Disney PR Reveals the Company’s Strategic Vision
Avatar is an experience again!
Disney just confirmed this and several other aspects of a recent Bob Iger Q&A session. The other day, Disney’s CEO said what he thought.
Now, Disney has gone back and cleaned up the wording to show what Iger meant.
Here’s what Disney’s PR department wants you to know about the company’s current status and future plans.
The Avatar Clean-Up
Disney executives frequently appear at the annual Morgan Stanley Technology, Media and Telecom Conference.
MickeyBlog has covered this several times, sometimes nervously when people like former CFO Christine McCarthy speak.
During the 2024 event, Disney CEO Bob Iger held court and offered his thoughts on a wide-ranging number of topics.
MickeyBlog has already covered many of these subjects such as superhero fatigue, theme park expansion, and movie cancellations.
For our fans, Iger’s most tantalizing comments involved an Avatar “themed land.”
Our staff debated how to cover this one because Iger had previously described the idea as an “Avatar experience.”
During the Morgan Stanley Q&A, he upgraded it to “themed land,” which we’d all agree is better.
Well, I don’t claim to understand the cause for confusion – a senior moment, maybe? – but Disney has since walked that back.
Iger specifically stated “We have one Avatar-based land, Pandora, in Florida. We’re going to put a second one in California.”
However, Disney’s recap is back to describing the upcoming park addition as an “Avatar experience.”
Here’s the updated – some would say modified – quote:
“Iger referenced the excitement about plans to develop an Avatar experience at Disneyland in California.”
Read into that what you will. If all goes well, Disney faces a vital vote on the DisneylandForward project on April 16th.
That political component may factor into the confusion, but Disney is definitely only willing to acknowledge an Avatar experience right now.
Disney Tracks Theme Park Growth
As a reminder, Disney had already committed $60 billion toward theme park expansion over the next decade.
Even if Disney hadn’t done that previously, it would likely consider the opportunity now.
As the official website notes, the theme parks division, Disney Experiences, is currently enjoying an exceptional quarter.
Iger expects operating income growth of somewhere in the mid-teens during this fiscal quarter.
In other words, the parks are earning at least 15 percent more than they had at this time in 2023.
Not coincidentally, Disney’s free cash flow should meet or exceed Iger’s previously stated expectation of $7.5 billion.
When Disney has more cash on hand, some of that money’s easier to direct toward theme park expansion!
Disney Confirms ESPN Plans
One of the topics that makes investors nervous is ESPN’s future.
This division has anchored Disney revenue for roughly 30 years now, but the last few years have been rough.
While ESPN is still making money, its profit margins have shrunk due to cord-cutting.
Soon, Disney will turn ESPN into a primarily digital service, a goal that comes with quite a dramatic downside.
Much of Disney’s overall marketing strategy relies on live sports to draw large numbers of fans, who are also potential customers.
Not coincidentally, Disney just announced a new deal with Charter that provides ESPN+ free to subscribers.
According to the Disney website, it wants to build “ESPN into the preeminent digital sports platform.”
Iger isn’t ready to dump linear broadcasting in its entirety because it makes too much money.
His current plan calls for “(taking) advantage of linear in terms of the revenue and the profits that it generates…”
But the new goal involves “making ESPN available in multiple ways so the consumer can enjoy the sports they want to watch…”
Iger envisions ESPN in 2026 as having a cable television presence, a Sports Hulu option, an ESPN+ option, and a full-fledged over-the-top app.
Investors, like consumers, remain a bit fuzzy about the difference between ESPN+ and the app coming in 2025.
The PR department has since clarified the upcoming app as “a stand-alone product that features ESPN’s flagship channels as a streaming offering alongside innovative digital integrations and functionality, including sports betting.”
In simplest terms, Disney wants to create a live sports hub that incorporates gambling as an organic part of the process.
While Iger had shied away from that option for years, the profit potential has grown too lucrative.
Disney Defends Digital Plans
Critics like Peltz have assailed Disney for its failure to match Netflix’s profit margins.
In layperson’s terms, that’s kinda like expecting an artist with two albums to have as many number one singles as The Beatles.
As a reminder, Disney+ is barely four years old. They just feel like dog years because of the pandemic.
Disney’s website highlights Iger’s points regarding streaming success.
Iger argued, “In putting basically Hulu into a Disney+ app experience…we are not only increasing the volume of content that we have on the platform, but with that comes significantly more engagement.”
Later, the CEO added, “And in bundling Hulu with Disney+, we’re finding wherever we bundle, churn rates are down significantly, so that’s a path to profitability.”
That’s a short off the port bow at Peltz, who recently sounded like the octogenarian he is in discussing Hulu.
The official site highlights the reasons why Iger’s vision for Direct-to-Consumer is working and will work even better in the future.
However, Iger himself said it best. “We’re in a business that is serving a global population in a very, very important and a very, very, I think, valuable way.
“So, I love how we’re positioned. I don’t get daunted by disruption.
“I believe, basically, the best way to contend with disruption is to embrace it, actually become a disruptor.”
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