DIS - Disney

[spartan]

Interested to hear opinions on whether customer retention is linked to daily usage. If Disney offers a "higher quality" product, then theoretically, can they keep their customers engaged with less content? At recent investor day, Chapek mentioned that they're focusing on quality but given their projected content spend, are they also concerned about quantity?

 

The market might be focusing too much on sub growth and too little on whether those subs are regularly consuming D+ content. MoffetNathanson points to a worrying trend: https://www.fastcompany.com/90564310/disney-should-worry-about-this-new-report-on-streaming-tv-viewership-trends

 

"In the third quarter of this year, just 26% of viewers said they or someone in their household watched Disney Plus every day, down 300 basis points from the prior quarter, which itself was down 200 basis points from the quarter before that. For comparison, 43% of Netflix viewers said they used the service daily in the third quarter, about the same number who said so in the prior quarter."

 

Maybe those declines aren't that statistically significant.

 

And again, I'm just not sure if this is as worrying for Disney, given how unique they are compared to competition.

[ANP301191]

Just updated my thesis on Disney specifically based on the DTCI business division and what I think the market is missing in valuing it specifically in terms of looking at India, key points:

 

Basis for this discussion: Disney+ (previously called Hotstar in India) has around 27m subscribers (https://www.livemint.com/industry/media/disney-hotstar-crosses-26-8-million-subscribers-in-india-11607646286230.html) - I presume it is higher today than at the time of writing the article. This is approximately 1/3 of the total userbase, and I will hazard a guess that it is probably more or less at the same exact position today. Hence Indian consumer habits will impact Disney+ in a larger way than what I believe the market is currently predicting.

 

Thesis:

 

1) India is probably the largest opportunity for Disney in terms of its DTCI business as well as merchandising and other business units. The reason I believe this is because, first, English is still seen as a key measure of education (anecdotal evidence from my side only but I think it holds sway if you ask most Indians), as a result the content that Disney creates for its other core markets translate easily into India. Second, the various socio-economic factors which are well argued often (population, economics) that means that Disney will have a larger customer base to attract from in the future. Third, India offers Disney a more open field to play into - Netflix only has 25.5m subscribers and Amazon only has 10m prime members (end of 2020), so the competitive landscape seems more even as compared to the US or other developed markets where Netflix is an entrenched incumbent.

 

2) Disney+ is now the online platform partner to the IPL - the Indian Premier League (cricket tournament - for the Americans reading this think the NBA and the NFL merged into one, for the Europeans think the Champions League - around 405m people watched the finals last year) (https://www.hindustantimes.com/cricket/ipl-2020-viewers-need-annual-subscription-to-watch-matches-says-disney-hotstar/story-9uAxAaoS0lhZqAbXL3VSgO.html). It was already the only place to watch the IPL in the last 2 years, but for the first time it will have the rights to actually sell additional ads on its platform, which it has done with 10 partners already and I am sure many more in the future. Additionally, last year was the first time that the IPL was behind a paywall, Disney claims over 260m people watched the IPL through Hotstar and that the number could go up to 280m this year, I think that number is actually conservative - first, even though India has somewhat returned to normal post the pandemic, there are still restrictions in places like Mumbai and Dehli - people stuck at home probably will watch more tv. Second, the tournament is happening in neutral venues without fans, so people will watch at home. Third, the Dream11 (think Draftkings/Fanduel) fantasy cricket phenomena probably reached mainstream in 2019, but 2020's growth was lower than expected due to the pandemic, I think there is a good chance that it will be back with a vengeance and the tie up to advertise with Disney+ will lead to a great future opportunities to partner together.

 

3) All of the current statistics discount the amount of free users that Disney+ has. As Disney+/Hotstar in India has a free version and the company has never actually revealed the exact number of free users (to my knowledge) various publications in India report usage numbers of around 250-300m. In fact its free version in effect forced Netflix to offer a free weekend of Netflix to attract consumers (https://www.indiatoday.in/technology/news/story/netflix-now-available-for-free-in-india-for-two-days-here-is-how-to-get-the-offer-1746853-2020-12-05). These users may not pay today, but if the platform can continue to attract and monetize them in the future, it offer the ability to own around 1/5 of India's population and probably a huge chunk of the addressable market in India.

 

Honestly, think the average Disney investor is thinking about reopening theme parks and cruises, which is great - cash cows back to normal, no more loss making divisions etc. But Disney+ India is where I think the real moonshot is in the business. If it can become the first amongst equals in content in India, I think the business could get so many ancillary benefits from the Indian consumer that it is hard to actually model.

[Liberty]

https://www.cnbc.com/2021/03/17/kevin-mayer-on-leaving-disney-and-tiktok-joining-dazn-pay-tv-decline.html