Everything We Just Learned about Disney’s Future
Every three months, executives from The Walt Disney Company hold a conference call.
During these conversations, Disney and some invited guests discuss the company’s future and recent decisions.
The latest call proved particularly enlightening, as it filled in some blanks about several Disney mysteries.
Here’s everything we just learned about Disney during its August 2021 call.
All the Streaming News
I mentioned Disney’s streaming subscriber numbers yesterday. Suffice to say they’re massive.
Disney added 12.4 million Disney+ subscribers last quarter, giving the service a grand total of 116 million. It’s halfway to Bob Iger’s stated 2024 goal of 230-260 million.
That’s not the only winner, though. Hulu gained another 1.2 million subscribers, bringing its running total to 42.8 million.
Meanwhile, ESPN+ currently sits at 14.9 million, an increase of 1.1 million in a quarter.
More impressively, ESPN+ only claimed 8.5 million subscribers at this time a year ago. Folks, that’s 75 percent growth year-over-year.
As Chapek bragged, the Disney Bundle, including all three streaming services, is a massive hit. He stated:
“The churn rates on the bundle are even lower, surprisingly low even for us.
And I think what that says is that our customers enjoy the price value of the bundle that we offer and getting an incredible amount of content for a really good price.”
Churn rate is an industry term that means how many people cancel service each month.
Chapek’s stating that fewer people cancel the Disney Bundle than Disney+ on its own, meaning that they find tremendous value in the three-service combo.
Also, I should stress that for all its extraordinary achievements, Disney+ remains a loss leader at Disney.
In fact, CFO Christine McCarthy points out that Disney+ lost more money this quarter than the same one in 2020.
How is this possible? She lists potential sticking points as “higher programming and production, marketing and technology costs, driven by the ongoing expansion of the service.”
To my frustration, the company didn’t disclose additional details about Premier Access earnings.
However, McCarthy teased analysts by saying that Cruella’s revenue offset some losses. So, it’s profitable to some degree. We just don’t know how much.
The Film Dilemma
My streaming podcast, Streaming into the Void, has repeatedly suggested that Disney make its current Premier Access business model permanent.
We feel strongly that Disney earns more revenue through this approach, even though some performers, notably Scarlett Johansson, suffer financially.
Disney CEO Bob Chapek appeared prepared for such questions. He even took the offensive by broaching the topic early in the call.
Chapek indicates that Disney signed new theatrical contracts for its upcoming Marvel title, Shang-Chi and the Legend of the Ten Rings, months ago.
At the time, the pandemic appeared to be waning. So, Disney didn’t account for the possibility of a new virus strain causing another outbreak.
In short, Disney committed to this course of action, an exclusive theatrical window, before Delta led to more COVID-19 infections.
Now, the Shang-Chi movie must spend 45 days only in theaters before it can debut on streaming services.
That’s not even the worst part for Disney. Free Guy started as a Fox project, one that Disney later acquired.
As such, the Fox contracts are binding. So, Disney possesses even less wiggle room with it. That film MUST start in theaters exclusively.
Premier Access Isn’t Gone, Just on Hiatus
Chapek refers to Disney’s current release model as a three-pronged hybrid approach, with movie theaters and Disney+ as two parts.
Premier Access stands as the third, although no film on the Disney film release schedule currently includes this release type.
Disney’s taking a wait-and-see approach, depending on how Free Guy and Shang-Chi do.
In fact, Chapek stated,
“We think it’s actually going to be an interesting experiment for us because it’s got only a 45-day window for us.
So, the prospect of being able to take a Marvel title to the service after going theatrical with 45 days will be yet another data point to inform our actions going forward on our titles.”
The CEO later added, “Nothing is in stone because the marketplace is rapidly changing.”
Yes, Shang-Chi and the Legend of the Ten Rings, a film with a $150 million budget, has turned into a grand experiment rather than a sound business investment.
The past 18 months have been crazy for Disney, y’all.
Chapek also passively-aggressively pointed out that Black Widow stands as the most successful domestic release during the pandemic. Take that, ScarJo!
The executive similarly casts shade on reporters who have snidely rumormongered about a falling out between the current CEO and his predecessor, Bob Iger.
Some had suggested Iger disagreed with the notion of Premier Access release. Chapek stepped on the neck of that by saying both executives agreed.
Those stories never made sense anyway, given that Iger remains the Chairman of the Board at Disney. He’s still Chapek’s boss.
Speaking of Johansson, Chapek also insinuated that Disney has cut deals with hundreds of talents to avoid additional Disney+ lawsuits.
The CEO of Disney had a lot to get off his chest this month!
Disney Theme Park Updates
I’m no longer expecting the return of FastPass at Walt Disney World. Of course, that’s pure speculation, but I say it because of how Chapek started his speech.
The head of Disney indicated that Disney Genie details will arrive soon. Chapek described this service as “MyMagic+ on steroids.”
As a reminder, MyMagic+ has powered the parks for nearly a decade now. Yes, FastPass+ counts as a vital component of that technology suite.
So, the mention of Disney Genie hints that something better is in the offing.
What should you expect from Disney Genie? Obviously, we’ll know more when Disney provides those details.
However, Chapek indicated that guests will spend less time than ever before standing in lines.
Instead, the virtual assistant will learn from your park behavior. It’ll suggest rides and restaurants based on personal preferences and current crowds.
In other words, Disney will utilize big data to maximize park enjoyment, which sounds spectacular!
Overall, the theme park news seemed glowing, which surprises me given the latest outbreak.
Park revenue spiked, but that’s unsurprising given that all theme parks were open simultaneously for the first time since January of 2020.
Numbers should improve from now on as all Disney parks are operational once more.
Disney still wouldn’t reveal current capacity limits, but it noted that attendance approached maximum levels on most days.
When asked about increased COVID-related costs, Chapek mentioned that the new reservation system has hidden benefits.
Disney better controls its costs under the Park Pass format, leading to higher profit per guest.
Similarly, guests will enjoy the process more since it’s customizable. Chapek references selling points as “guest personalization and guest choice.”
I presume that he’s thinking of Disney Genie in both instances. As such, I’m reaaaaaally looking forward to what’s under Genie’s hood.
Feature Image: Getty