DIS - Disney

[rogermunibond]

Anyone else think the sub targets are aggressive? 60-90mm by the end of FY2024 when NFLX is at 60mm US subs today.

 

Not particularly. Guidance implies 20 to 30m subscribers in the US by 2024. Doesn't seem aggressive at all tbh.

 

Yeah they said 1/3 NA and 2/3 international.  Actually think the sub estimate could be lowballing.

[Liberty]

https://stratechery.com/2019/disney-and-the-future-of-tv/

[rogermunibond]

Interesting adjustment of his aggregation thesis.  I don't really see Netflix as pure aggregator anymore.  Not in the same sense as Google, FB, or even Youtube.

 

When so much of Netflix content is self-produced originals the melding of the supplier/aggregator roles is pretty extreme.

[Jurgis]

I've read about the Disney+/Hulu segmentation and for me that is pure milking of customers. (No, I'm not a Disney fan coming into this.). And while I wanted to cancel Netflix, I see Netflix as being the most customer friendly of all media companies. They don't try to segment me and milk me for extra dollars to see all the content they have. Disney wants to force me to sub Disney+ for Marvel/StarWars/kiddie stuff and Hulu for every other movie. This sucks on two levels: I don't give a crap about kiddie stuff, so on one side they are segmenting too little and on the other side they are segmenting too much. So personally I'm likely not gonna subscribe to either.

 

But then a lot of other people will likely sub to Disney+... Hulu is less likely.

 

Edit: I'm might ask Sanjeev to change my name tag to "Grumpy Investor".  8)

[glorysk87]

I've read about the Disney+/Hulu segmentation and for me that is pure milking of customers. (No, I'm not a Disney fan coming into this.). And while I wanted to cancel Netflix, I see Netflix as being the most customer friendly of all media companies. They don't try to segment me and milk me for extra dollars to see all the content they have. Disney wants to force me to sub Disney+ for Marvel/StarWars/kiddie stuff and Hulu for every other movie. This sucks on two levels: I don't give a crap about kiddie stuff, so on one side they are segmenting too little and on the other side they are segmenting too much. So personally I'm likely not gonna subscribe to either.

 

But then a lot of other people will likely sub to Disney+... Hulu is less likely.

 

Edit: I'm might ask Sanjeev to change my name tag to "Grumpy Investor".  8)

 

Haha - man, no one is ever happy.

 

Over the past few years, the common complaint was that bundling was an awful experience because it forced the consumer to pay for stuff they didn't want to watch in order to have access to stuff they did want to watch.

 

So companies have moved more towards a segmented product offering - multiple different services that you can subscribe to separately. If you want kids stuff, just sub to the kids service. If you want other stuff, pay for Hulu.

 

Yet now people like our friend Jurgis here are complaining that they have to pay for things separately.

 

Grumpy investor indeed.

[Jurgis]

If you want kids stuff, just sub to the kids service. If you want other stuff, pay for Hulu.

 

Except that Marvel/Star Wars are not kids stuff.

[rogermunibond]

Jurgis - was never going to happen since DIS only owns 60% of Hulu.  It would be compelling as an offering and from a UI perspective though.

[rkbabang]

If you want kids stuff, just sub to the kids service. If you want other stuff, pay for Hulu.

 

Except that Marvel/Star Wars are not kids stuff.

 

But how many times can you watch the same movies?  Disney+ looks like the type of thing you subscribe to for a month 1-2 times per year to watch a certain thing then unsubscribe.  Unless you have kids.

 

 

[Spekulatius]

If you want kids stuff, just sub to the kids service. If you want other stuff, pay for Hulu.

 

Except that Marvel/Star Wars are not kids stuff.

 

But how many times can you watch the same movies?  Disney+ looks like the type of thing you subscribe to for a month 1-2 times per year to watch a certain thing then unsubscribe.  Unless you have kids.

 

Exactly. The greatest thing about the streaming services is that they are so easy to cancel.

[glorysk87]

If you want kids stuff, just sub to the kids service. If you want other stuff, pay for Hulu.

 

Except that Marvel/Star Wars are not kids stuff.

 

WHOOSH - missed the point entirely

[rogermunibond]

https://secondmeasure.com/datapoints/game-of-thrones-premiere-spikes-hbo-now-signups/

 

Not sure where the data comes from.  Maybe survey.  But OTT churn is pretty real.  Whether marketing CAC gets re-spent would be a concern.  To returning subs use new email addresses and qualify for promotional dollars?

[estoybien]

If you want kids stuff, just sub to the kids service. If you want other stuff, pay for Hulu.

 

Except that Marvel/Star Wars are not kids stuff.

 

At least having to buy A&B to get A is better than having to buy A,B,C,D,E,F,G,H,etc to get A...

 

As for my fam, we a) would stay subscribed to Netflix if it were substantially more expensive, b) will subscribe to Disney+ but price sensitive bc it's a limited universe of content and kids are getting older, c) *might* get a bundle Disney+/Hulu/ESPN+ but not for much more, d) would keep Amazon Prime if it were substantially more expensive, but don't really watch Amazon Prime Video at all. (Wrong thread, but I think Amazon Prime Video really needs a rebranding.)

[Liberty]

Interesting adjustment of his aggregation thesis.  I don't really see Netflix as pure aggregator anymore.  Not in the same sense as Google, FB, or even Youtube.

 

When so much of Netflix content is self-produced originals the melding of the supplier/aggregator roles is pretty extreme.

 

Why do you think self-producing content is opposed to the idea of being an aggregator? I don't think it is.

 

It's because they can aggregate so much demand that it makes sense for them to self-produce (can spread fixed costs over a larger base).

[bizaro86]

Interesting adjustment of his aggregation thesis.  I don't really see Netflix as pure aggregator anymore.  Not in the same sense as Google, FB, or even Youtube.

 

When so much of Netflix content is self-produced originals the melding of the supplier/aggregator roles is pretty extreme.

 

Why do you think self-producing content is opposed to the idea of being an aggregator? I don't think it is.

 

It's because they can aggregate so much demand that it makes sense for them to self-produce (can spread fixed costs over a larger base).

 

There is some game theory here as well - by having their own in house content production they have more credibility in negotiations for content. Without that, they would be very much beholden to the big studios, even more than they already are.

[Spekulatius]

Interesting adjustment of his aggregation thesis.  I don't really see Netflix as pure aggregator anymore.  Not in the same sense as Google, FB, or even Youtube.

 

When so much of Netflix content is self-produced originals the melding of the supplier/aggregator roles is pretty extreme.

 

Why do you think self-producing content is opposed to the idea of being an aggregator? I don't think it is.

 

It's because they can aggregate so much demand that it makes sense for them to self-produce (can spread fixed costs over a larger base).

 

They also get pretty good and fast feedback on what viewers watch. That alone is giving them and edge to produce the right content, imo.

[Jurgis]

If you want kids stuff, just sub to the kids service. If you want other stuff, pay for Hulu.

 

Except that Marvel/Star Wars are not kids stuff.

 

But how many times can you watch the same movies?  Disney+ looks like the type of thing you subscribe to for a month 1-2 times per year to watch a certain thing then unsubscribe.  Unless you have kids.

 

Exactly. The greatest thing about the streaming services is that they are so easy to cancel.

 

I don't play the sub/unsub game.

 

But do the companies value it? No. They're just happy to have suckers who subscribe long term.

[DooDiligence]

I find that I can get most of what I want to see with a one month NetFlix signup & there's enough new stuff to sign up again every 3 to 6 months. (The last time I signed up was over the December holidays & plan on doing so again this Summer.)

 

I get a cheap student rate for Amazon Prime but rarely watch it.

 

Tried Sling a few times (meh...)

 

YouTube (free) is my go to for instructional vidis & music discovery.

 

I love the sub in / sub out models.

[rogermunibond]

Liberty - from something that Ben wrote in 2016 about why Apple should buy Netflix

 

"Netflix’s strategy has been a textbook example of Aggregation Theory; Netflix has built leverage and monopsony power over the premium video industry not by controlling distribution, at least not at the beginning, but by delivering a superior customer experience that creates a virtuous cycle: Netflix earns the users, which increases its power over suppliers, which brings in more users, which increases its power even more."

 

Netflix is still an aggregator true, but like Spotify now, has to deal with a non-monopsony relationship with the traditional suppliers (DIS, CBS, NBCU, TMW).  That's very different from MS with Windows, or Google with search, or FB with social graph.  Some of the best economic returns.  It could well be that Netflix inevitably will have lower returns than these others.

 

The other possibility is that Netflix could be going around studios and developing near monopsony power with smaller producers and international media companies that don't quite have NFLX threatening them (Fuji TV and NHK in Japan for example).  Eventually though I think they'll all become like BBC which understands the NFLX threat to their business model.

 

See the FT article for how Netflix is already exerting it's power on producers.  Netflix needs to leave enough crumbs on the table for producers to earn a good return.

 

https://www.ft.com/content/cf0f0bd6-4596-11e9-a965-23d669740bfb

 

[rkbabang]

If you want kids stuff, just sub to the kids service. If you want other stuff, pay for Hulu.

 

Except that Marvel/Star Wars are not kids stuff.

 

But how many times can you watch the same movies?  Disney+ looks like the type of thing you subscribe to for a month 1-2 times per year to watch a certain thing then unsubscribe.  Unless you have kids.

 

Exactly. The greatest thing about the streaming services is that they are so easy to cancel.

 

I don't play the sub/unsub game.

 

But do the companies value it? No. They're just happy to have suckers who subscribe long term.

 

I don't sub/unsub from Netflix or Prime Video, but I do with HBO, Showtime, and Hulu.  There isn't enough on those networks worth paying all year for.  That would go for Prime Video too  if it were a stand-alone service, but streaming isn't the reason I have Amazon Prime, I stay subscribed for other reasons (2-day shipping, music, drive, etc...).  Netflix is really the only video streaming service worth paying all year for.  I suspect I might get Disney+ to checkout The Mandalorian, then cancel after I watch it.

 

[Liberty]

Liberty - from something that Ben wrote in 2016 about why Apple should buy Netflix

 

"Netflix’s strategy has been a textbook example of Aggregation Theory; Netflix has built leverage and monopsony power over the premium video industry not by controlling distribution, at least not at the beginning, but by delivering a superior customer experience that creates a virtuous cycle: Netflix earns the users, which increases its power over suppliers, which brings in more users, which increases its power even more."

 

Netflix is still an aggregator true, but like Spotify now, has to deal with a non-monopsony relationship with the traditional suppliers (DIS, CBS, NBCU, TMW).  That's very different from MS with Windows, or Google with search, or FB with social graph.  Some of the best economic returns.  It could well be that Netflix inevitably will have lower returns than these others.

 

The other possibility is that Netflix could be going around studios and developing near monopsony power with smaller producers and international media companies that don't quite have NFLX threatening them (Fuji TV and NHK in Japan for example).  Eventually though I think they'll all become like BBC which understands the NFLX threat to their business model.

 

See the FT article for how Netflix is already exerting it's power on producers.  Netflix needs to leave enough crumbs on the table for producers to earn a good return.

 

https://www.ft.com/content/cf0f0bd6-4596-11e9-a965-23d669740bfb

 

To me that model fits the definition of aggregator.

 

https://stratechery.com/aggregation-theory/

[rogermunibond]

Yeah, I misspoke - what I meant was that NFLX doesn't fit the economic model as well as others.  Digitized content is not as low margin as software and it's relationship with suppliers not nearly as monopsonic as others.  Makes it a less powerful aggregator, imo.  But who knows.

[Saluki]

 

 

 

I do like how they are separating things like that.  In the old days of cable, and even these new live TV streaming services like Hulu live TV, youTubeTV, playstation vue, directv now, etc, you have to pay for sports even if you never watch them.  This way you can pay for only what you intend to watch.  Separating things into sports, children's programming, and everything else.  It isn't completely pay per view, but it isn't everything all bundled together and you pay for it all whether you want it or not.  I think this might be a winning move.

 

I've looked at DIS in the past and I could never get comfortable with it because of how big a portion of their revenue ESPN is.  I'm not a sports fan so maybe I don't get it, but something like $20+ of most premium cable subscribers bill from the cable company goes to ESPN, if I recall, and as more people cut the cord that number of subscribers has to come down. 

 

Also, the money they paid for Lucas Films looks well spent because they can keep making star wars movies and selling toys.  The entire DIS library is very valuable, in fact.  In the 80s my sister watched The Little Mermaid, which she watched with her kids in the 2000s and I'm sure her grandkids will watch someday.  They still make money from really old content.  With ESPN, I don't anyone who watches a basketball game from 2 years ago, or even 2 weeks ago.  The content is not evergreen.  I think it's a terrible business in that sense, but what do i know?

[cameronfen]

 

 

 

I do like how they are separating things like that.  In the old days of cable, and even these new live TV streaming services like Hulu live TV, youTubeTV, playstation vue, directv now, etc, you have to pay for sports even if you never watch them.  This way you can pay for only what you intend to watch.  Separating things into sports, children's programming, and everything else.  It isn't completely pay per view, but it isn't everything all bundled together and you pay for it all whether you want it or not.  I think this might be a winning move.

 

I've looked at DIS in the past and I could never get comfortable with it because of how big a portion of their revenue ESPN is.  I'm not a sports fan so maybe I don't get it, but something like $20+ of most premium cable subscribers bill from the cable company goes to ESPN, if I recall, and as more people cut the cord that number of subscribers has to come down. 

 

Also, the money they paid for Lucas Films looks well spent because they can keep making star wars movies and selling toys.  The entire DIS library is very valuable, in fact.  In the 80s my sister watched The Little Mermaid, which she watched with her kids in the 2000s and I'm sure her grandkids will watch someday.  They still make money from really old content.  With ESPN, I don't anyone who watches a basketball game from 2 years ago, or even 2 weeks ago.  The content is not evergreen.  I think it's a terrible business in that sense, but what do i know?

 

Not an expert in this area, but I think sports is the main thing keeping cable TV alive.  Basically you can watch a substitute of other shows on Netflix or Hulu, but it's quite difficult to have an online only sports game broadcast (because of the coordination issue I think).  So even as they lose customers I think they should be able to command more pricing power when bundling.  There are some games that are watched a long time after they are played (ESPN has "ESPN Classic" as a channel) but it's less evergreen then good TV shows or movies by far. 

[fareastwarriors]

 

 

 

I do like how they are separating things like that.  In the old days of cable, and even these new live TV streaming services like Hulu live TV, youTubeTV, playstation vue, directv now, etc, you have to pay for sports even if you never watch them.  This way you can pay for only what you intend to watch.  Separating things into sports, children's programming, and everything else.  It isn't completely pay per view, but it isn't everything all bundled together and you pay for it all whether you want it or not.  I think this might be a winning move.

 

I've looked at DIS in the past and I could never get comfortable with it because of how big a portion of their revenue ESPN is.  I'm not a sports fan so maybe I don't get it, but something like $20+ of most premium cable subscribers bill from the cable company goes to ESPN, if I recall, and as more people cut the cord that number of subscribers has to come down. 

 

Also, the money they paid for Lucas Films looks well spent because they can keep making star wars movies and selling toys.  The entire DIS library is very valuable, in fact.  In the 80s my sister watched The Little Mermaid, which she watched with her kids in the 2000s and I'm sure her grandkids will watch someday.  They still make money from really old content.  With ESPN, I don't anyone who watches a basketball game from 2 years ago, or even 2 weeks ago.  The content is not evergreen.  I think it's a terrible business in that sense, but what do i know?

 

Not an expert in this area, but I think sports is the main thing keeping cable TV alive.  Basically you can watch a substitute of other shows on Netflix or Hulu, but it's quite difficult to have an online only sports game broadcast (because of the coordination issue I think).  So even as they lose customers I think they should be able to command more pricing power when bundling.  There are some games that are watched a long time after they are played (ESPN has "ESPN Classic" as a channel) but it's less evergreen then good TV shows or movies by far.

 

Live sports is why I keep my satellite subscription even though it's like $100 a month... I already have Netflix and Prime Video but we need our sports in our household.

 

Go Warriors! (terrible lose last night  :'(  )

[Spekulatius]

Yes, sports programming keeps cable TV alive. There is an untapped (IMO) market to give the customer exactly what they want. Sell subscription to special events like soccer world cup, Olympic Games, European championships, Formula one seasons, NASCAR etc. I would gladly pay for these events, if I can view them the way I want to and the subscription is reasonably priced. it’s similar to the unbundling in the music industry. Recording these events gets cheaper and streaming is dirt cheap, so I think this will eventually come. Eventually business owners like Formula one can do this all by themselves, no middle man needed and keep more $ in their pocket. Same with FIFA, Nascar etc.

 

Starwars a great asset for Disney and I think they got a bargain. The content will be monetizable for a long time, they can monetize this in theme parks, video games, eventually virtual reality....Disney is already the Berskhire of best in class entertainment IP and assets.