Disney quarterly earnings show that the parks are thriving.

Edited: May 9, 2019, 4:41 AM

Ahead of the annual TEA attendance soothsaying survey, Disney's quarterly report is being loudly hyped by business media.

CNBC: "Higher ticket prices didn't deter tourists from taking trips to Disney theme parks during its second quarter. The company, which reported earnings Wednesday after the closing bell, said guests spent more and stayed longer during their time at Disney parks and on cruises in the quarter, boosting revenue 5% to $6.2 billion during the three-month period ended March 30. This is good news for Disney as it is about to open what some consider its most anticipated theme park expansion land ever — Star Wars: Galaxy's Edge."

Replies (21)

May 10, 2019, 12:20 PM

Disney's resorts and Universal's too are largely becoming recession-proof for the simple reason that both are targeting upper class income households which don't suffer economic damage nearly as much as the middle and lower class income households when a recession occurs.

Both companies will never admit it because it is bad PR, but the upper class patron is where their bread and butter is. Upper class income households have the capability to visit Disney and Universal resorts on a yearly or more often basis, stay in onsite hotels, dine in onsite restaurants, purchase expensive and varied souvenirs, and purchase add-on opportunities like exclusive seating for fireworks shows and dessert parties. The middle class income households can only afford some of these opportunities on a less than yearly basis. The lower class income households probably aren't going to visit at all. A day at a regional theme park or the county fair is the extent of their aspirations.

So the days of everyone being able to spend a day at the "Happiest Place on Earth" with Uncle Walt and Mickey Mouse are pretty much the pipe dream of the Baby Boomers. Low income households in Los Angeles and Orlando areas may be able to squeeze in a day visit once in a great while, but for low income people in areas where you have to travel to the resort area and pay for a hotel room, the ability to visit Universal or Disney is pretty much nonexistent.

Within reason, nobody should be surprised in the least when Universal and Disney raise entry prices and attendance and revenue go up. Personally, I think they could charge 20-30% more for park tickets and they still wouldn't see a drop in attendance and revenue. The upper class households can afford the price increase, and I doubt that either company has much concern about losing middle and lower class patrons.

And with all of the upgrades and lands going in at Disney and the new park going up in Orlando for Universal, prices will go up and revenues will go up (and Iger's salary will go up). Welcome to the new normal.

May 14, 2019, 7:19 PM

And then, just for kicks, Disney buys Hulu.

Edited: May 15, 2019, 12:46 PM

They didn't technically "buy" Hulu. They purchased controlling interest in the streaming service by owning Fox's stake and then buying out WB. Disney then struck a deal with Comcast to command controlling interest and share Hulu-exclusive content with Comcast's upcoming streaming service through 2024, at which point Disney can buy out Comcast altogether for a predetermined amount.

Disney pretty much "muscled their way" into Hulu to reduce current competition in the streaming space until they can get Disney+ off the ground. A clever, though cynical move from a business standpoint if you ask me.

Who knows what streaming entertainment will look like 5 years from now, but the deals Disney struck are essentially a hedge against themselves. If Disney+ is not successful, Disney can dump it and shift everything over to the established Hulu platform. If Disney+ is successful, they have their own fully-owned platform that increases their influence in what projects to be a growing market along with a potential asset that can be sold to another studio to cash out on their investment.

However, I do project that Disney will need to be really careful with Disney+ and Hulu to ensure that the two entities are competitive with each other to keep antitrust claims at bay. The Justice Department already put tight controls on Disney's purchase of Fox (required them to sell the RSNs), and as the streaming entertainment market matures, Disney's ownership of potentially two of the largest providers (with possibly just Netflix and AmazonPrime surviving the current scramble for eyeballs) could create an unbalanced marketplace that could prevent Disney from taking full ownership of Hulu in 2024 even if they wanted.

May 15, 2019, 2:16 PM

It seems like Hulu is about to become a more adult platform for Disney productions. It is where they will apparently air most of their Fox-owned shows (not all, mind you, remembering that The Simpsons are moving to Disney+), and they have already announced some Marvel animated solo series based on B characters, who will all team up in a show called "The Offenders" (seriously).

May 15, 2019, 3:51 PM

RM writes "If Disney+ is not successful ..."

I respond: That's just adorable. Don't break any bones as you very tightly cross your fingers praying for D+ to fail, Russell.

(Chuckle)

Regardless, congrats to the Mouse for picking up Hulu.

May 15, 2019, 5:35 PM

I’ve been reading theories that they will bundle Disney+, Hulu and ESPN+. With ESPN constantly bringing the company’s stock down, maybe bundling it with two strong streaming services will be the fix they need.

I’d be excited about Hulu being the streaming home of FX, now owned by Disney. Despite having a library second only to HBO, the FX app and On Demand options are horrible with only a few episodes of new shows available and their library scattered across different streaming sites.

May 16, 2019, 8:47 AM

I get the feeling the people and infrastructure of Hulu is the mega important thing here. Disney is getting into the streaming service and it's hard to predict how consumers will choose to stream their content in the future. Having experienced people and existing systems gives you a launchpad for future endeavors as much as it is an aging infrastructure.

I also wonder if Disney will partner with anyone to make hardware for their services. Maybe they partner with someone like Roku (if not build themselves) a dedicated "Disney box" that uses your house wifi and plugs into your TV. Maybe that box could have Mickey ears, a Spiderman logo, or be shaped like R2-D2! Or maybe it'll be a tiny black box...

Edited: May 16, 2019, 10:43 AM

You're in rare form this week TH. I'm not sure I ever wished or "prayed" for Disney+ to fail. I merely mentioned that striking deals to gain controlling interest in Hulu along with the deal with Comcast to purchase their stake in 2024 was hedging their bets IF Disney+ fails. Honestly, I think it's a little strange for Disney to have full ownership stake in two different streaming services, so perhaps this is their way to make sure they've got plenty of skin in the game as the market evolves. I think Disney+ has the pedigree to succeed along with a very tempting introductory price to get consumers to give it a try. However, their newly minted controlling interest in Hulu presents a potential conflict of interest, meaning higher-ups are either clearing the decks to eliminate competition for the budding Disney+ and/or hedging against the possibility that consumers will not gravitate towards Disney+ as much as they would like.

Smart companies are always looking to the future, so one can only project that Disney will leverage Hulu for either financial gain by selling it at a later date (or perhaps they'll be forced to sell because of an anti-trust issue), and/or they wanted control of Hulu to increase the likelihood of success for Disney+. That assessment has NOTHING to do with my opinion of the service or how successful I think it will be, simply an analysis of why I think Disney made this business decision. I'm sorry that I don't blindly gush and applaud every single decision made by Iger and his minions without first considering the ramifications and reasoning behind them. I tend to consider the cause and effect of Disney's decisions instead of seeing them as the next great move for all Drone-kind.

@Aaron - Disney has already confirmed that Disney+, ESPN+, and Hulu would be bundled into a single subscription. However, while they provided the prices for Disney+ by itself, they have yet to announce the prices for various bundles or even if there will be multiple bundles. I have a subscription to ESPN The Magazine, which subsequently gives me a subscription to ESPN+, but I haven't received any communication as to how my access will change once the "dead tree" edition stops circulation and whether I can leverage my Magazine/ESPN+ subscription for a discount for Disney+ and/or Hulu. And yes, the FoxGO streaming apps for their networks is probably one of the worst in the industry (down there with B/R), so if that content migrates to Hulu it would be a significant upgrade.

@RumbleMike - I doubt that Disney will want to get into the hardware business or sign any sort of exclusivity deals with a hardware manufacturer (like Roku or Apple TV). Streaming services that are exclusive to certain devices have been struggling in the market, and I doubt Disney would want to limit their audience by reducing the number of devices that can access their fledgling streaming platform even if it generated additional revenue through licensing or other kickbacks.

May 16, 2019, 12:57 PM

Fair points Russel. I don't think they'd try to create hardware. At home I have a Roku and an Apple TV and both of those have a hulu app and a couple different Disney apps (Disney NOW, Movies Anywhere).

What I could see in the future is more competition from the hardware makers. Disney being a key content provider leaves a lot open to possibility.

Edited: May 16, 2019, 4:55 PM

Disney+ will be classic Disney films, Marvel, and Star Wars. Hulu will be where they can unload all their arthouse, R rated, and affiliate films that the soccer moms would be offended to find out that Disney is associated with.

Disney+ also has a very competive price point and looks very, very suspiciously like Apple TV. While I doubt it will fail, Netflix is extremely entrenched. There is much to dislike about the streaming model, and I hope Disney does not pull back from theatrical and disk based releases.

Edited: May 16, 2019, 6:19 PM

Just spitballing here...

Sky UK (now a Comcast subsidary) have their Now TV service through IPTV. Its my understanding that the NowTV devices are Roku devices (and you can access Now TV through other devices too).

Imagine a situation where Disney/ABC get into a carriage dispute with other pay-TV (ie Cable) providers but has a warehouse full of their own version of these devices with ABC, Disney, Hulu, ESPN easy to access? They seem to be cheap enough that giving them away to encourage cord cutting could be viable, even if they adopt a Freemium model where ABC and some Disney linear channels are given away, and other services accessible on a paid basis.

The could end up looking like the good guys, and put a bomb under Comcast's business plan...

May 17, 2019, 9:56 PM

OH PLEASE! RM be honest. Before it opens you dub the Disney Skyliner system the "sweatliner". You denigrate Disney fans calling them "drones". You stretch assumptions to the breaking point when you assert that the absence of official company hype associated with Mickey & Minnie's Runaway Railway is evidence that Disney has limited confidence in its show value -- an accusation that has gone silent after the company announced that it is so happy with the atttraction that they intend to build a version in California.

Your assessment of Disney Springs in 2017 reads "far more window shopping going on than actual purchasing" -- a claim that has no basis in data just an opinion that (shocker) advances a negative impression of DSTP.

And then on this thread you entertain a hypothetical scenario where Disney+ fails. I mean ... Seriously? Is there any credible media source that has presented a scenario where that might happen?

Dude, we all get it. You hate the fact that Disney has maintained its position as the leading developer/creative force in the themed entertainment industry.

Of course you could prove me wrong by simply posting that Disney is, in fact, "the leading developer/creative force in the themed entertainment industry."

Go for it, big guy! :)

May 18, 2019, 8:11 AM

I will bite but only as to Disney+. I will argue that it is already set up as a loss at it's price point with the purpose to have a major competition with Netflix. With Disney's now massive ownership in media, that may be a good thing. Absent a few shows, I am not all that impressed with Netflix, and I think Netflix may be ruining the theater model. Disney may have the muscle to operate at a loss, but how long will they do it and at will they sacrifice physical media in the process? Other streaming services have failed, and even Apple and Amazon have been unable to move into Netflix's territory, but we will see. Disney has certainly shown a willingness to invest in something and stick with it. Please understand my biases, I am a film person. I hate that Roma was not released in a theater by Netflix. I also hate that Disney has not release 20,000 Leagues Under the Sea on blu-ray. But Disney is still allowing families to go out to the movies and buy popcorn. If Netflix continues, that will not happen in 30 years. And Amazon Prime releases their films in the cinema.

Edited: May 18, 2019, 3:35 PM

>>>Other streaming services have failed, and even Apple and Amazon have been unable to move into Netflix's territory, but we will see.

Some have failed sure, and some have succeeded. HayU (by NBCU, so Comcast) seems to be doing very well in the territories its in, despite its niche genres (Its basically a "Reality TV" aggregator), and NowTV (BSkyB, which is now part of Comcast) seems to be doing well in its territories too, helping Sky not only keep their subscriber numbers high but also captures a new audience that would never subscribe to a long contract for pay TV.

>>> I think Netflix may be ruining the theater model

And may its death come sooner, rather than later.

That said, its not Netflix that's killing theatres. My understanding is the demand from distributors is now so high that they basically make nothing on ticket sales.

>>But Disney is still allowing families to go out to the movies and buy popcorn.

Weird, I can buy popcorn in my local supermarket. Annoyingly British Cinemas don't sell buttered popcorn, only salted and some monstrosity called "Sweet" - the Supermarket is the only way I can get that buttered flavour.

May 18, 2019, 6:24 PM

The popcorn statement was obviously an analogy. Being able to go to the theater is an experience, just like going to a theme park. I would hate to think that some people would prefer VR to the act of showing up at EPCOT for a day. Sure, Netflix may green light films that the major studios would not touch, but avoiding theaters is a horrible thing for many reasons. The topic could take up an entire book. At least Amazon Prime will release films in theaters, and there are many art house theaters that are more that happy to exhibit them. Now we come to Disney. Disney could break this. They will own most of the major franchises and will have a market share in most of the major studios. There is no question what Disney+ and Hulu are doing. Disney could also ruin the entertainment industry as well. Will their ownership of Fox, it is up to them. They will make a lot of money, but they are basically the stewards of the future of the movie industry.

There are many theaters that are countering the horrible cineplex model of bad screens filled with people that look at cell phones with crying babies. Go to an Alamo Drafthouse or Arclight Cinema. Other theaters are catching on. People are going to want to see movies on a big screen. The only death of a screen is a limitation of media, and that is exactly what Netflix represents. Yes, Disney+ could fail, but Disney and other studios could also save the movie theater as we know it. I hope they do.

May 18, 2019, 8:43 PM

Roma was shown in many US theaters and it it had more to do with Netflix violating the National Association of Theatre Owner’s rules for a film’s proximity between theatrical and home viewing. All the major chains are part of the Association while some independent theaters are not. This will be a big issue when Scorsese’s The Irishman comes out this year. Disney will be releasing some films to Disney +like the Lady and the Tramp remake but not their tentpoles like Marvel, Avatar and Star Wars.

Edited: May 19, 2019, 9:18 AM

'Many' theaters is not exactly accurate. I believe it was just in a handful of cities and on a handful of screens in those cities for an incredibly short window. I believe the Ballad of Buster Scruggs was on something like two screens in the nation for less than two weeks. I have not looked this up, but the run times and screens were not many. The only purpose was to placate the Academy so those films could qualify for the Oscars due to their rules. As an aside, I take issue with many things the Academy does, but that requirement is not one of them. That is why many Amazon Studios films like Manchester by the Sea were able to be nominated, as they had theatrical runs. Netflix just barely skirts the rules. This is why Spielberg advocates Netflix films to be in the Emmy's and not Oscars, and I agree with him. I would have loved to have seen Roma in the theater. It would have been a half a day flight for me with at least one layover.

The major theater chains have the requirement about the release window that you mention, but the smaller, independent theaters do not. My local art house theater would have loved to have shown it. I bet the New Beverly would have shown it. Alamo Drafthouse would have done so, and I think they even publicly said so. There are thousands of independent theaters all over the country not affiliated with Regal, AMC, etc.

Edited: May 19, 2019, 3:53 PM

>>>The popcorn statement was obviously an analogy. Being able to go to the theater is an experience, just like going to a theme park

The difference is I find one enjoyable. The other I find at best a chore... Its somewhat mitigated if I go to an expensive cinema with recliner seating, but all in all, I'd rather be on the couch.

>>>The only purpose was to placate the Academy so those films could qualify for the Oscars due to their rules. As an aside, I take issue with many things the Academy does, but that requirement is not one of them.

Sorry if I seem cold, I just have no time for "Film Snobbery", suggesting a film isn't a film simply because it wasn't played on enough big screens. Walt had to pay to get Seal Island on a big screen and win an academy award before theatres would touch it.

Does anyone seriously want to suggest it shouldn't have won an award because Walt only got it into a couple of cinemas before the award was given?

I think if given half a chance Walt would have loved to bypass that particular cartel.

May 20, 2019, 7:40 AM

And cartel is a valid point. Since Game of Thrones has concluded, I am reminded of how the main characters control the fate of the 'little people.' I want good films. I understand many prefer to see movies only on their couch, but there is no denying that for most, the experience of seeing a film in a theatrical setting is far superior. Films are even crafted with audience reaction in mind. Like I said earlier, this response could fill a book. Netflix left unchecked would ruin good entertainment. The main studios have cut theaters out to the extent that they cannot make money absent charging exorbitant prices for popcorn. That is why the single screen 70mm cinemas are gone. Studio greed. Studios don't want to bankroll small new ideas. They want franchises. Many people hate unruly patrons at the theater. Enter Netflix. But Netflix has to have content. The studios know they have to adapt. People still want good entertainment. Disney+ could compete. Disney was the deciding factor in the HD home media war with blu-ray. If not for that, Microsoft would likely already be in control of downloads for some time. The other studios have been behind the curve with streaming, but the qualify is way behind blu-ray and 4K. Filmstruck folded. Don't know CBS's numbers, but Disney+ and Hulu could make a dent. I am standing by my assertion that if the theatrical experience goes away we will be left with films more films like Bright and Polar than Roma and Buster Scruggs.

Edited: May 20, 2019, 9:05 AM

Oh please TH - I'm sorry I'm not all rainbows and lollipops when it comes to Disney news like you. Not every minuscule shred of news they publish is gilded and coated in pixie dust. And yes, I (and many others) call followers of the Cult of Rodnetia "Drones" (FWIW, I didn't make up that name), because that's exactly what they are. They suck up everything Disney like it's the end all be-all of perfection, spending ungodly amounts of money on overpriced experiences, cheaply made Chinese tchotchokes, and bending the knee to the whims of Lord Iger. Honestly, I stand in awe of Disney's ability to get such a large segment of the population to willingly open their wallets wider and wider every year, which may one day lead to a situation where only the richest of the rich may ever be able to visit their parks.

I'm just trying to bring some perspective to conversations you bring to table and to wipe some of the drool off your lap. Don't get me wrong, Disney has gotten to the top of the heap by producing one of a kind experiences that continue to capture the imagination. However, they have recently evolved to become a tactical and shrewd business that increasingly places profit above all else, and as part of that must over-hype every minute addition to their ever-growing portfolio in order to influence the markets and justify those expenditures. From an insider or Disney shareholder's perspective, that's what you want to see from a company that you are heavily invested in. However, from someone outside that bubble, like myself, I see it as pandering, spin, and hyperbole. Only an investor, employee, or Drone would see the third delay of an attraction as a positive, but here you are TH. You're certainly welcome to spin the most recent pushback of MMRR as great news, but that doesn't invalidate the opposing viewpoint that sees such a delay as a lack of confidence in the attraction and/or significant issues with an installation that had no outside interference. While you could spin the announcement to clone MMRR at Disneyland as great news, it's just as likely (and just as valid of an argument) to say that Disney is doubling down on the attraction because it's gone way over budget and the only way to justify the expense would be to clone it so the over-budget R&D costs could be aggregated across 2 installations.

I won't get too deep into my comments on Disney Springs, but I think the writing has been on the wall for brick and mortar retail for almost a decade now. There's certainly a place for it, but I think linking an expansive retail center with a theme park resort is a concept that will sunset sooner rather than later, though as long as businesses are forking over the money to rent square footage, there's no reason for Disney to not hold out their hat.

As with the term "Drones", I cannot lay claim to the "Sweatliner" moniker, but it seems rather fitting, and accurately captures the consistent and ongoing concern from many guests about Disney's new transportation system. It wouldn't be the first thing to be categorized before anyone actually experienced it, and it certainly won't be the last. The system will have its chance to break this impression when it debuts, but until then it's anyone's guess as to how comfortable the inside of those plastic boxes will be on a 95-degree day. That doesn't mean guests can't or shouldn't be concerned, esepcially considering how much money Disney is investing in the system that could have been spent on other more proven and cost effective technologies. I seem to recall some $1+ billion investment that fans were weary about that has now become one of the biggest burdens at WDW, and so ineffective and frustrating that it won't be used for its primary purpose when the most anticipated addition in theme park history debuts later this year.

I still don't understand why making an analysis of Disney's Hulu deal signals that Disney+ will fail, quite the contrary. I was pretty clear in stating that I felt that Disney's move for controlling stake in the established platform was clever in that it provides them an insurance policy if Disney+ doesn't perform as expected. That's not me saying Disney+ will fail, that's me analyzing the business decision from Disney as a hedge against their bets to ensure that when the streaming entertainment market shakes out and matures over the next 5+ years that Disney's controlling stake in Hulu (along with the launch of Disney+) will place them in prime position to weather any storm or shift in the market. Whether Disney+ succeeds or fails is irrelevant, because The Walt Disney Company is likely to have a large chunk of the streaming entertainment pie when all is said and done.

I do strongly believe that Disney is the leading developer and creative force in the themed entertainment industry, and they have become a leading authority in the overall entertainment industry as a whole. I don't need to mince words there, because without Disney, there is no Six Flags, Cedar Fair, Sea World, Merlin, Universal, et al. However, that doesn't mean Disney is infallible or that the decisions they make are always pure of heart for the benefit of their customers and guests. Disney makes mistakes all the time, and what was a HUGE gap between them and the competition in the 90's has closed ever so slightly through a combination of complacency and an increased interest in competing with the king of the mountain. That doesn't mean they still don't lead the industry or set the standard, it just means that there are other creative forces out there that are matching or exceeding the Disney standard and that Disney sometimes fails to meet their own standard and are allowing profit and financial considerations to edge ahead of their core missions from time to time. I tend to gravitate towards those chinks in the once impenetrable Disney armor not because I'm some Universal fanboy or lust to see Disney fail, but because I want Disney to succeed and hope that pointing out their shortcomings will drive guests/fans/Drones to not allow the company to drop their bar. If we all turn into Drones, Disney would never have to strive to improve and try to constantly better themselves. If people buy everything the company sells regardless of the quality and/or value, Disney has no reason to be creative and imaginative. The Walt Disney Company was built on that creative spirit, and if guests continue to shell out more and more money on increasingly stagnant or diminished experiences, what will drive the company to push the envelope?

My criticisms come from an expectation that Disney is the best at what they do, and for me they've got a high bar to live up to (and that bar keeps inching up because they keep changing guests more and more). There is always room for improvement, and if every announcement and new addition is the greatest thing since sliced bread, the bar for excellence will be so unattainably high that even Disney could never reach it. I want Disney to keep pushing that bar higher and higher, but understand that it's not easy, and that sometimes it comes with risk that can lead to disappointment. As fans, we need to keep things in perspective, and that a company that was more or less stagnant for almost a decade but has decided to rapidly grow (not just the theme parks but Disney as a whole) that such expansions throughout history have been fraught with pitfalls and growing pains. So far, Disney has managed through these with deft precision, but that doesn't mean things will be so rosy moving forward. Disney has to stay focused to keep this behemoth moving forward while staying nimble, and guests need to hold Disney's feet to the fire when they take missteps. However, we need to keep our eyes open and aware of these potential pratfalls, and not blindly follow simply because it's Disney.

May 20, 2019, 10:03 AM

oof... this is a ton of passion for my monday morning.




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