Feb 5, 2020
Disney+ grows to nearly half as big as Netflix... in just 2 months Read More Took Netflix 10 years... to reach the 68M US subscribers it has today. After just 2 months, Disney's almost halfway there with 28.6M. That's the headline from Disney's 4th quarter earnings report. It sounds good, but Disney+ actually hurt Disney's profits badly — those new subscribers drove revenues up 36% overall for Disney, but sank profits by 23%.
Disney+'s 28M: 20% of those Mickey lovers aren't even paying the already low $6.99/month for Disney, they're getting it for free from a Verizon promotion.
And it's expensive: The cast of The Mandalorian and the CGI gal who whipped up Baby Yoda aren't free. The streaming segment (which also includes Hulu and ESPN Plus) lost $693M last quarter (maybe the $7/month isn't enough).
PS: A new series about Obi-Wan Kenobi is being developed for next year.
The Takeaway:Remember Walt's character ecosystem... He drew it on a napkin back in 1957. Unlike HBO, Netflix, Quibi, and NBC's new Peacock streaming service , Disney+ doesn't need to make profits. It can set a low price to maximize the number of people who fall in love with Baby Yoda, then cash in on its other divisions:
Media Networks: The division that's still making bank thanks to cable TV packages is still its profit puppy — it made $1.3B in profit in the last quarter.
Theme parks: 10% more Americans visited its US parks, but this current quarter is expected to feel some pain from coronavirus (an estimated $130B of lost profit).
Merchandise: Lunch boxes, stuffed toys, Frozen dresses — they're all bundled in with the Disney+ division, so we can't say exactly how sales did.
Studio Entertainment: Disney is the undisputed king of movies, and Star Wars Episode IX helped profits triple in that division compared to the year before (a Star Wars-free year).
Dec 13, 2019
Hasbro misses huge holiday toy opportunity with Disney's "Baby Yoda" Read More Furious with you, I am... When the CEO of toy company Hasbro snuggled into his sofa to watch Disney+'s Star Wars-ish The Mandalorian series, he wondered what that adorable miniature Yoda thing was. It was hundreds of millions of should-be dollars for his company.
"Baby Yoda" is 50-years-old (diaper-age for yoda's species) and the cult star of the series.
But Disney kept him a secret until the show launched in November — it didn't even tell top toy-making partner Hasbro.
So parents ended up searching for "Baby Yoda" toys on Amazon over 90K times this past month (and ordered $100K worth of fake/unofficial ones).
Now Hasbro's unveiled a gaggle of Baby Yoda toys... but they won't arrive until May 2020.
This is "Tickle Me Elmo" money... The master of all holiday toys quintupled 1996 sales for its company (Tyco). The current popularity and undeniable cuteness of Baby Yoda could've driven similar holiday pandemonium, but Disney's stealthy self-serving moves were Hasbro's loss.The Takeaway:Hasbro is pretty much a Disney toy store... Hasbro paid big for the rights to be the official toymaker of Disney franchises Star Wars, Marvel, and Frozen. Now those toys are a huge part of its biz — 27% of Hasbro sales last quarter came from "partner brands." That's corporate-speak for Disney's billion-dollar character franchises, from Elsa to the Skywalkers.
Sep 17, 2019
Netflix splurges on Seinfeld to survive the streaming wars Read More But are you master of your domain?... Netflix is. The streamer just treated itself to Seinfeld. All of it — for more than $500M. Netflix rounded up the crew from Tom's Restaurant (close-talkers included) because it needs to replace its top shows that are getting yanked by their owners amid these streaming wars.
The Office (#1 Netflix show): Gone in 2020 — NBC is taking it back to include in its own yet-to-be-named streaming service.
Friends (#2): Gone in 2021 — AT&T is taking it back and adding it to HBO Max.
All Disney movies: Gone by November — Disney is launching competitor Disney+.
FYI: Seinfeld hits Netflix in 2021 (not that there's anything wrong with that) and remains on Hulu (probably with commercials) until then.
'No streaming for you, Sony'... The key here isn't how much Netflix paid (it was more than Friends or The Office recently went for), it's who sold it: Sony. The only companies willing to work with Netflix are the ones without their own streaming platforms. Jerry, George, Elaine, and Kramer aren't too worried — their series has made over $3B since the finale episode.The Takeaway:You're loyal to George Costanza — not Netflix... Streamers are discovering that cord-cutters care most about the shows they'll watch over and over again — aka sitcoms. Netflix lost US subscribers last quarter because its news shows didn't land. Now it's searching for a "loyalty leader" — a show that keeps you hooked to your subscription. It's betting Seinfeld will, yada yada yada, maintain your subscription.
Sep 10, 2019
Apple reveals iPhone 11 — then ends its always-raising-prices streak Read More The Touch screen. The no-headphone-jack. Siri... Apple has evolved over the course of its annual new iPhone product unveils. The stage and dark lighting haven't. Here's what we get with the new iPhone 11:
Size and colors: Pastels for days with the new lavender, soft green, and honey yellow. Both the regular and Max versions are slightly bigger than the previous ones.
A "Pro": $999+ gets you three cameras (the starter, a backup, and 3rd-string, just in case), which create quite a bulge. Your move, Pixel 4.
The "Slofie": Sloooow-mooootion videoooo getssss addedddd to the front-facing camera, too.
Forget iPhone — Apple TV+ is the star... and it arrives Nov. 1 at a ridiculously low-priced $4.99/month. Netflix ($12.99), HBO Now ($14.99), and even Disney+ ($6.99 starting in November) aren't happy about this price war aggression. Tim Cook also showed off original Apple TV+ shows (there aren't many of 'em, but they star Steve Carell and Reese Witherspoon) and a $4.99/month video game "Arcade" pass.The Takeaway:Apple's thinking about the whole customer... New colors, a 3rd camera, and the A13 chip aren't forming fanboy lines outside glass-plated Apple Stores anymore. So it's focusing on prices: Lower some prices, offer some freebies, and hope to make $$$ on sales every few years (with monthly service subscriptions in between):
iPhone 11 starts at $699 and the Pro version at $999 (iPhone X started at $999 when it debuted in '17).
Apple Watch 5 is the same price as the previous ones and its Watch 3 is a Fitbit-ish $199.
Apple TV+ costs a Venti Latte per month at $4.99, or free for a year when you buy a Mac, iPhone, or iPad.
Aug 30, 2019
Disney sells YES Network to the Yankees, Sinclair, and *Amazon* Read More Now batting, for the New York Yankees... Jeff Bezos. In one of the final chapters of the Disney-acquires-Fox saga, Disney officially sold the YES Network Thursday to the NY Yankees, Sinclair Broadcast Group, Amazon, and some other investors. Here's what they're buying:
YES is the TV channel with rights to broadcast the Yankees, Brooklyn Nets, NY Liberty, and NYC FC teams.
And it's worth $3.7B because New York sports have global appeal despite local frustration.
This Disney & Fox deal goes way back to 2017... That's when Mickey started a bidding war against Comcast to acquire 21st Century Fox, which included X-Men, Fantastic Four, The Simpsons, Avatar, 22 regional sports networks, and the YES Network. The Justice Department allowed the merger on 1 big condition:
The requirement: Disney can add all those big names, but only if it sells the sports channels and YES — otherwise it would have too much media power.
Sports translation: LeBron and Kobe can be on the same team, but only if they trade away Steph to another one.The Takeaway:Amazon's now the proud 15% owner of YES Network... It hasn't said what it will do with that — But we're all hoping for the Yankees to be a #PrimePerk. Amazon Prime Video has already done deals with the NFL's Thursday Night Football and the Premier League. CEO Bezos won't offer up details yet, but it's already generating HQ2-style speculation.
Aug 24, 2019
Spider-Man is a victim of a Disney/Sony contract war Read More There's a disturbance in the universe... Spider-Man (we know — he should drop the hyphen) is stuck in the middle of it. And it's a battle between Sony and Marvel Comics, which is now owned by Disney. Back in 2015, the two struck a deal:
The superheroes: Marvel's creative team includes Spider-Man in its films, but Sony surprisingly owns the film rights.
The money: In return, Marvel (now Disney) got 5% of the ticket sales from the 1st day of a Spider-Man movie release (+ all the merchandise $$) — Sony got the rest of the box office.
The switcheroo: Now Disney's proposed a new 50/50 plan — both companies pay the production costs and split the profits evenly. But Sony said 'No.'
So who's got the Infinity Stones?... No one. If this doesn't get resolved, then Spider-Man won't be in any Marvel films in the future. That means Iron Man and Black Panther can't call on Peter to save the world the next time it inevitably faces eternal death. That would be bad for both Disney and Sony, but right now the talks show no signs of life.The Takeaway:We're witnessing the power of franchise ecosystems... That new Spider-Man movie Far from Home is now Sony's top-grossing movie ever. Meanwhile, Disney's Avengers: Endgame became the largest movie of all time, period. Both share characters, which drives engagement and future spin-offs. That's why Disney acquired Fox for $71B — it's adding 15 movie franchises to its Star Wars and Avengers treasure chest. And it just delivered a record film year.
Aug 7, 2019
Disney's stock falls 5% as its acquisition spree catches up Read More A chain is only as strong as its weakest superhero blockbuster... Disney just announced that revenues hit a record high of $20B (up 33%), but profit dropped 51% in the 2nd quarter. Now that Disney's officially acquired Fox and most of Hulu to add to the Mouse family, you have to take the good with the bad:
The Good (mostly Disney): Avengers:Endgame became the best performer in movie history. And the ESPN and Discovery channels brought home big bucks.
The Bad (mostly Fox): We're huge Wolverine fans, but the most recent X-Men movie missed (badly). Also, a tournament-worth of cricket matches got rained out, hurting Fox's international revenues. Now Disney wants to resurrect Fox's Home Alone.
Here's what Disney actually does... Mickey lives off of 4 profit food groups:
Media Networks (33% of revenue): Things at Disney's many cable TV channels (includes ESPN and ABC) were solid.
Parks, Experiences, and Products (31%): Attendance fell 3% at Disney's US parks, but per-tourist spending jumped 10%. Could be the disturbingly large turkey legs.
Studio Entertainment (18%): Re-butter the popcorn for Disney's hits on hits on hits. The movie studio set a record $3.8B revenue.
Direct-to-consumer (18%): The home of Disney+, the much-hyped new streaming network that arrives in November.The Takeaway:Disney+ doesn't need to make money... (that's its secret). The new Netflix rival just needs to feed the Disney profit beast. Disney makes money everywhere, and that gives it a huge advantage over Netflix.
Netflix: $12.99/month, because Netflix has 1 product that needs to make all the profits.
Disney+: Can charge just $6.99/month because the more fans that fall in love with Coco, the more Disney can make money on theme parks, toys, and shows covered in Coco.
PS: The CEO just announced the mega package of Disney+, Hulu, and ESPN+ will cost $12.99/month.
May 24, 2019
Disney dominates theme parks — And is about to unleash The Force Read More Party in the castle penthouse... We get it — Disney+ is going to be a big deal and Marvel is a money-making movie machine. The stock is up 14% since Disney's big streaming announcement. But now a report on its world-leading theme parks deserves your attention:
Disney owns the top 4 theme parks worldwide: Orlando's Disney World, California's Disneyland, and 2 in Tokyo.
The Magic Kingdom led with 20,859,000 visitors last year.
And 8 of the top 10 properties are Mickey's.
Magical timing... On May 31st, Disney unleashes its new “Star Wars: Galaxy’s Edge” park in Anaheim, CA — the biggest expansion of a Disney park ever. Drop a cool $200 on a lightsaber after you've crushed some galactic Tandorian chicken. Or go for the $99 custom drone that interacts with the Planet Batuu scenery around you. It's an aggressively immersive park.The Takeaway:It all goes back to a 62-year-old diagram... In 1957 (29 years after he drew Mickey), Walt Disney sketched out this biz plan, with Disney characters at the center. Connected to them were 5 "areas": Film, TV, music, merchandise licensing, and theme parks. Today's theme parks tie directly back to that diagram — A never-ending profit ecosystem. 
