right pocket and putting it in the left pocket.

What's more likely. Disney creating billions of operating income out of 20 billion dollar revenue or Tubi creating billions of dollars on 700m. They are not whatsoever the same sized businesses. D+ was expensive to upstart. Hulu established why it was better for them to have done so internally and not merely waited to acquire. As is they are almost 20 billion in the hole on Hulu. Plus a whole lot longer of a lead time. Which is why the slim fraction of D+ start-up was actually quite a good deal to my eyes.

I think you’re missing the point. Tubi is inherently the better business model than D+ is. Looking at subscriber count alone proves that. No one is saying that the two services will create the same level of revenue, however Tubi is poised to be able to deliver a significantly better return on investment that D+ could.

DTC still has not reduced content spend, that is still forthcoming due to the nature of amortization of programming and the delay from strikes. As well as inevitable price increases.

No Disney has not been able to reduce content spend. Acolyte cost double of what House of Dragon costs per episode, which is made even more amazing because Acolyte episodes were half as long and appeared cheaper and less refined with worse actors and writing. Acolyte is also not the exception as so much of D+ original content has been awful.

I agree, it is no longer a growth strategy. It's a profitability strategy. Which is one of Bob's few skills. The days of aggressive consumer acquisition and content spend out of whack to do so are over. Disney has their market share.

Experiences are (oddly) their current growth business. In theory. DTC is about to get the old parks red ocean experience.

Experiences have always been their growth engine. They deliver the largest fraction of profits to the company of all the divisions, but they’re ugly and not pretty to look at as compared to the more glamorous parts of the company. WDW alone is the biggest profit driver in the company, yet it is consistently mishandled and abused by executives who only care about year over year performance and nothing about actually growing their cash printing baby.

 

[BrianLo]

Disney licensing content to itself is like paying yourself by taking money from the right pocket and putting it in the left pocket.

Who puts money into the right pocket to begin with? If the service doesn't exist the 20B in revenue goes with it. If they stopped licensing content to themselves, the studios would have to look for that money externally.

Conceptually this seems very, very poorly understood. The service is self-sustaining. They have created a wealthy service that willingly licenses their (agree, probably too expensive) content at their beck and call.

No Disney has not been able to reduce content spend. Acolyte cost double of what House of Dragon costs per episode, which is made even more amazing because Acolyte episodes were half as long and appeared cheaper and less refined with worse actors and writing. Acolyte is also not the exception as so much of D+ original content has been awful.

The content reduction is one of volume. Not per series expense. They produced a lot fewer movies and series this year - which will be borne out over the next few years.

The per series spend is a different issue. But certainly another area they could improve on.

 

[TrainsOfDisney]

The service is self-sustaining.

eh…. I wouldn’t be so sure about that

 

[BrianLo]

eh…. I wouldn’t be so sure about that

Because? It's about to go into decline? Cancellations will outstrip price increases? Acolyte S2 is getting a 300 million budget?

I know I'm off on my own island with my streaming financial opinions, I guess. Feel free to all come back at me in 3-5 years. But, on the flip side I'd like more recognition that I was right by then too. Since I seem to not be getting any of it with the profit break even discussion I battled through here a couple years back.

Now it's this begrudging acceptance it can break even and minimizing again its future trajectory.

 

[TrainsOfDisney]

Because? It's about to go into decline? Cancellations will outstrip price increases?

Only in the magical land of corporate accounting is it currently “profitable” - they haven’t even begun to pay back their investment.

Streaming is a total mess for everyone involved - every studio has completely devalued themselves in an effort to compete with other failed business plans.

 

[Sirwalterraleigh]

A little bit privy to the 5 year trend lines for DIS. Operating income is relatively now stagnant over 5 years. Hence the stock price. But look how dramatically the company has changed (reported as percentage mix of OI).

2019 (annual)
Linear Media ~50%
Experiences ~45%
Studios ~18%
DTC ~(-13%)

2024 (first 6 months)
Linear Media ~26%
Experiences ~70%
Sports ~8%
Studios ~(-3%)
DTC ~(1%)

A rapid collapse of Linear. Experiences working overtime (hence why Bob seems to have suddenly noted the unit exists). I of course expect Studios to have a much brighter Q3/4.

I think you highlighted the problem there

 

[Sirwalterraleigh]

Because? It's about to go into decline? Cancellations will outstrip price increases? Acolyte S2 is getting a 300 million budget?

I know I'm off on my own island with my streaming financial opinions, I guess. Feel free to all come back at me in 3-5 years. But, on the flip side I'd like more recognition that I was right by then too. Since I seem to not be getting any of it with the profit break even discussion I battled through here a couple years back.

Now it's this begrudging acceptance it can break even and minimizing again its future trajectory.

You’re not off on your island

2 problems:

The only “assurances” we have ever gotten about D + being a cash machine is from Bob and Bob. That’s it “trust us”

We’ve been watching this for along time now…neither the industry nor the markets are backing that up.

Netflix made $5 billion in profit last year. Sounds like a lot…but it took FOREVER and it was on $33 billion in revenues. 15%

That isn’t the answer for the linear death. Which is why the park revenues are so out of whack and they have problems/consumer rebellion. They are getting close to a crash

It’s not that they can’t turn a profit on it. They can. Its scale. Modern Disney was built on FREE tv money…they didn’t have to work for it. Not the same.

 

[Nubs70]

You’re not off on your island

2 problems:

The only “assurances” we have ever gotten about D + being a cash machine is from Bob and Bob. That’s it “trust us”

We’ve been watching this for along time now…neither the industry nor the markets are backing that up.

Netflix made $5 billion in profit last year. Sounds like a lot…but it took FOREVER and it was on $33 billion in revenues. 15%

That isn’t the answer for the linear death. Which is why the park revenues are so out of whack and they have problems/consumer rebellion. They are getting close to a crash

It’s not that they can’t turn a profit on it. They
can. Its scale. Modern Disney was built on FREE tv money…they didn’t have to work for it. Not the same.

Netflix at 15% is multiples higher than DIS.

 

[Sirwalterraleigh]

Netflix at 15% is multiples higher than DIS.

Of course…but they were solely focused on it and had to plow tons of development cash into it for years. It was a huge risk and it looked crazy.

 

[Disney Dead Head]

We always have a grocery order that includes 2 or 3 cases of water so we do the same thing.
We avoid paying $5 for water as much as possible when we have water in our room that is $1 or less.

Why not bring a refillable water bottle and utilize the free ice water available at QS and also free bottle filling stations?

 

[Lilofan]

Why not bring a refillable water bottle and utilize the free ice water available at QS and also free bottle filling stations?

Bring powered packets of lemonade and make that free ice water into a cold glass of refreshment .

 

[HauntedPirate]

Why not bring a refillable water bottle and utilize the free ice water available at QS and also free bottle filling stations?

From personal experience, you can fit 3-4 16.9oz water bottles in a Loungefly and refill them during the day. You can even freeze one and use it to keep the others cool for a while. If you're referring to the metal refillable bottles, you can't fit many of them in a Loungefly.

 

[Dranth]

Only in the magical land of corporate accounting is it currently “profitable” - they haven’t even begun to pay back their investment.

Yes, which is where Disney and every company exists.

Profitable, as it is being used with regards to D+, means you are now making more money than you spend in a given time period, not that you are making more money combined then you ever spent combined. Filing with the SEC or IRS is not done on a life time level so nothing is measured that way. People here are creating their own metrics which do not exist in the real world and trying to use that to explain their personal opinions.

The argument others are making is you can't do that, you need to meet it in reality where things are judged by standardized and accepted practices, not how people think it should work.

Besides, if a company or segment remains profitable it is actually impossible to eventually not make back everything you put into it.

 

[monothingie]

Who puts money into the right pocket to begin with? If the service doesn't exist the 20B in revenue goes with it. If they stopped licensing content to themselves, the studios would have to look for that money externally.

Let Disney make expensive content and license it directly to a third party partner who would assume all the direct costs for distribution and marketing. It would certainly deliver a better ROI than what they have now. But Bob and Bob were sold on the idea that they could profit heavily on both the distribution and content generation end. The results so far have been less than optimal with no real breakthrough on the horizon.

Conceptually this seems very, very poorly understood. The service is self-sustaining. They have created a wealthy service that willingly licenses their (agree, probably too expensive) content at their beck and call.

But that's what has gotten them in the malaise they're in right now. Overly expensive content being forced onto an in-house distribution platform that is obligated to buy it, distribute it, and market it. They assume all the risk within the company and unsurprisingly turned out little or no profit as a result. The problem is even further compounded if the product delivered is of low quality.

The content reduction is one of volume. Not per series expense. They produced a lot fewer movies and series this year - which will be borne out over the next few years.

They slowed the churning out product because of the strikes and the necessity to try to fix stuff that is already in the pipeline. Iron Heart is finished on a shelf somewhere which may be released to DTC sometime in the next 2 years. Captain America has been reshot 2 or 3 times over. Blade is on its fourth script and third director. Rey Movie is hot garbage that was supposed to have started filming already, but hasn't and the Mando/Grogu movie is going to arrive 4-5 years too late to capture the same interest that it had before it jumped the shark.

The per series spend is a different issue. But certainly another area they could improve on.

Even if the content they produce is well received, having a starting price tag of $200M+ kneecaps them right at the start. There is no indication that any sort of cost controls have been implemented or have been effective in bringing the series spend numbers down to reasonable levels.

 

[TrainsOfDisney]

Filing with the SEC or IRS is not done on a life time level so nothing is measured that way. People here are creating their own metrics which do not exist in the real world and trying to use that to explain their personal opinions.

*bold by me*

Actually these metrics are used in the real world and are common in entertainment. A broadway show doesn’t announce they recouped the investment until they have paid off all investors for example.

Movies often are considered a loss if they don’t make back the money to produce the film plus all of the marketing, etc.

 

[Sirwalterraleigh]

*bold by me*

Actually these metrics are used in the real world and are common in entertainment. A broadway show doesn’t announce they recouped the investment until they have paid off all investors for example.

Movies often are considered a loss if they don’t make back the money to produce the film plus all of the marketing, etc.

…if anyone is creating their own metrics on streaming …it’s been Disney

That’s why they’ve been wishy washy the whole time

 

[Disstevefan1]

Movies often are considered literally a loss if they don’t make back the money to produce the film plus all of the marketing, etc.

As we know, Disney's movie budgets are out of control and movies that lose money at the box office may take yeas and years to break even or make money from other income like streaming, physical media and merch.

I wish Disney ran their movie business as budget minded as they run their theme parks.

 

[Disstevefan1]

…if anyone is creating their own metrics on streaming …it’s been Disney

TWDC's expertise in story telling comes in handy sometimes...

 

[GhostHost1000]

TWDC's expertise in story telling comes in handy sometimes...

and they definitely have experience in fantasyland