Isn’t lying to shareholders a bit questionable? It’s specifically about quality issues, especially with Disney.
The reason for the collapse in viewership is purely because they started fighting for streaming market share with infinite budgets and zero quality control, and apparently, someone thought that woke garbage was the winning choice. Budgets definitely need to be cut, but viewership numbers certainly won’t grow by reducing the quantity; instead, hopping between streaming services will continue. If the entire service only gets one or two watchable shows per quarter, it’s not worth paying for more than a month or two a year.
Well, as viewership numbers continue their slide, at some point there will be either mergers or bundle deals.
Here is Sijoittaja.fi’s analysis of Netflix, readable in just a few minutes.
Streaming giant Netflix released its second-quarter 2023 results after the market close on July 19th. Earnings per share were significantly better than forecasts, but revenue fell short of analysts’ expectations. Netflix’s crackdown on password sharing has started to take effect, and the company gained 5.9 million new subscribers during the past quarter. However, revenue growth fell behind both analysts’ and the company’s own forecasts, which was a disappointment for the market. The share price fell by about five percent in after-hours trading.
Disney is starting to run into trouble with its Hulu deal, so they are forced to sell something.
Traditional TV channels are up for sale, but I personally can’t think of anyone who would want to buy them. Regulatory approvals might also pose a problem, as the FTC and FCC might not be enthusiastic if the plan is to merge these channels with others.
Iger is trying to save the situation by selling a stake in ESPN to “strategic partners”—in other words, he’s hoping that the NFL, NBA, NHL, and MLB will agree to a partnership so that ESPN wouldn’t have to pay for broadcasting rights in the future. Good luck with that.
The best box office weekend since 2019. Barbie is projected to have a $150M+ opening, while Oppenheimer is looking at a nearly $80M haul. Mission Impossible is being overshadowed by the two aforementioned films, while Sound of Freedom has already surpassed The Flash in earnings.
Warner’s Blue Beetle will be released in a month and it’s looking weak.
Opening Weekend Range: $12M-$17M
Theme Parks Adjusted EBITDA Increased 32% to $833 Million, Its Highest Adjusted EBITDA on
Record, Reflecting Growth at Universal Beijing, Universal Japan and Universal Hollywood Compared
to the Prior Year Period
Barbie continues to dominate the box office. Its second weekend still secured the top spot with $93M in box office revenue in the US. Barbie is already the fourth highest-grossing movie of the year. Worldwide box office revenue has already reached $775M, and breaking the billion-dollar mark seems certain. An absolutely staggering success, then, with an estimated budget of about $150M.
Oppenheimer also continues to impress as worldwide box office receipts broke the $400M mark. Haunted Mansion, on the other hand, less surprisingly turned out to be quite a flop with $24M in box office revenue.
This week, WBD will announce its results on Thursday. Barbie’s success won’t be reflected in them yet, so a weak report is expected in terms of the figures, as The Flash was a complete disaster.
From Disney’s side, it came as a total surprise to me that the miniseries Secret Invasion, panned by critics and fans, cost as much as Barbie and Oppenheimer combined.
Disney seems to have money pits everywhere, and they have also angered Florida’s political leadership, which will likely be felt in taxation going forward. I’m personally waiting patiently for when all the bad news is priced into the share price. I don’t think it is yet.
This is exactly what happens when too much money is given to incompetent hands to mess around with a series without anyone caring what the production is doing or where the money is going.
Disney entered the streaming war completely overconfident, writing blank checks to all sorts of low-rate crews to churn out more Marvel and Star Wars content. Productions were greenlit before there was even a draft of the script, purely based on high-level ideas, and by the time they realized things were going south, they burned more money on reshoots and re-editing, somehow patching together something they felt they could put out. Or well, regarding Secret Invasion for instance, one could certainly argue whether it was even worth releasing. If you watch that series closely, you notice many instances showing how scenes were adapted to a changed script – dialogue where the speaker was strategically out of frame, scenes that don’t seem to have any logic…
As I understand it, a large part of that absurd budget went to reshoots and effects produced on an insane schedule (as effects had to be redone because of the reshoots, etc.).
Well, eventually the losses accumulate to the point that the madness stops, at the latest when the money runs out.
Disney’s financial management is almost on par with Lehto. The situation is not sustainable at all, and Disney will continue to take a beating for a long time before the stock price starts to recover. The Hulu deal is supposed to be completed at the turn of the year, and Disney is still missing the necessary 10+ billion. There is also probably about 50 billion in debt, and the coffers are empty.
Disney+ is still burning money; for example, the latest Star Wars TV series already spent 50 million in pre-production before a single frame of moving picture was even filmed:
The next big releases are The Marvels, the Disney animation Wish, and Pixar’s Elio. It’s hard to see any of these performing any better than this year’s other releases. In March, a real shocker is expected when a Latina Snow White, one dwarf, and 6 other politically correct characters take over movie theaters.
Due to the strikes, release schedules are in flux, but the next potentially profitable release isn’t until next summer’s Inside Out 2, though I fear its budget has also spiraled out of control.
Variety reports that force majeure clauses are being triggered this week, meaning we might soon hear about productions being canceled.
I don’t understand where the money spent on Secret Invasion has gone? It has some mediocre CGI, sets, and apart from the two leads and a supporting actor, an absolute no-name cast. A piece of crap like that should have been producible for twenty million instead of 212 mil.
Disney has completely lost its grip on cost control. The quality is also total trash. It’s as if they’ve become a startup with too much VC money that they just have to burn on something. Productions need to get back to basics and focus on quality. Right now, they are churning out mediocre content on an assembly line, which is eroding the value of their strong brands.
I agree about the dive in Disney’s quality, though, and even management has already admitted that churning out low-quality crap is not a winning tactic and that in the future, they will focus on better quality.
So the only thing left open is where the remaining 192 million was wasted. Well, Emilia Clarke probably also charged several million for her involvement, but still… I don’t see how that production could have cost more than 50-60 million bucks. The only explanation that makes sense is that they did a massive amount of reshoots and special effects on a completely insane schedule (and multiple times), which blew the budget. Since the “good - cheap - fast” trilemma applies to these, you can only get two at a time. And “good” here means technical quality; if the writers produce garbage, you can’t fix it with effects.
A fairly good performance compared to my own expectations. Good cash flow, even though revenue and earnings slightly missed consensus. And debt has been paid off aggressively again. In my opinion, the turnaround story is progressing well on track.
I assumed that marketing costs would have spiraled out of control in Q2 with the launch of Max and the marketing investments for The Flash being flushed straight down the toilet. Also, most of the Barbie marketing was on the previous quarter’s side, and the results will only show in the next report. However, this doesn’t seem to have happened.
Speaking of marketing, WBD utilizes its own diverse network excellently for “free” marketing. I wonder if anyone else does this? A few examples:
HGTV’s Barbie Dreamhouse Challenge, which became quite a popular spectacle in its own right, was clearly designed to promote the Barbie movie, but its execution came out of HGTV’s budget.
Discovery’s popular Shark Week recruited Jason Momoa as host this year. This provided good promotion for the upcoming Aquaman movie without using the movie’s own marketing budget.
In The Last of Us series, there was a long scene where they played an old Mortal Kombat game. Coincidentally, WBD is soon releasing new Mortal Kombat games for both consoles and mobile. Again, “free” promotion for the upcoming game by reminding millions of viewers of those moments when they used to play Mortal Kombat as kids.
Edit: linking a related article from Seeking Alpha, which in my opinion contains many factual errors and misunderstandings but also addresses the point I mentioned above.
Barbie’s dominance is expected to continue this coming weekend. For some incomprehensible reason, WB is also releasing Meg 2: The Trench, which cost nearly 200 million dollars. Opening weekend box office is estimated to be just over 20 million. So, unfortunately, wasting money is something they know how to do elsewhere besides Disney…
