THB #372: 3 Tickets For Disney

Obviously, I am not sitting in Bob Iger’s office now and they removed all my listening devices from when Chapek was there. Heck, they don’t even feed me “leaks” the day before they launch press releases about new hires. (It’s okay… I’m not very good at the payback required.)

But as the return, on whatever level, of Mayer and Staggs to Disney to chew on potential changes to the company’s future is all the buzz, I started musing on where this all could be going.

I’m breaking it out into 3 versions of the company, The A-Ticket, The C-Ticket, and The E-Ticket. You might have to be over 45 to understand those designations, but they are burned into my soul forever. I think they will make themselves clear as we go.

THE A-TICKET

“And that's it and that's the only thing I need, is this. I don't need this or this. Just this ashtray. And this paddle game, the ashtray and the paddle game and that's all I need. And this remote control. The ashtray, the paddle game, and the remote control, and that's all I need. And these matches.”

When you were a kid and Disney had ticket books, the “A” ticket was generally for little kids, older adults or people really obsessed with Disney (a number of Disney History shows were A ticket… I liked them… but I was a weird kid that way). In 2023, the A Ticket for Disney would be the easy road… get back to Disney First, nearly guarenteed success with minimal risk and minimal upside beyond great stability. Iger referenced the idea of “Core Disney” in his now weirdly infamous CNBC interview.

Core Disney starts with “Disney Parks, Experiences and Products.“ Parks, etc is basically a $30 billion a year business that throws off about $8 billion a year in operating income. There are some vulnerabilities and they continue to spend money building, but these are primarily established, stable spaces with an established, stable, (sometimes rabid) audience.

Turns out, they aren’t so rabid that they are willing to consistently spend at least $1209 per guest per night with a minimum of 2 guests for the Star Wars Hotel Galactic Starcruiser. Oh, well.

What else is “Core Disney?” Brands. Marvel, Star Wars, Pixar, and Disney Animation are as core as core can be.

You know what you won’t find in the Disney Bundle? Much of the Touchstone library that rebuilt Disney in the movie business in the late 80s, alongside the revived animation business. Big Business and Cocktail, yes… Ruthless People and Down & Out In Beverly Hills, no.

The ambivalence about those films - which deserve better - mirrors the ambivalence that Disney has shown about non-brand films in the years before COVID. Aside from nature docs and The Nutcracker, the only non-brand film released by the studio since September 2016 was A Wrinkle in Time… a wreck of car. There were 6 non-brand films released in 2015 and 2016, with 5 of them grossing a total of $148 million worldwide. The 6th was the one relative hit, Spielberg’s Bridge of Spies, which grossed $165 million worldwide.

I was not and am not a fan of the in-house-brand-only approach. But it certainly was successful for Disney for the years before COVID and Chapek. (Am I being mean to him? Sorry. I guess it was a coincidence that so much tanked under his watch.)

So, in 2022, the films released by Disney (including all of the Avatar 2 gross) grossed about $5.5 billion worldwide. In 2019, the studio was up over $11 billion in this category. The movies of 2023 are around $2.7 billion worldwide now with as much as another $1.5 billion looking likely for the rest of the year’s films.

It’s fair to argue that the machinery of Disney’s film business is having a bad year. Part of this is circumstance. Part of it is bad habits developed during the COVID period. Part of it is both Marvel and Pixar trying to re-set with new talent in front of and behind the camera while LucasFilm seems to be flapping in the wind, trying to find a post-Skywalker course.

But whatever it is, it’s still “Core Disney” and is unlikely to be going away.

That brings us to Core Disney DTC, aka Disney+. 105 million subscribers, generating about $8 billion a year. This does not include Hulu or ESPN, as they are not/may not be Core.

Now… the big question. Is linear “Core Disney?” Are parts of it Core and parts of it non-Core?