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