Disney Headlines for February 13th, 2024

Last week, everything was a Headline!

In a span of 24 hours, Disney dropped bombshell after bombshell announcement, shocking everyone from Nelson Peltz to Roger Goodell.

MickeyBlog has already discussed this stuff a lot, but it’s gonna keep happening since THIS is the future of Disney.

So, this week’s Disney Headlines cover some new details on shocking revelations from last week.

Iger Doesn’t Care about Video Games

Please don’t miss the forest for the trees with the Epic Games announcement, my friends.

Yes, Disney has signed a $1.5 billion deal to acquire a nine-percent ownership stake in Epic Games.

You shouldn’t believe that Disney did this specifically due to the impending Fortnite tie-in, though.

Sure, Disney and its CEO, Bob Iger, love the idea of introducing a new revenue stream, one that’s the M word without saying it.

Shh, don’t tell anybody, but Fortnite is currently building and expanding the framework of a metaverse in real-time.

Epic doesn’t call it that because everyone hates the term metaverse. That’s totally what it is, though.

Here’s TechCrunch saying the quiet part loud. And Disney will earn a ton of money from this venture.

That’s not the primary goal here, though.

Bob Iger remains laser-focused on eyeballs. As I’ve mentioned twice recently, Fortnite claimed 100 million players in November.

What have I said is one of Disney’s primary goals in any ESPN deal? Iger and his team seek giant masses of people.

Disney has negotiated with cellular companies like AT&T, Version, and T-Mobile, each of which possesses more than 100 million customers.

That’s a firehose of potential eyeballs that Disney can inundate with content and products.

Iger correctly views these potential business partners as ways to gain free advertising.

When your phone comes with Disney+, you fall in love with Percy Jackson, Echo, Baby Yoda, and so forth.

If you’re playing Fortnite, you’re joining 100 million of your closest friends in Battle Royale.

Meanwhile, Disney is reminding all of you about the greatness of its products and the strength of its brands.

Iger just unlocked a back door to an entirely new, substantially younger demographic of current/potential Disney fans.

This is about gaining customers, people!

Why Moana 2 Matters

Disney’s earnings report was very good and full of wins. But it should have been better.

One of Disney’s departments fell 38 percent year-over-year.

Did you notice which one? If not, you should be able to guess.

The answer is Disney’s film division, which experienced one of the most brutal apples-to-apples comparisons ever.

In the most recent fiscal quarter, Disney’s primary releases were Wish and The Marvels. Oof!

Do you know what’s even worse? One year ago, the comparison titles were Avatar: The Way of Water and Black Panther: Wakanda Forever.

Technically, only about two weeks of Avatar 2’s box office fell in the quarter, but that was enough for it to earn just under $1 billion.

The Marvels and Wish…didn’t do that, which brings us to the seminal importance of Moana 2.

I’ve been the tin foil hat guy on this topic for a while.

In evaluating years of Nielsen streaming data, I’ve seen this coming.

Moana continually appears on the Nielsen streaming charts and recently claimed the title of the Most Streamed Movie of 2023.

We’re discussing a seven-year-old catalog title that somehow bested new releases like The Super Mario Bros. Movie!

The writing has been on the walls for a while now that Disney needed to make more Moana.

Disney had previously announced a live-action remake that will co-star The Rock, who previously voiced the character of Maui.

Now, The Rock will act out the role, but it hasn’t even started filming yet. So, we may not see it for another three years.

Disney needs something now!

Moana Saves the Day Again

Conveniently, Disney+ had requisitioned a Moana television series.

Apparently, that story has proven so good that Disney will convert it into a theatrical release.

Even better, Disney can release this in November, slotting it into the same release window where titles like Frozen have dominated.

Conveniently, that’s the same release window that Moana held as well.

So, eight years and four days later, we’ll get its sequel.

Meanwhile, Disney has guaranteed that it won’t suffer that same film division fate in next year’s first quarter earnings that it did this time.

This was a very clever piece of business. My only concern is whether the quality of the film justifies the choice.

Disney needs Moana 2 to be every bit as good as Frozen II.

And the same statement applies to Encanto 2, which we all know is gonna happen.

PS: Based on the data I’ve tracked, as long as Moana 2 is good, I honestly wouldn’t be surprised if it’s one of the two biggest films of 2024.

Speaking of Blockbusters…

According to Puck’s reporting, Bob Iger “wanted big announcements” for the earnings call.

Mission accomplished, Bob!

Of course, people are putting two and two together on how much Iger paid for the privilege.

That Epic Games check for $1.5 billion is a big one, but he did buy nine percent of a thriving company in the process.

Conversely, Disney is only licensing a Taylor Swift concert at the high cost of $75 million.

On the surface, that might sound insane, but it’s part of the new math driving old-school Hollywood out of business.

Early in the pandemic, Disney paid for the streaming rights to Hamilton, which had no choice but to skip a theatrical release.

That transaction came with profound hidden benefits to Disney.

At the time, Disney+ was only a few months old.

Hamilton attracted new customers, but that’s only part of the story.

Many of these subscribers wouldn’t have given Disney+ a chance otherwise. Then, many of them kept their subscriptions.

Disney hopes for the same boost from Taylor Swift: The Eras Tour.

So, Iger opened his wallet and paid $75 million to someone who really needed it, a musician performing a billion-dollar concert tour.

How Disney Will Benefit from This

The concept here is simple. Disney+ just raised its rates and thereby lost 1.3 million subscribers.

That was an accepted cost of doing business with the price increases.

However, the Taylor Swift concert movie will increase subscribers by an estimated 5.5 million or more this quarter.

Follow the math here. Disney earns $6.84 per month from each of its core subscribers.

At a cost of $75 million, Disney only needs 11 million subscriptions to pay for the service.

You’re probably looking at those numbers and thinking Disney overpaid. That’s not how the math works, though.

Disney will make $37.6 million from its 5.5 million new sign-ups for the month of March.

As long as those customers stay for the equivalent of one more month, the Taylor Swift investment has paid for itself.

That doesn’t mean all 5.5 million subscribers must stay for two months, either.

Disney simply needs enough of them to stay for Disney+ to reach 11 million total subscriptions caused by the concert movie.

I ran some regression analysis and settled on 70 days as the likeliest profitability point for this licensing deal.

If Disney gains more than 5.5 million subscribers – 1) you’ll hear about it everywhere and 2) the breakeven point happens sooner.

I expect Disney to turn a profit by Memorial Day at the absolute latest, and I wouldn’t be surprised if it were much sooner.

Even better, from that point forward, everything else in terms of Swiftie subscribers on Disney+ is pure profit.

Bob Iger and Disney had a really good week, my friends.

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Feature Photo: Heidi Gutman/Walt Disney Television