THB 203a: Disney Day Q3 - The Hard Sell
Disney had an okay quarter. Nothing freshly negative. Nothing very exciting.
But instead of taking it from everyone with a Twitter account like Kevin Bacon in Animal House, as Zaslav did last week…
… Disney got super aggressive and fed the crowd some bloody, bloody red meat and made a “meh” into a win.
They downgraded guidance for Disney streaming by 15 million subs (7%) and no one really seemed to notice.
I respect Bob Chapek more than I ever have before.
Here is the gobbledygook offered by CFO Christine McCarthy: “Excluding the impact of any significant future macro headwinds, our core Disney+ subscriber target range is 135 million to 165 million by the end of fiscal 2024, largely consistent with previously provided guidance that non-Hotstar Disney+ subscribers in 2024 would approximate 60% to 70% of the expected 230 million to 260 million total subscriber base.”
Oh, I love to dance a little sidestep…
Still, there were 2 big, industry-changing stories today.
1. Disney is getting out of the business of selling 3 individual streaming offerings and a bundled combination. They are now forcing the bundle on consumers by making subscribing to any 1 of the 3 financially illogical/prohibitive. When they more than doubled the price of ESPN+, that was their experiment… and apparently, they liked the results.
2. Disney is, essentially, creating a virtual television network in India, where the cost of subscriptions are prohibitive. It’s not quite FAST. They are still charging. But the pricing is between $.50 a month and $1.50 a month. (There is no more expensive option.) But it’s not really AVOD because they have live channel availability.
Essentially, Disney passed on the insanely overpriced IPL Cricket deal and decided they had enough to keep Hotstar strong, making more money per subscription on advertising than they could make on subscriptions.
Disney will continue to lean on Hotstar for sub growth. They updated subscriber guidance to 80 million subs by the end of fiscal 2024. Disney only started breaking out Hotstar subs in February of this year. They have added 12.5 million Hotstar subs in the 2 quarters since. That only leaves 22 million to add in the next 9 quarters. Seems like they are playing conservative there.
AND Disney also sold the clickbait that they now have more worldwide subs than Netflix, which is just bullshit that journalists should be embarrassed to repeat. They measure domestic subs by crediting bundle subscribers as 3 subscribers, because they have all 3 offered streamers.
There is a certain genius to this 3-headed monster of the screamed and the understated.
Here’s where it gets tricky…
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