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Disney’s 'clear fandoms' can help it compete against Apple and Amazon: Analyst

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Needham Senior Analyst Laura Martin joins Yahoo Finance Live to discuss Disney's new Star Wars hotel, the future of Disney+ as streaming wars continue, and the outlook for Disney.

Video Transcript

BRIAN CHEUNG: Disney, Orlando held an investor event showcasing its new "Star Wars" hotel, which gives fans a two-day immersive experience. It's got props from the movies, a little bit of light saber training. For more on this and more from Disney's investor event, let's bring in Laura Martin, senior analyst at Needham. And Laura, look, we've got a lot of "Star Wars" fans in our team here. One person who owns multiple lightsabers said, look, he doesn't want to spend the $5,000 price tag to do this event. Who's the target demo here?

LAURA MARTIN: No, I think you're right. I think it's "Star Wars" superfans. It's about $5,000 for a cabin. But then it's only $6,000 if you bring four people. So I did talk to some people at the park who are not getting a discount, who are taking four of the park employees, and they're paying the six grand, and all four of them will be there for this event. So you can sort of get it down to $1,200 a person if you take you and your friends, and you all sleep in the same cabin.

And it is sort of cool because everyone inside the hotel, there's 240 employees, and they're all dressed in character, and they all stay in character the full two days. And you have adventures. You get attacked by the First Order. You get boarded by the First Order. The entire-- like, it's a hotel, cruise ship-- is themed to be a Starship cruiser. So there's long hallways. You get texted secret meetings with Wookiees to try to push back on the First Order. And most of the people who come show up in costume. The actual consumers show up in their favorite "Star Wars" costume.

AKIKO FUJITA: I think you've kind of convinced me that it could be interesting. I'm not a "Star Wars" fan, by the way. But let's put that aside because when we talk about Disney, so much of the attention has been on the streaming side. And you bring up a good point here in your note, when, one, you say that you think Disney is still going to come out on top, but there is a question about how they compete against rivals like Apple, as well as Amazon, when those companies don't necessarily need to turn a profit on the streaming side because they have revenue coming in from so many other parts.

LAURA MARTIN: Yeah, so I think that's the big challenge. I think it's a bigger challenge for Netflix, but it's a challenge for every company competing and streaming that isn't Apple or Amazon. How do you make money from a business when you're competing with people who don't need to make money from that business?

And I think Disney's answer is legitimate, which is we're going to create-- we have long-term fandoms around Mickey Mouse and princesses and Winnie the Pooh. And we make more fandoms around "Frozen" and "Cars," and, of course, "Star Wars" and the "Avengers" series.

So their strategy to compete with-- I'm not going to say beat, but I'm going to say compete against Amazon and Apple, is, they have clear fandoms, and they are figuring out ways like Galaxy's Edge to tap into the highest value consumers, the highest lifetime value consumers, around those fandoms, and make money from them in 360 degrees. Whereas Apple and Amazon sort of throw shows on, and that's it. It's all they do, the only place they compete. They don't compete in the physical world with those assets.

BRIAN CHEUNG: And Laura, lastly here, I just want to ask about what's kind of been catching a lot of attention in the news recently. And that is the kind of interaction of Disney and the state of Florida and even Disney's own employees regarding the Don't Say Gay bill in that state. Has that presented any sort of business interruptions to the company? How do you feel like management has kind of handled that whole situation?

LAURA MARTIN: Look, I think being the head of the Walt Disney Company is more like running a government than like running a company. And we have a CEO that is in early innings, and he's used to running assets, i.e. the assets are the attraction, and no more. The Walt Disney company's core business is running content assets.

And the people, the creative people who create those content assets, are the most important asset, not the rides, not the lands. So I think those are hard lessons to learn. And I think he has a couple of missteps, which most CEOs would have had. I don't think Bob Iger would have had the same missteps, but he was something special.