THB #203: Disney Day Q3, Preview

Good morning, west coasters. It’s the end of the film industry summer in more ways than one this week. (The streaming story heats up, with She-Hulk, House of the Dragon, Lord of the Rings, and Dancing With The Stars landing on The Stream in the next 6 weeks.)

Is it a coincidence that The Quiet Quarter is also being made a quiet quarter by distributors going very light on content for 2 full months? Hmmm…

Of course, in reality, what happens on streaming has nothing at all to do with successful or unsuccessful theatrical releases. The idea that a popular streaming show opening on the same week as a quality movie in theaters will keep people from watching either has proven to be laughable. Strong companies play to all fields.

Disney’s Quarterly report this afternoon the end of the earnings releases until we go back down that road again in October. And it seems every one of the streaming companies will be happy for the lack of focus on numbers. We are in a transitional period and almost nothing terribly significant will actually happen until the end of the year or early 2023. No ad platforms. No major international roll-outs. If there are any mergers between existing major players, they will be from desperation and be highly likely to fail.

Disney is expected to add 10 million subscribers this quarter. If this is what happens, there can realistically be 3 drivers.

Most significantly, Disney opened for business in 70 countries in Europe, West Asia and Africa in June. That is a lot of room to run for Disney DTC.

Netflix passed 100 million international subs in Q1 2020. Disney is likely to announce that landmark this afternoon. The mix is very different. But they should get better ARPU than they have in India.

Disney has floated past the open windows on sub losses in the last 2 quarters by expanding the count hugely in India… at $1 a month subs (and keep in mind that thier version of Disney streaming, Hotstar, includes a similar range of content to the American Disney Bundle, not just D+). Last quarter, 4.2 million of the reported 7.9 million in dub growth was from India/Hotstar… again, at $1 a pop.

The conversation about India and Disney these days revolves around the loss of cricket. But it is worth noting that the Paramount Global rights don’t kick in until next year and Disney can still offer broadcast access in India. So there is no reason to assume there is a cliff that Disney will fall off in this or the next quarter. There could actually be more additions.

And the third area of potential growth is domestic. You will remember the big bump in the cost of ESPN+? I believe the reason for it was to drive the ESPN+-only subscribers join The Disney Bundle, which is $4 more than the new ESPN+ standalone pricing, making the addition of D+ and Hulu that much bigger a bargain. Disney doesn’t break out each of the streamers in subscriber counts and all three get counted for Bundle subscribers. So if a million ESPN+-only subs were pushed into The Bundle, that adds 2 million more subs to the overall Disney count.

We’re about 2 hours from the earnings release and 3 hours from The Call.

Until then…