The Walt Disney Company CEO Bob Iger hosted the Q3 2023 quarterly earnings call on August 9, and covered a number of topics from streaming price hikes to revenues from parks and the Disney Cruise Line.
Streaming
One of the biggest pieces of news coming out about Disney and its streaming services is prices are going to be raised for both Disney+ and Hulu with no ads. All of these prices will be taking effect on October 12, 2023.
Disney is following through on previously stated plans to raise streaming prices, as well as launching a bundled version of Disney+ and Hulu, and expanding the ad-supported version of Disney+ to Europe and Canada.
In the U.S., Disney+ with ads and Hulu with ads will stay at $7.99 each, or $9.99 for the two bundled.
But if you don’t want ads, be prepared to shell out more for your services.
- Disney+ with no ads will go from $10.99 monthly to $13.99 monthly.
- Hulu with no ads will go from $14.99 monthly to $17.99 monthly.
- There will be a new bundle of Disney+ and Hulu, both with no ads, for $19.99 monthly, that will start on September 6, 2023.
- Hulu + Live TV with no ads will jump from $69.99 monthly to $76.99 monthly, and if you want it with no ads, the price jumps from $82.99 to $89.99 monthly.
Cable is starting to look like a cheaper alternative now.
Iger also said the company is starting to look closely at account sharing, and later this year, subscriber agreements will be updated and Disney will roll out “tactics to drive monetization sometime in 2024.”
The company says it has improved its direct-to-consumer (DTC), also known as streaming, operating income by roughly $1 billion in just three quarters, as Disney continues to work toward achieving DTC profitability by the end of Fiscal Year 2024.
Linear TV
In addition to streaming, Iger touched on Disney’s linear television, such as ABC, FX, Freeform, and National Geographic.
These are highly profitable for Disney, he acknolwdged on the call, but added, “the trends being fueled by cord cutting are unmistakable. And, as I have stated before, we are thinking expansively and considering a variety of strategic options.”
“We need to keep in mind the need for content to fuel our DTC businesses, notably Hulu. So anything that would be done would be with an eye to the content to fuel our growth business, and that is streaming.”
Regarding ESPN, he said Disney has “received notable interest from many entities” after putting out the call for strategic partners, but Disney would retain control of ESPN. It’s looking to join forces in any or all of content, technology, marketing and distribution.
“Taking our ESPN flagship channels direct-to-consumer is not a matter of if, but when,” Iger said. “And the team is hard at work looking at all components of this decision, including pricing and timing.”
WGA and SAG-AFTRA Strikes
Of course producing content for both streaming and linear channels will depend heavily on the resolution of the current WGA and SAG-AFTRA strikes.
During this call Iger touched briefly on this, saying,“It is my fervent hope that we quickly find solutions to the issues that have kept us apart these past few months. And I am personally committed to working to achieve this result.”
“Nothing is more important to this company than its relationships with the creative community … that includes actors, writers, animators, directors and producers. I have deep respect and appreciation for all those who are vital to the extraordinary creative engine that drives this company and our industry.”
This is quite different from the dismissive comments he made last month during his interview with CNBC, where he stated,
“I understand any labor organization’s desire to work on behalf of its members to get the most compensation and be compensated fairly based on the value that they deliver. We managed, as an industry, to negotiate a very good deal with the directors guild that reflects the value that the directors contribute to this great business.”
“We wanted to do the same thing with the writers, and we’d like to do the same thing with the actors. There’s a level of expectation that they have, that is just not realistic. And they are adding to the set of the challenges that this business is already facing that is, quite frankly, very disruptive.”
Parks and Cruises
Regarding the Parks division, which includes the Disney Cruise Line, news was upbeat.
“Our Asia Parks have been doing exceptionally well, reinforcing a clear opportunity for continued growth,” Iger said. “Both Shanghai Disney Resort and Hong Kong Disneyland have experienced stronger than expected recoveries from the pandemic, and in Q3 they both grew meaningfully in revenue, operating income, and attendance.”
“What sets Disney apart are the numerous ways we’re able to reach consumers with the stories and characters they love, including in our Parks and Resorts,” Iger said. “We’ll be opening new Frozen-themed lands at Hong Kong Disneyland and Walt Disney Studios Park in Paris, as well as a Zootopia-themed land at Shanghai Disney Resort. And later down the road, we will be bringing an Avatar experience to Disneyland, reinforcing the unrivaled worldwide appeal of our brands and franchises.”
Domestically, Iger noted that Disneyland profit was up “modestly,” but “we saw softer performance at Walt Disney World from the prior year, coming off our highly successful 50th Anniversary celebration.”
“However, Walt Disney World is still performing well above pre-COVID levels – 21% higher in revenue and 29% higher in operating income compared to FY2019, adjusting for Starcruiser accelerated depreciation,” he added. “And following a number of recent changes we’ve implemented, we continue to see positive guest experience ratings in our theme parks, including Walt Disney World, and positive indicators for guests looking to book future visits. This includes strong demand for our newly returned Annual Passes.”
He also said, “our Cruise Line in particular showed strong revenue and operating-income growth in the third quarter. Current Q4 booked occupancy for our existing fleet of five ships is at 98%, and we will be expanding our fleet by adding two more ships in fiscal 2025 and another in fiscal 2026, nearly doubling our worldwide capacity.”
During its earnings presentation, Disney included a list of “upcoming Parks and Experiences openings and events” along with previously announced timelines, most of which we’ve already covered:
Total Parks, Experiences and Products (includes consumer products and cruise lines) saw revenues for the quarter rise 13% to $8.3 billion and income up 11% to $2.4 billion.