Yahoo Finance's Editor-at-large Dan Roberts joins The First Trade with Alexis Christoforous and Brian Sozzi to discuss Disney's latest earnings report.
ALEXIS CHRISTOFOROUS: All right, we have our eyes on Disney. Let's stay with entertainment for a minute. The company posting a surprise profit last quarter, but revenues plunged, especially at the theme parks division. Still there were some bright spots, and here to break it down with us is our Editor-at-Large, Dan Roberts.
So Dan, the big one blaring us here in the face is Disney+, right? I mean, incredible growth. I think they hit their five-year goal in just eight months, and now they've got another streaming service coming out?
DAN ROBERTS: Yeah, Disney had a goal, Alexis, of 60 to 90 million subscribers by 2024. And Bob Chapek on that call-- by the way, no Iger on that call, so that was, sort of on a side note, kind of some interesting symbolism.
But Bob Chapek saying that Disney+ has hit 60.5 million subscribers, so way ahead of the target for that goal, although that stated goal was always, I think, extra super conservative. Because then they can say, oh, look, we hi the goal. The question is, how long will it take to get that next 30 million to get to that other end of the 60 to 90 million range?
But ahead of schedule. It's interesting. The number that was previously out at first-- when the earnings release hit the tape-- was below Wall Street's expectations. It was like $57.5 million, and then Chapek clarified that since the end of its quarter, Disney has hit 60 million for Disney+, 60.5 million.
And you've got to think Hamilton was a big contributor with that. I think Hamilton got a lot of people to sign up-- people who said, I'm sick of hearing about this thing. I never got to see the Broadway show, but fine. I'll finally watch this. Now one little side note there-- how many of those people who did a trial in order to watch Hamilton will cancel when that trial ends?
- Dan, one of the other headlines here is that Milan is going to be introduced on Disney+. Now Chapek mentioned on the call that this is not a change in business model, but let's be real here. This is a big negative for movie theaters.
DAN ROBERTS: Well, it's interesting. When Universal did "Trolls World Tour" as a direct-to-digital rental and charged $20, and It was a huge hit, Universal said, it's not a new business model. This is a one-off. Now Disney's going to do it, and Disney is saying, it's not a new business model. It's a one-off. But how many more examples will there be, and when will companies start changing their tune?
Now an interesting contrast that does lend credence to the idea that this is still a rare exception-- over at Warner Bros., they're not doing this with "Tenet." And a lot of people are pointing out that that just reflects Director Christopher Nolan's influence because he said, no way am I letting my thing go straight to digital. I want my movie seen on a big, big screen in theaters.
Now let's mention, Mulan is still going to hit theaters in some places, but it's going to be places that don't have Disney+ yet. So I imagine that's mostly outside the US. And we should also mention, all of the reaction has been, oh my goodness. Disney thinks they could charge $30 for a rental? But you will own that digital copy on your Disney+ account. So I guess technically it's not really a rental. You get to keep it. So you pay the $30, you could watch it over and over. It goes into your Disney+ account.
And I think a lot of families will be happy to pay that $30. I mean, think about it. A trip to the theater with four kids and two parents is still going to end up much more expensive than $30. And I think with, you know, families itching for new content when they've gotten through everything on Netflix during the pandemic, they are going to pay $30 to be able to watch it again. In fact, if anything, the Trolls World Tour was $20 just to watch it once.
So Disney, I think, is being smart here, even though I do think the headline of $30 to rent it-- that does sort of imply as far as people say, goodness, that's steep. And people say at first, how can Disney do that? I think it'll be fine, but it is funny. People thought this was inevitable, and a lot of people said, no way, Disney will never do with Mulan. Now they're doing it.
ALEXIS CHRISTOFOROUS: So wait. Just to clarify, Dan, so as long as you're a paying subscriber of Disney+, and you buy Mulan for $30, you can continue to watch it as many times as you want.
DAN ROBERTS: Yes, it goes into your account. I believe it's like when you buy a digital movie on demand, or I guess you can do that digitally now. Although I always think, eh. It's just interesting. It doesn't feel the same. It doesn't feel like you own it, but you do.
Now of course, that's on top of having to pay for Disney+. So, you know, our Managing Editor Sam Rowe tweeted something very funny in all caps about, you know, is anything included anymore in these descriptions? Because they're telling you you've got to sign up for Disney+ and pay the monthly fee, and then you've got to pay another $30 if you want--
ALEXIS CHRISTOFOROUS: Of course you do. Look, Disney has to make money somehow, right? And also I just want to mention, they are planning a new general entertainment streaming platform overseas next year under the Star brand name.