Speaker 1: Early today, Caroline and I spoke to Disney CFO Hugh Johnston,
Speaker 1: and we discussed all of those parts of the House
Speaker 1: of Mouse.
Speaker 2: Isn't this If you look at the major investments that
Speaker 2: we've been making in the business over the last couple
Speaker 2: of years, Number one is in the streaming business, and
Speaker 2: number two obviously is in the experiences business, so parks
Speaker 2: and cruises.
Speaker 3: And the like.
Speaker 2: And as you've seen in the number is through twenty
Speaker 2: twenty four, you know, it really marked a pivot for
Speaker 2: the Walt Disney Company.
Speaker 3: The creativity is certainly very.
Speaker 2: Much back back to back billion dollar movies and a
Speaker 2: terrific slid for twenty five in addition to that fantastic
Speaker 2: workout of the TV studios with sixty Emmys, and that
Speaker 2: obviously feeds the flywheel of the Walt Disney Company, whether
Speaker 2: it's streaming or whether it's experiences including parks, consumer products,
Speaker 2: and of course the cruise ships. So given those investments
Speaker 2: that we've been making, and given that we now have
Speaker 2: good financial visibility into the returns on those investments, we
Speaker 2: felt like it was important to inform investors not just
Speaker 2: on how we were investing, but what they should expect
Speaker 2: in terms of the returns on those and with that visibility,
Speaker 2: we're confident that we can actually deliver.
Speaker 3: Here across the media sector.
Speaker 1: Your industry is getting better at being profitable in streaming,
Speaker 1: so that's where I want to go. Is this something
Speaker 1: that is kind of industry wide macro level factor is
Speaker 1: supporting you, or is this something that you've done in
Speaker 1: the last year specifically that's kind of cracked the formula
Speaker 1: for streaming at Disney.
Speaker 3: I think it's a combination of both.
Speaker 2: Streaming is certainly very much scale business, so as everyone
Speaker 2: gains more scale, obviously that helps the industry overall. For
Speaker 2: us in particular, I think the combination of the terrific
Speaker 2: ip that we're putting into the service, the product improvements
Speaker 2: that we're making, and that we are intending to make
Speaker 2: with the new leader that we have on product, Adam Smith,
Speaker 2: who came over to us from YouTube, we see obviously
Speaker 2: a terrific future in terms of where streaming is going.
Speaker 3: You know, it's important to think.
Speaker 2: About what do additional subscribers mean in terms of the
Speaker 2: streaming business. In many ways, streaming has the characteristics of
Speaker 2: a software business, where the incremental value of an additional
Speaker 2: subscriber is very high because the incremental cost to that
Speaker 2: incremental subscriber are very low. So we feel optimistic about
Speaker 2: as the industry is coming together, we're going to continue
Speaker 2: to both add subscribers and in addition to that, because of.
Speaker 3: The value we're delivering with the great ip and the.
Speaker 2: Great product that we're putting into this service, we'll be
Speaker 2: able to take pricing as well. And that combined with
Speaker 2: good cost management that we have in place in terms
Speaker 2: of good disciplines on that business, we feel very optimistic
Speaker 2: about where streaming is going for us.
Speaker 4: You're also curving password sharing. How much of an impact
Speaker 4: will that make?
Speaker 3: You think it'll be a positive.
Speaker 2: It'll be gradual over time and strengthen from quarter to quarter,
Speaker 2: but we do think it'll be a positive impact on subscribers.
Speaker 4: I'm interested in the film studio and what bonus you're
Speaker 4: going to get from More or two, what bonus you're
Speaker 4: going to be getting from Mafasa the Lion King. How
Speaker 4: important has the investment been there?
Speaker 2: Well, I think it's quite important and in many ways
Speaker 2: to talk about that, we ought to dial back a
Speaker 2: little bit to where we were.
Speaker 3: A few years ago.
Speaker 2: You know, as we launch streaming, and it's important to
Speaker 2: remember we've only been in the streaming business five years.
Speaker 2: This is a relatively nascent business for us in many ways.
Speaker 2: Even though it's going to be quite profitable for us,
Speaker 2: or is quite profitable now, it'll be more profitable in
Speaker 2: the future. But as we think about where we were
Speaker 2: a few years ago, we were very much focused on
Speaker 2: creating a lot of quantity in order to fill the
Speaker 2: service with content, and as is often the case, when
Speaker 2: you push hard on quantity, sometimes quality isn't quite up
Speaker 2: to where you would like it to be. When Bob
Speaker 2: Biger came back a couple of years ago, he talked
Speaker 2: about restoring creativity to the center of the company and
Speaker 2: reducing quantity and focusing on raising the bar on quality.
Speaker 3: Now we've been talking about that.
Speaker 2: For really a year year and a half, but you
Speaker 2: saw the impact of that. I think very much in
Speaker 2: twenty four with Inside Out two and Deadpool and Wolverine
Speaker 2: back to back billion dollar.
Speaker 3: Movies is it's never been done before.
Speaker 2: And then on the TV side with Avid Elementary and
Speaker 2: The Bear and of course Showgun, we had sixty Emmys.
Speaker 2: So I think that focus on quality is not something
Speaker 2: that's kind of a one time random thing, but in
Speaker 2: fact is a sustaining impact on the company. So as
Speaker 2: we think forward to the slate in twenty twenty five,
Speaker 2: whether it's Muwana Iu or Mufasa the Lion King, or
Speaker 2: Lilo and Stitch or Avatar or Captain America, we're very
Speaker 2: optimistic that those movies are going to be big, big
Speaker 2: hits as well.
Speaker 3: We couldn't be more excited about them.
Speaker 1: So you've talked about the linear TV or live TV
Speaker 1: business almost.
Speaker 3: Like a hedge.
Speaker 1: I know you want to keep that audience. It's important
Speaker 1: to you, particularly the older demographic. But like many sports
Speaker 1: fans interested in the D two C launch on ESPN,
Speaker 1: how you think that that will kind of change your
Speaker 1: audience and customers' attitudes in how they pay for sports
Speaker 1: by sports.
Speaker 2: Well, the important thing I think about the ESPN Flagship
Speaker 2: launch Flagship is the project name that we use on that.
Speaker 2: The thing to think about it is it's not just
Speaker 2: another distribution channel, So it's not basically taking ESPN Alon
Speaker 2: as it exists and just putting it into streaming. It
Speaker 2: will have all of that content, to be clear, but
Speaker 2: in addition to that, it's really going to be a
Speaker 2: true digital experience in so many ways, so the ability
Speaker 2: to do e commerce, the ability to track fantasy, the
Speaker 2: ability to shape some of the ESPN broadcast products to
Speaker 2: your liking, the ability to do online vetting as a
Speaker 2: part of the product. It's a much more interactive, much
Speaker 2: more digital product, and that's where I think the big
Speaker 2: reshaping will come from. Consumers will choose what they want
Speaker 2: to go through traditional cable networks or whether they want
Speaker 2: to go through the newer digital networks, and that's something
Speaker 2: that we're there for everyone everywhere. That's really the goal
Speaker 2: of ESPN is we want to be where the sports
Speaker 2: fan wants to be, but we do intend to bring
Speaker 2: a lot of value in that product, and I think
Speaker 2: sports fans will come to it relatively quickly.
Speaker 4: Disney CFO Hugh Johnston that