Disney Might Be Cooked This Time

Mickey Mouse at Disney World
Handout / Getty Images Entertainment via Getty Images

Disney’s acquisitions of brands like Marvel initially paid off but have seen diminishing returns as audience interest wanes. The company faces significant challenges in the highly competitive streaming market, struggling to achieve substantial margins against giants like Netflix (NASDAQ: NFLX) and numerous other services. The issue of customer churn exacerbates this problem, with viewers frequently switching services. Additionally, while Disney’s (NYSE: DIS) streaming service had a boost from specific content like the Taylor Swift Eras Tour, the competition for screen time and the importance of sports content like the NFL remains critical for long-term profitability.



Well, they bought all these brands like Marvel, and they rolled them into Disney. At first, it worked great because the first movie worked, the second. But at some point, the eighth or ninth movie, you started to see a trailing off in interest.

And the yield from those buyouts like Marvel paid for themselves probably quite early on. The problem is that they’re not yielding that kind of return now.

Well, and you have to be the huge Marvel fan to go see Wolverine faces, you know, King Kong or whatever they’re doing now, because I think people are just bored. And if they could come up with, they certainly have the production studios to kick out some really good product, especially with Pixar and all that, but it doesn’t seem to ever come to the forefront.

The other problem Disney has is that I don’t care about whether they’re breaking even on streaming or not. If you’re up against Netflix, if you’re up against Amazon Prime Video, you’re up against the 30 other smaller things, whether it’s Max or Paramount Plus. Getting a real margin in that business, it could be that the only guys who are really, really making money in that space is Netflix.

Yeah, and all the over-the-top competition from Sling and all the other, you know, YouTube TV, all of those that compete for the local sort of programming and regular what was cable programming, they can undercut them. And Hulu is not horribly expensive. We have it here, and I think… It has that plus Disney Plus plus ESPN Plus.

And the only reason Disney Plus was reasonably good during the quarter is they had the Taylor Swift Eras Tour video on there.

Well, when people on Wall Street look at streaming, there are two things they look at. The first one is how much screen time does an average American have watching anything on their phone, on their computer, on their TV? I don’t remember what it is right now, but let’s say it’s four hours. It’s not going to become six. It’s going to maybe go to four hours and one minute, but it’s three hours and 59 minutes. That’s not an accordion number.

The other one is that just the sheer number of these, the last figure I saw is an average household has… Three and a half streaming services at any time.

Right. There are dozens of these. And one of the things that causes what’s called churn. You subscribe to something. You don’t like it very much. You cancel. You go to another streaming service. You see the things you want. You cancel it. So Disney’s problem with streaming is a long term and permanent problem.

Well, it’s like cell phones. It’s the same thing. People bouncing between Verizon and AT&T and T-Mobile and Cricket. There’s constantly looking for a better deal. And yeah, I think the churn problem will remain there.

And the only big business is the NFL anyway. And that’s why places like Amazon, they’re paying up for the NFL. And granted, they have it via ESPN and college football. But, I mean, that’s where the money is, is in sports, not in, you know, reruns of old shows or local news or anything like that.


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