Disney Q2 Home Entertainment Revenue Slips Due to Lower Catalog Sales

The Walt Disney Company May 11 said “content sales/licensing and other” revenue, which includes packaged media and transactional VOD, declined 3% to $1.9 billion, compared with $1.84 billion in revenue in the prior-year period. Segment operating income plummeted almost 95% to $16 million, from $312 million a year ago. The decrease in operating income was due
to lower TV/SVOD distribution results and, to a lesser extent, a decrease at home entertainment due to lower sales of catalog titles in the current quarter.

In the prior-year period, top-selling Disney titles included Mulan and Soul, while animated musical Encanto and residual revenue from Shang-Chi and the Legend of the Ten Rings were the top-selling packaged-media titles in Q2.

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The decrease in TV/SVOD distribution results was due to a decrease in sales of episodic television content driven by higher sales of “Modern Family” and “How I Met Your Mother” in the prior-year quarter.

Speaking on the May 11 fiscal call, CFO Christine McCarthy said the decline in home entertainment revenue included management’s “strategic decision” to re-direct Disney titles to direct-to-consumer streaming channels, rather than legacy retail channels.

“As a reminder, these results are deliberately aligned with our decision to utilize our content on our own direct-to-consumer services,” McCarthy said.

ViacomCBS Streaming Push Sends Stock Tumbling Off Paramount Mountain

NEWS ANALYSIS — ViacomCBS is doing more than putting all of its eggs into the Paramount brand basket. The media giant is spending money it doesn’t have in an effort to match competing streaming services’ (i.e., Netflix, Disney+ and HBO Max) content spend on original content.

The day after ViacomCBS senior management announced a corporate name change to Paramount and plans to increase content spending to $6 billion from $4 billion, investors responded by driving the share price down 20% in Feb. 16 premarket trading.

Analysts piled on their concerns despite the Paramount+ streaming platform adding 7.3 million subscribers in the quarter to bring its total sub count to 32.8 million since launching in 2014 as CBS All Access.

“While we can see how Paramount+ with its breadth of content, including sports, kids, general entertainment and news offerings, helps differentiate the streaming service from its peers, we have a hard time looking at the [direct-to-consumer] revenues and investments on a standalone basis,” analyst MoffettNathanson wrote in a note.

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Indeed, streaming subscription revenue grew 84% year-over-year, reflecting strong sub growth from the company’s streaming subscription services. Streaming advertising revenue grew 26% year-over-year, driven by growth in advertising on Pluto TV and Paramount+.

At the same time, expenses related to over-the-top video distribution skyrocketed. Costs at Paramount’s TV production and pay-TV operations increased 38% and 32%, respectively, to $3.5 billion each. Revenue increased around 18% to $3.7 billion and $4 billion, respectively.

“We see another transitional cycle of ratcheted streaming investments at Paramount+, alongside Showtime Anytime and Pluto TV,” Tuna Amobi, analyst with CFRA Research, wrote in a separate note. “We see modest progress on the road to recovery from the pandemic disruption of the ads and TV/film content businesses.”

Disney Ups Hulu Online TV Price, Adds Free SVOD Options

Disney has sent emails to Hulu + Live TV subscribers informing them about a $5 monthly hike to their online TV service subscription. The price hikes, which go into effect Dec. 21, raise the ad-supported option to $70 from $65, while the ad-free tier increases to $76 from $71 monthly.

Key to the price hikes: Subscribers get free access to Disney+ and ESPN+, which along with the Hulu SVOD platform, make up Disney’s direct-to-consumer business across 179 million combined subscribers.

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Hulu+ ended the most recent fiscal period (Oct. 2) with 4 million subscribers, which was down from 4.1 million subs during the previous-year period. The online TV platform still tops a market that includes YouTube TV, Philo, Sling TV, Fubo TV and AT&T TV, among others.

The price hikes following last month’s $1 Hulu SVOD fee surcharge, which now costs $7 with ads and $13 without advertising.

Disney CEO Bob Chapek Cites Home Entertainment Success as Key to Getting Closer to Consumers

For Bob Chapek, what’s old is new again.

Before Chapek become CEO of The Walt Disney Co., he was president of Walt Disney Home Entertainment and driver of a successful packaged-media marketing program that created demand for select Disney classic titles by keeping them temporarily unavailable via the “Disney Vault.”

Flash-forward to the present and Chapek has been focused in part on expediting Disney’s direct-to-consumer retail and streaming access. Speaking June 14 on the virtual Credit Suisse 23rd Annual Communications Conference, Chapek said the DTC business strategy — similarly to home video and transactional VOD in the past — is about getting closer to the consumer.

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Disney’s DTC unit includes streaming video services Disney+; Disney + Hotstar; ESPN+; Hulu; and Star+. The segment had more than 103 million combined subscribers, and posted revenue of $3.5 billion in the fiscal first quarter, up 73% from the previous-year period.

“It’s about having a granular understanding of what the consumption patterns are, and then speaking to the consumers in a way that’s going to be relevant to the content that they want specifically for themselves,” Chapek said. “And by doing so, we’ll drive engagement and consumption.”

Disney+ has taken baby steps into premium VOD, dubbed “Premier Access,” enabling Disney+ subscribers early access to select movies priced at $29.99 purchase-only price. Subsequent retail channels include transactional VOD, electronic sellthrough, DVD and Blu-ray Disc.

“In terms of the relationship that we have with our distribution partners, the key is having a strong symbiotic relationship, and that’s what we’ve got, as they really want Disney content and we bring that value to their platform,” Chapek said.

“So as long as we have a symbiotic relationship, where we bring something they need, we get something that we need. It’s a healthy relationship. And with the wide variety of content that we have in our machine, I think we’ll continue to have that very positive, very productive, very symbiotic relationship.”

When asked whether Disney might separate select Disney brands such as Marvel and Star Wars into standalone streaming platforms, Chapek said the aggregated business model, including combining Disney+, ESPN+ and Hulu into a specially-priced combo offering, is working.

“There is sort of a large overlap between people that like Marvel versus people that like Star Wars and people that like Disney,” he said.

“We won’t say no to anything in the future, but right now we’re really happy with our more highly aggregated model that we have, both from a cost standpoint and from a market opportunity standpoint. But again, who knows it could evolve over time as we learn more and more in different regions across the world.”

NBCUniversal, Telemundo Partner on Streaming Content Studio

NBCUniversal Telemundo Enterprises is creating Telemundo Streaming Studios, which it bills as the first-ever Spanish-language studio in Hispanic media exclusively dedicated to serving the growing Latino streaming audiences in the United States and around the world.

Following the creation of original titles “El Señor de los Cielos,” “La Reina del Sur,” “El Recluso,” “No Te Puedes Esconder,” “Jugar con Fuego” and, most recently, “Dime Quien Soy,” “100 Dias para Enamorarnos,” “Falsa Identidad” and “Mariposa de Barrio,” Telemundo is expanding production capabilities to create original scripted content exclusively for direct-to-consumer platforms. In addition to developing and producing its own IP, the new studio will offer production services to third-party direct-to-consumer platforms.

“Latinos are pacesetters of cultural and technological change,” Beau Ferrari, chairman, NBCUniversal Telemundo Enterprises, said in a statement.  “We are … super serving the Latinos of today with the best original, premium and culturally relevant content across all platforms.”

According to Nielsen, driven by streaming video consumption, Hispanics spend more time per day on video through TV-connected devices and video-focused app usage compared to “total adults.” Hispanics are often 50% or more of the average audience to shows that center on Hispanic characters and stories, which is a remarkable over index considering they are roughly 20% of the population.

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Based out of Miami, Telemundo Streaming Studios will be housed under Telemundo Global Studios, led by Marcos Santana, who will continue to oversee all original scripted productions for the network, including international co-productions. The new production unit launches with more than 35 projects in development and in production, including the dramedy “Armas de Mujer” for Peacock, “El Marginal” seasons four and five for Netflix, as well as the remake of “Historia de un Clan,” upcoming seasons of “El Recluso,” a new version of “El Diario de un Gigolo” and the action-packed series “El Immortal.”

“As pioneers in the production of scripted Spanish-language content for U.S. Hispanics, we have a wide range of experience to invest in producing the best scripted content for the growing number of Latinos who consume their favorite shows across streaming platforms,” Santana said in a statement. “With these new studios, Telemundo will be the go-to source for Latino streaming content in the US and around the world.”

HBO Max App Available on Cox Platforms

The HBO Max app is now available to Cox Contour customers on their set-top boxes, WarnerMedia and Cox Communications announced March 10.

Cox customers can now access HBO Max via their Contour 2 or Contour Stream Player devices by opening the HBO Max app using their Contour remote or by saying “HBO Max” into their voice remote to launch the app. Customers are also able to subscribe to HBO Max directly via their Contour TV device using their remote.

HBO Max, WarnerMedia’s direct-to-consumer platform, features content from HBO, Warner Bros., DC, Cartoon Network, Adult Swim, Turner Classic Movies and more, as well as all-new Max Originals at $14.99 per month. The streaming platform initially launched in the United States in May 2020 and will expand into 39 territories throughout Latin America in June, and the HBO-branded streaming services in Europe (the Nordics, Spain, Central Europe, the Baltics and Portugal) will be upgraded to HBO Max later this year.

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Fox News International Adds 12 More Countries

Fox News Media’s international streaming platform Fox News International Oct. 29 expanded its distribution to 12 additional countries, including Costa Rica, Ireland, Norway, Bulgaria, Cyprus, Czech Republic, Estonia, Latvia, Lithuania, Malta, Slovakia and Iceland.

The brings the total number of countries receiving the service to 27 in advance of the Nov. 3 U.S. presidential election. Subscribers have access to live feeds of Fox News Channel and Fox Business, plus a catalog of 20 on-demand programs.

Fox News International is available through mobile and OTT devices, including iPhone, Android, Apple TV and Android TV. It is also now offered with enhanced distribution across Amazon FireTV’s streaming platform.

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Fox News International Expands Streaming Platform in Europe

Fox News Media’s international streaming platform Fox News International expanded its distribution in Europe Oct. 15 to include Austria, Belgium, Denmark, Finland, Greece, Hungary, Luxembourg, Netherlands, Poland, Romania and Sweden.

That brings the total number of countries where the service is available to 15. The direct-to-consumer platform launched in Mexico in August, and in the United Kingdom, Germany and Spain in September. The platform is targeting a reach of more than 20 countries by early 2021.

Subscribers have access to Fox News Channel and Fox Business programming. Fox News International is available through mobile and OTT devices, including iPhone, Android, Apple TV and Android TV, with plans to bring the service to Amazon Fire TV and Roku later this year.

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Disney Reorganizes With Focus on Streaming Video

With much of its business units idled due to the coronavirus pandemic, Disney CEO Bob Chapek Oct. 12 announced internal restructuring that puts the focus on what is working: streaming video.

Kareem Daniel

Disney is combining ad sales with distribution into a new Media and Entertainment Distribution group led by Kareem Daniel, who has served as president of consumer products, games and publishing. The media giant said the move is to put a “focus on developing and producing original content for the company’s streaming services.”

The new group will be responsible for all monetization of content — both distribution and ad sales — and will oversee operations of the Company’s streaming services. It will also have sole P&L accountability for Disney’s media and entertainment businesses.

This means that while Alan Horn and Alan Bergman, Peter Rice, and James Pitaro will continue to lead Disney’s studios, general entertainment and amusement parks, respectively, they will do so separate from streaming video.

Rebecca Campbell

Rebecca Campbell, who headed direct-to-consumer operations, which includes Disney+, ESPN+, Hulu, and pending Disney+ Hotstar, was upped to chairman of international operations and direct-to-consumer. All five executives report directly to Chapek, with Campbell reporting directly to Daniel.

“Given the incredible success of Disney+ and our plans to accelerate our direct-to-consumer business, we are strategically positioning our Company to more effectively support our growth strategy and increase shareholder value,” Chapek said.

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The CEO said separating content creation from distribution would allow Disney to be more effective in making the content consumers want most, delivered in the ways they prefer it, i.e. over-the-top video, transactional VOD and PVOD.

Indeed, Disney+ had more than 60 million subscribers in August. The bundle of Disney+ with Hulu and ESPN+ has 105 million.

“Our creative teams will concentrate on what they do best–making world-class, franchise-based content — while our newly centralized global distribution team will focus on delivering and monetizing that content in the most optimal way across all platforms, including the coming Star international streaming service,” Chapek said.

“It’s a tremendous privilege to work with the talented and dedicated teams that will comprise this group, and I look forward to a close collaboration with the outstanding and incredibly successful team of creative content leaders at the company, as together we build on the success we’ve already achieved in our DTC and legacy distribution business,” Daniel said in a statement.

A 14-year Disney veteran, Daniel has held leadership positions across a variety of businesses, including consumer products, games and interactive experiences, publishing, studio distribution, and Walt Disney Imagineering. Prior to that, Daniel was VP of Distribution Strategy at Walt Disney Studios, where he worked closely with the leadership in developing the company’s film content distribution strategy across multiple platforms and played a key role in the commercialization of the studio’s films.

“As we now look to rapidly grow our direct-to-consumer business, a key focus will be delivering and monetizing our great content in the most optimal way possible, and I can think of no one better suited to lead this effort than Kareem,” Chapek said. “His wealth of experience will enable him to effectively bring together the company’s distribution, advertising, marketing and sales functions, thereby creating a distribution powerhouse that will serve all of Disney’s media and entertainment businesses.”

Disney reports fourth-quarter (ended Sept. 30) fiscal earnings Nov. 5.

Disney+ Expands to Eight Additional European Markets; Releases ‘Mandalorian’ Season 2 Trailer

The Walt Disney Co. Sept. 15 announced that its branded SVOD platform, Disney+, is now available streaming in Portugal, Norway, Denmark, Sweden, Finland, Iceland, Belgium and Luxembourg. Featuring content from Disney, Pixar, Marvel, Star Wars and National Geographic, Disney+ launched Holland, United States and Canada on Nov. 12, 2019.

The platform launched in Austria, the United Kingdom, Spain, Italy, Germany, Ireland, and Switzerland on March 24, replacing DisneyLife in the U.K. and Ireland. Disney+ is expected to launch in Eastern Europe starting in October.

The news coincided with release the first trailer for the second season of the popular “Star Wars” spinoff series, “The Mandalorian.”

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“We have surpassed 60.5 million paid subscribers globally, and today we continue our international expansion with the launch of Disney+ in eight countries,” Rebecca Campbell, chairman of Walt Disney Direct-to-Consumer and International, said in a statement. “As a major force in the global direct-to-consumer space we’re bringing high-quality, optimistic storytelling that you expect from our brands to even more people.”