Personal computers saw the same sort of rapid changes and cycles. Higher costs prevented the same sort of widespread turnover, but it was a similar cycle. Like with desktops, and then laptops, there will be a point where software demands will stop outpacing hardware demands giving devices longer up-to-date lifespans.
And who was this grand censor and arbiter who compelled all newspapers to only print "real" news? Was yellow journalism never really a thing? Newspapers financed by people specifically to advocate their singular agenda were not a thing?
Samsung is worse.
And where Cook says "giving consumers products they didn't know they wanted or needed", I translate "did a great snow job convincing people they need something totally superfluous". (There's a "Frozen" joke in there somewhere, but I'm way too tired to flush it out.) I, for one, am still quite content with my Galaxy S3, and have been quite resistant to suggestions that I upgrade.
Good observation. This makes a lot of sense. The host brought up the point point that Iger said on the last earnings call that MM+ will positively contribute to earnings for the first time this quarter. Rasulo corrected him and said that what he thought Bob said is MM+ would contribute to earnings growth this quarter not necessarily earnings. If you read between the lines that could be saying expense will be down. When you compare Q4 of this fiscal year (7/1/14 to 9/30/14) to Q4 last year (7/1/13 to 9/30/13) you will see a drop off in MM+ expense. Last year they were still rolling out the system. They still had an army of consultants and programers plus all the additional CMs assigned to helping guests figure out how to use the bands. Even if the system doesn't drive a dime of additional revenue they will still show earnings growth due to the decreased expense.There's a huge disclaimer missing from Rasulo’s remark. So huge that I’m tempted to call Rasulo deceitful if he doesn’t emphasize it at the next quarterly call.
Bear with me while I explain …
One of the reasons it’s so hard to pin down MyMagic+’s price tag is because its costs are buried everywhere.
When it comes to new theme park rides, most costs are brick & mortar related. These show up as capital expenditures (capex).
When someone asks, “How much did the New Fantasyland cost?” they typically have capex in mind.
Not so with MyMagic+. Yes, it has a lot of capex. However, its costs are also are squirreled away in traditional operating expenditures (opex) and also something Disney refers to as “Selling, general, administrative and other”.
So, when P&R Chairman Tom Staggs laughs at the notion that MyMagic+ “costs” over a billion, it’s because he’s mentally cherry-picking the costs in his reply. “Golly gee, when I’m asked about the cost of a cruise ship, they are asking about its capex number, so that’s what the question means, right?”
Never mind that corporate Disney buried MyMagic+’s costs all over the place.
For the first nine months of the fiscal year, opex is up 6%, depreciation associated with capital investments is up 7%, but this funky “Selling, general, administrative and other” is down 2%.
What Rasulo is not being open about is that, like any project, these costs are down due to the simple fact that the project is complete.
If you don’t believe me, then please refer to the company’s most recent 10Q:
“Selling, general, administrative and other costs decreased $26 million from $1,422 million to $1,396 million primarily due to the absence of development costs for MyMagic+”.
For reference, this line item was up 29% over the previous 3 years.
Iger and Rasulo are going to tell you Parks & Resort Operating Income is up some terrific number because of MyMagic+.
What they are not going to tell you is that it’s up for the simple reason that they’ve stopped throwing money at MyMagic+.
I need to fit into a bridesmaid's dress in a month; do you mind?
My point though is that every previous innovation lowered the barrier of entry and created a situation/scale not seen before. There has also been plenty of schlock in circulation. We just do not have access to a lot of it anymore because people do not tend to save crap and the emphasis on preservation for everything really grew in the latter half of the 20th century.
For the first 3 quarters of fiscal year 2014, Disney's Domestic Parks & Resorts Revenue was up only 8.4%. In case anyone thinks this is good, it averaged 10.7% the 3 years before that. In other words, in MyMagic+'s first year of widespread deployment, revenue growth has slowed down.
Revenue growth from MM+ was never going to be quantifiable. They are still talking up the point that they believe that if people make plans before arriving they spend more time (and money) on property and less elsewhere in Orlando. Let's assume for a minute that this statement is 100% true. How could you ever quantify those gains? I suppose they could have some internal metrics tracking number of days spent in the parks, but the spending part is nearly impossible to quantify. This is why I was always skeptical of the revenue percentages thrown around here.
