Disney’s Staggering Spending on Content

 by Ray Keating

Analysis/Commentary

DisneyBizJournal.com

December 13, 2021

 

I know the news on what The Walt Disney Company plans to spend on content during its fiscal year 2022, which began on October 1, is not exactly new. It was released in late November. However, it’s taken a couple of weeks for the numbers to truly sink in with me.

 

Disney plans to up its annual spending on content by $8 billion – from $25 billion in 2021 to $33 billion this year. That’s an increase of 32 percent.

Now, this number isn’t just about Disney+. It covers Disney’s streaming, linear and sports programming. However, the increase seems to be all about streaming, that is, Disney+, Hulu and ESPN+. 

 

It was noted in the company’s 2021 annual report that the company would be producing 50 titles (both movies and episodic series) for theater and streaming releases. Also, it was reported that its General Entertainment division would be producing 60 unscripted series, 30 comedy series, 25 drama series, 15 docuseries/limited series, 10 animated series, 5 made for TV movies, and numerous specials and shorts.

 

While not a strictly apple-to-apples comparison given Disney’s greater variety of outlets, it has been reported that Netflix plans to spend about $17 billion in 2022 on content, and WarnerMedia, post-merger, is looking to spend $20 billion each year. 

 

Also, in April 2021, Amazon’s annual report showed that the company spent $11 billion on movies, episodic series and music for its Prime services in 2020, and that was up from $7.8 billion in 2019.

 

Content is king with Disney, and given that investors found the latest report on streaming subscriptions disappointing, 2022 promises to be a big test for the House of Mouse.

 

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Ray Keating is the editor, publisher and economist for DisneyBizJournal.com, and author of the Pastor Stephen Grant novels and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.

 

The views expressed here are his own – after all, no one else should be held responsible for this stuff, right?

 

Great Christmas Gift! The Disney Planner 2022: The TO DO List Solution is here! It combines a simple, powerful system for getting things done with encouragement and fun for Disney fans, including those who love Mickey, Marvel, Star Wars, Indiana Jones, Pixar, princesses and more. Also, “The Disney Planner 2022: The TO DO List Solution” comes with a handy spiral binding for easy use. 

 

Keating has three new books out. Vatican Shadows: A Pastor Stephen Grant Novel is the 13^th thriller/mystery in the Pastor Stephen Grant series. Get the paperback or Kindle edition at Amazon, or signed books at www.raykeatingonline.com. Past Lives: A Pastor Stephen Grant Short Story is the 14th book in the series. Again, get the paperback or Kindle edition at Amazon, or signed book at www.raykeatingonline.com. And order the 15th book in the series What’s Lost? A Pastor Stephen Grant Short Story – grab it at Amazon.com or signed editions at www.raykeatingonline.com. 

 

Also, check out Ray’s podcasts – the Daily Dose of Disney, Free Enterprise in Three Minutes, and the PRESS CLUB C Podcast.

Diller Dead Wrong on Streaming

 by Ray Keating

Commentary

DisneyBizJournal.com

May 23, 2021

 

Are all other streaming services, including Disney+, destined to play second fiddle to Netflix … forever? That’s what media mogul Barry Diller told CNBC late last week. 

 

Diller, of course, is dead wrong. In free enterprise, maintaining one’s market position is not destiny – indeed, anything but. And that reality is only intensified and accelerated in an era of great technological advancements.

Diller’s long career and success in the television and media business naturally give him credibility to have his views tapped by CNBC and others. He told CNBC, “Netflix won this several years ago, they’re the only ones who have the scale and momentum to keep making these somewhat lunatic investments in programming. You cannot compete with the momentum, the scale, no one will ever be able to do that.”

 

That’s right, Diller asserted that “no one will ever be able” to compete with Netflix.

 

The CNBC Diller appearance came on the heels of the announcement by AT&T that it would be combining its content arm, WarnerMedia, with Discovery, to create a new company. 

 

That obviously strengthens the HBO Max streaming service. And then there’s Disney+, which even with a recent slowdown has gained subscribers at a far faster rate than originally expected, along with Amazon Prime, Comcast’s Peacock, ViacomCBS’s Paramount+, YouTube, and more.

 

Netflix gained a major competitive advantage by being the early or first mover on streaming. But the notion that they have so much revenue, scale and momentum that they do not face serious competition is absurd. The history of free enterprise is littered with early movers who gave way to other businesses that improved on quality, service, innovation, et al.

 

If Netflix continues to produce quality content in an appealing and convenient way for consumers, then it very well may remain the streaming leader for some time. But if other giants, such as Disney and Amazon, do things better, then Netflix could easily slip behind others. And then there’s the fact that the ongoing revolution in computer and telecommunications technologies will serve as fuel or as an opportunity for the next great company or product to challenge Netflix, Disney, Amazon and others already established in the market, or challenge the entire streaming model itself.

 

The fact is that no one – including Barry Diller – has a crystal ball in terms of where entrepreneurship, invention and innovation will take industries and consumers. That’s good news for entrepreneurs, for creators, for nimble companies and workers, and for consumers – but perhaps not so much for those who might have thrived earlier but lack vision when it comes to the future.

 

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Ray Keating is the editor, publisher and economist for DisneyBizJournal.com, and author of the  Pastor Stephen Grant novels and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.

 

The views expressed here are his own – after all, no one else should be held responsible for this stuff, right?

 

Keating has two new books out. Vatican Shadows: A Pastor Stephen Grant Novel is the 13ththriller/mystery in the Pastor Stephen Grant series. Get the paperback or Kindle edition at Amazon, or signed books at www.raykeatingonline.com. Past Lives: A Pastor Stephen Grant Short Story is the 14th book in the series. Get the paperback or Kindle edition at Amazon, or signed book at www.raykeatingonline.com. And pre-order the 15th book in the series What’s Lost? A Pastor Stephen Grant Short Story.

 

Also, check out Ray’s podcasts – the Daily Dose of Disney, Free Enterprise in Three Minutes, and the PRESS CLUB C Podcast.

 

You also can order his book Behind Enemy Lines: Conservative Communiques from Left-Wing New York  from Amazon or signed books  at RayKeatingOnline.com. His other recent nonfiction book is Free Trade Rocks! 10 Points on International Trade Everyone Should Know. 

 

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Disneynomics: Disney+ and Its Effect on Streaming, Including Netflix

by Ray Keating

Disneynomics Column

DisneyBizJournal.com

September 13, 2020

Reed Hastings, the Netflix CEO, and other observers are impressed with what Disney has achieved so far with Disney+, and expectations have only become more robust looking ahead. That’s a good thing, since uncertainty reigns across many of Disney’s other ventures.

In July, Netflix reported that it had gained 10.1 million subscribers in the quarter ending in June of this year. And that came after adding 16.1 million in the previous quarter. Netflix now has more than 190 million subscribers globally, and for the year ending in June, Netflix revenue registered $22.6 billion, which was a 28.4 percent increase over the previous year. 

And who is number 2 in terms of subscribers? That would be Disney+ at more than 60.5 million, and of course, Disney+ only came online in November of last year. However, total subscription numbers for the Walt Disney Company top 100 million when combining Disney’s Disney+, Hulu and ESPN+.

Hastings apparently is impressed with what Disney has achieved. In a September 7 report, Bloomberg News asked Hastings to identify his number one competitor: “‘Disney,’ he said. ‘If you’d asked us a year ago, “What are the odds that they’re going to get to 60 million subscribers in the first year?” I’d be like 0. I mean how can that happen? It’s been super impressive execution.’”

Competition and too many streaming options? Hastings doesn’t seem worried: “‘There is no such thing as subscription fatigue,’ [Hastings] said. ‘Disney has “The Mandalorian” and we have “Stranger Things.” They are somewhat complementary. People will subscribe to both.’”

In an analysis released early last week by Deutsche Bank, analyst Bryan Kraft says streaming promises to be the big plus for Disney. Indeed, based on his take on the streaming end, Kraft upgraded his rating on Disney from a hold to a buy, with a target price of $163 (the stock closed on Friday, September 11, at $131.75). As MarketWatch noted:

The company has “the most clear path to successfully transitioning its general entertainment programming and content production businesses into a globally scaled, vertically integrated streaming entertainment leader,” Kraft wrote. “The clearest sign that Disney is succeeding in transitioning its business model, aside from the impressive subscriber results, has been management's decision to shut down some of its traditional networks in international markets, including the UK,” he continued, as Disney has been willing to write down the goodwill associated with such moves.

Perhaps most interesting was Hastings’ acknowledging a shift in strategy at Netflix: “Netflix is no longer solely focused on making high-quality, award-winning shows. Hastings and his co-CEO Ted Sarandos say building new franchises is the next big mission. The want to identify stories that can stretch across multiple TV shows, movies, toys and lunch boxes, appealing to viewers all over the world.”

That, of course, and as Bloomberg noted, sounds very much like a Disney strategy. Disney’s influence already is being seen, with recognition of value in Disney’s model. At the same time, Disney has learned from Netflix that a regular stream of new content is vital to sustaining and growing subscribers. Also, consider that the Netflix shift is about adding a Disney model onto their existing “high-quality, award-winning shows” strategy, not replacing it. That points to the market leadership and enormous revenue being raked in by Netflix. 

Can Disney seriously challenge Netflix to become number one in streaming? Sure, they can. We’ll see if they will. Part of the story will be told as new production ramps up post-pandemic, and another part could be about Disney winning a much bigger part of live sports, such as NFL Ticket when that becomes available after the 2022 season.

For streaming aficionados and bingers, strap in. Toss HBO Max, Peacock, Amazon’s Prime Video, YouTube and others into the mix, and this promises to be a great deal of fun.

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Ray Keating is the editor, publisher and economist for DisneyBizJournal.com, and author of the Pastor Stephen Grant novels. He can be contacted at  raykeating@keatingreports.com.

Also, get the paperback or Kindle edition of Ray Keating’s new book Behind Enemy Lines: Conservative Communiques from Left-Wing New York.

Much to Like with Disney+’s 10 Million+

by Ray Keating

Analysis

DisneyBizJournal.com

November 14, 2019

The Walt Disney Company’s stock price took a nice jump up after the company announced yesterday that their Disney+ streaming service passed 10 million subscribers. That announcement, of course, came only one day after the service went live.

Of course, that wasn’t a one-day sign up, as you could pre-order Disney+ for several weeks. Nonetheless, that was an impressive feat, especially given that the company has projected 60 million to 90 million subscribers by 2024, with about a third coming from the U.S.

CNBC offered a handy comparison with other streaming services:

• Netflix (introduced streaming in 2007): 158 million subscribers, 60.6 million U.S. subscribers (as of October).
• Hulu (began streaming in 2007): 28.5 million U.S. subscribers (as of November).
• HBO (founded in 1972, began streaming outside pay-TV bundle in 2015): 34 million U.S. subscribers, 8 million HBO Now subscribers (as of October)
• CBS All Access and Showtime (began streaming in 2014): 8 million subscribers (as of February)
• ESPN+ (began streaming in 2018): 3.5 million subscribers (as of November)
• DAZN (began streaming in 2016): More than 4 million global subscribers (as of May)
• Crunchyroll (began streaming in 2006): More than 2 million global subscribers (as of November)
• Amazon doesn’t disclose the number of Amazon Prime Video users. Consumer Intelligence Research Partners estimated there were 100 million Prime subscribers in January, but those subscribers get many other benefits, including free one-day shipping.

When you look at those numbers, it’s noteworthy that Disney+ was ahead of HBO Now, BCS All Access and Showtime, DAZN, and Crunchy Roll – after going live for only one day.

Right now, Disney+ is live in the U.S., Canada, and the Netherlands, with Australia, New Zealand and Puerto Rico coming online on November 19, and Western Europe scheduled for the end of March 2020. I don’t expect that Disney+ will have to wait until 2024 to hit 60 million subscribers.

Ray Keating is the editor, publisher and economist for DisneyBizJournal.com, and author of the Pastor Stephen Grant novels. He can be contacted at  raykeating@keatingreports.com.