#369 - The Future of Disney Movies: Our Biggest Questions & Concerns

The DVC Show

The hosts discuss the recent D2/3 announcements regarding Disney's upcoming slate of movies, television, and streaming content. They analyze

Key takeaways

• Josh D'Amaro announced moving consumer products from Parks and Experiences to the Studio division.
• Merchandise sales for characters like Grogu helped offset box office underperformance for The Mandalorian.

Main topics

• Disney D23 Announcements
• Corporate Restricturing and Merchandising

Notable quotes

The merch saved us.

Conclusion

An insightful look at how Disney's media strategy directly impacts its

Transcript preview

Speaker 3 (0:00) Amy is so excited about talking about movies and stuff that she wants to go lay in the dog bed that's next to her at the moment. I don't Speaker 2 (0:07) have the attention span for movies. Speaker 3 (0:09) When's the last time you watched a movie? Speaker 2 (0:13) Project Hail Mary, probably. Speaker 3 (0:14) Right? So much dead air. Speaker 2 (0:19) Before, well, especially when it comes to theaters. So before we went to see, was it Project Hail Mary? Uh Speaker 3 (0:28) -huh. Speaker 2 (0:29) The last movie we had seen before that was Frozen 2. Yeah. Which I don't even know what year that came out. So... Speaker 3 (0:37) First... Last time we saw a movie in the theaters. Speaker 2 (0:38) In Speaker 5 (0:38) the Speaker 2 (0:38) theaters. In the theaters. In the theaters. I'm like... No, you guys Speaker 5 (0:41) went and saw Toy Story 5. I remember you talking about it. You went and saw Toy Story... We did. Was that after? Yeah, that was Speaker 2 (0:47) after. That was Speaker 5 (0:48) after Project Hail Mary. Speaker 2 (0:49) So... I like if it comes on TV and it sparks my interest, I might watch a movie, but I'm not. No, that's a lie. Speaker 3 (0:56) If it sparks her interest while it's on TV, she'll Google it to see what happens and then decide whether or not she wants to commit the next two and Speaker 2 (1:04) a Speaker 3 (1:04) half hours to it. I Speaker 2 (1:05) just my time is valuable. And so I'd rather stare at the wall sometimes. Well, Speaker 3 (1:11) if you Speaker 4 (1:12) guys notice that Amy's going to be staring at a wall for the next hour. Here we go. My time is valuable. I ain't got time to do this show. Speaker 3 (1:19) I'm out. Speaker 3 (1:30) Hey everybody and welcome to this week's episode of the DVC show. I'm your host Paul Krieger and if you couldn't guess from the cold open, Amy left. She may or may not be back in a little while. We've got sales executive for the DVC resale market, Derek DeBoer. Speaker 4 (1:46) Hey now, happy Monday everybody. Hold on, let me see if Amy's here. Amy? Speaker 3 (1:52) No Ronnie the renter in the background or anything like that either? The Honorable Jeff Haslam here. Hey dudes. And then we've got Craig McFarlane joining us again this week. Speaker 1 (2:04) Hey, it's so nice to be here again, although I didn't get the memo on the Star Wars Roosevelt's. I have a little tiki Star Wars Roosevelt. I could have worn that today, guys. You didn't tell me. Speaker 3 (2:15) I'm still wearing our Gemins hardware shirt from the bit that we did on the last show. I didn't get the memo either, but Craig, thanks for joining us for the next couple of shows. I immediately thought of you just coming out of D23 and we got to see each other out there, which was awesome. Connect a little bit. And then there's no bigger movie or TV buff other than Jeff Haslam that I think of other than you. So I figure if my wife is just checking out for this show, then we need someone else to fill in and have a little bit of a conversation with. Derek, are you a Speaker 4 (2:50) big movie and TV buff? So I used to be. Remember, my first job kind of with Disney was I was a publicist for Walt Disney Pictures. So I was working in Chicago. So I was huge into movies in like the late 90s and the 2000s. I did all the motion picture and marketing and publicity for Disney Pictures, for Castle Rock Pictures, all that stuff. So, I mean, I was obsessed with like box office. cut it from the newspapers, you know, the weekly box office report that came out every single Monday and put it in a binder. I was obsessed with it. And then I became obsessed with the Disney theme parks. And so every, my whole course in life changed. So I do like going to the movies. I go to the movies, honestly, God, like once a year. So it's gotta be something really, really good for me to actually go to Speaker 3 (3:38) the Speaker 4 (3:39) movies to see it. But I watch everything on home. So then I get very, very excited when there's something good coming or bad. Speaker 5 (3:46) I thought for sure he was going to say, I used to be, but when I went to my first movie and it was like a silent film, I just kind of stopped going after that. Speaker 4 (3:58) When they started talking, it threw me off. So I just didn't like it. Speaker 1 (4:05) Now, according to Joe and Anthony Russo, the four minutes they're adding to Avengers Endgame are critical to see Avengers Doomsday. So, Derek, are you going to go back to the three hour and five minute movie for that? Speaker 4 (4:17) We just rewatched Endgame and we rewatched it at home and it was great. And I know we can get into this, but then we saw, my God, that last Pandora Avatar movie. I swear to God, as soon as it was done. Fire and Ash. I'm not kidding. Three seconds when it was done, I forgot what the whole movie was about. All six hours. Out the other way. Speaker 1 (4:43) Zoe and I went to the movies for that one. I don't know really why we did. I think she turned to me at the end of that and just said, did we just spend our whole morning doing this? We went to like a 9 a.m. screening or something. It's Speaker 4 (4:59) so true. Speaker 1 (5:00) I never made it even through the second Avatar. Well, if anybody that's seen the second Avatar, they've now seen the third as well because it's the exact same story. Speaker 1 (5:12) Thank you. Speaker 5 (5:13) And not that different from the first movie. It's basically Ferngully meets the Terminator. Speaker 3 (5:23) Well, it is very unoften that we spend a DVC show talking about movies and television, but coming out of D23, there were a lot of exciting news and events. And Jeff, this was actually your idea that we throw together a little bit of a show where we kind of walk through everything that's been talked about from movies, streaming, merchandise, and what it all means for the parks and beyond. So, Craig, thanks for joining us. If you guys are watching us at home, as always, show some love for our sponsors over at Key Order Vacations and the world of DVC. DVC Resale Market if you're looking to buy or sell a Disney Vacation Club contract. Monera Financial who will assist in financing that DVC Resale Contract purchase and the DVC Rental Store where you can try before you buy, rent some points to stay at a Disney Vacation Club property or if you've got some extra points, rent those points out for cash. but Jeff, this is your baby. I'm letting you take it over tonight. Run with it. I got a bunch of different, uh, slides that you asked me to do. My wife's standing in the doorway right now, holding a dog. So she's just going to walk behind us literally with a dog. Speaker 3 (6:30) It's the DVC show, folks. Jeff, save us. Talk about movies. Yeah. Speaker 5 (6:35) So like Paul said, we on this show don't talk movies a lot. We might hint on it. We might touch on it a little bit. And it was such a kind of unique and far-reaching film slate that they announced at D23, as well as some follow-up. I can't remember if this news came out before or after D23, but it was right around the same time that Josh DeMauro on the quarterly earnings call kind of talked about. and some switches that they're doing you know within the company and i just thought you know eventually these movies sometimes make it into the dvc you know space and they definitely make it into the parks we don't talk about it enough i know you know craig and i are probably the the biggest film buffs here but i've seen paul at an oscar party with me he watches movies i hear derrick goes outside and does things sometimes too so i just thought it'd be fun to kind of talk about the next couple three years that they've talked about and how that impacts disney as a whole And those kind of things. So the biggest thing that I think we wanted to start off with is he announced, Josh DeMauro announced on the conference call that they're kind of reorganizing part of the company. As we all know, Parks and Experiences used to be in control of consumer products. We're talking merch, all the merch. He announced during that quarterly earnings call that merch, that consumer products is moving out of the Parks and Experience space to... under the studio space, under the studio umbrella. And his reasoning for doing that was he was flat out asked in the call about Moana, the live action, as well as the Mandalorian and Grogu and how they underperformed at the box office and his thoughts on that moving forward. And he basically said, we don't look at it that way. Yeah, they didn't pull the box office numbers that we were hoping for, but the merch saved us. The merch, Mandalorian and Grogu especially. sold so much merch that they don't count it as a loss or a write-off on the books. And that is such a switch for a movie studio to kind of go that direction that I kind of wanted to get everybody's thoughts about it, how that imparks our park merch. Does that allow them to take more risks in the movies, knowing that they kind of have the merch safety net? Or does it go to the opposite direction and just continually give us stuff that we don't care about because, again, the merch is going to save it? So that's kind of where we were. we're talking about. And Craig, I kind of want to kick it to you first, because I know you're kind of in this space as well. Just kind of your first thoughts. Speaker 1 (9:00) Yeah, I mean, you know, whenever you get like a big corporate restructure like this, there has to be a reason behind it. And I'm glad that he was honest about Mandalorian and Grogu in particular. I mean, right now they're selling, they actually had it on display at D23. I don't know if you all walked by it, Paul, but the $600 grogu that you can purchase now from hasbro was on display and so certainly that that's a huge portion of the studio as well because they're coming up with these ideas and you got to remember that like john favreau when he made grogu he basically came up with that they didn't hint at that at all grogu wasn't in those trailers for the mandalorian and then all of a sudden it's kind of thrust upon the world. Everybody wants the merch for it, but they weren't really prepared to be able to deliver that merch. And so it took about six months or so after the first season of The Mandalorian premiered to be able to get the merch ready and get it going. I think maybe having that consistency under the studios because the IP is so driving the company now and where it's at, I think that that will be able to solve that kind of a problem where they can be ready for those hits when they do happen. as like are they going to be able to take more risks this way i certainly think that their bottom line is going to look better so i think that the fact that the studio is going to have more money coming into it uh than maybe the parks division does i think that'll be beneficial overall for being able to have some more creative input creative ideas But I do think that it'll skew towards things that will sell, right? So the kids' movies, if there's a plushie that can come along with it, if there's an action figure that can go along with it, then that's what we're Speaker 3 (10:38) going Speaker 1 (10:38) to get a lot of. But that doesn't necessarily mean that we're not going to get new ideas out of that as well. What I think is kind of interesting, though, is from an earnings report standpoint, the parks are still doing pretty well. And so even though we're pricing a lot of people out of the parks, we keep raising those prices, you know, it seems like they're in a good spot. When we take consumer products away from that, what does that sort of look like to the bottom line of the parks division too? So I think that's something that clearly they've thought about and this is the direction they want to go. But I'm kind of looking forward to being a bit more synergy between the studio and the merchandise that we get. Speaker 5 (11:19) Yeah. And Paul, I mean, you're not the movie buff that we are, but you are definitely a finance guy, a business guy, a parks guy. How do you see this playing out long term? Is this something that can be sustained? Is this a short term fix? Why they reorganize the studios? Speaker 3 (11:34) Yeah. You know, you look at the same reports that have been coming out recently regarding some early exit plan options for people within. the Walt Disney Company, a lot of those have been within the studios division. Actually, there were no offers that we're aware of that were given to parks and resorts. And I think that's because DeMauro is kind of coming in and going, what they're doing over here, I know everyone that's doing those things, and I'm very comfortable with how they're doing those things. And where we need to really prop up the business is on the studio side. So what... What easier way to do that, at least initially, than to move kind of this consumer products into that to at least help carry the studios a little bit during this turmoil. You know, Jeff, you and I just talked about it yesterday a little bit while we were here. We're seeing kind of similar sentiments being done over at Comcast. So, you know, Comcast is looking to kind of split up and kind of change things around. And I think we're kind of seeing the effects of what the streaming wars have done to the business models over there. And everyone's trying to. I don't want to use the word cook the books, but it's kind of where your head goes, is everyone's trying to find a way to make this make sense on paper so that it makes sense to the shareholders. And so I am a little concerned long term how it's just kind of a shadow game, at least for now, in what they're doing. The thing with merchandise that I've never personally understood is like Mandalorian Grogu makes perfect sense. Everyone fell in love with Grogu. And so on a movie like that, you go all in from day one with all of that. Now, I'll take you back a couple of years to when Disney launched Wish, the movie. And they went all in on merchandise on day one. And that movie did not perform, I think, nearly as well as they expected it to do. And then you saw a lot of this merch on clearance for the next six, 12 months afterwards. Speaker 5 (13:38) I think there's still some wish up at the outlet store, actually. Yeah. Speaker 3 (13:42) And so it does make me wonder, like, you know... Looking forward, looking at kind of some of the movies that we're talking about on the horizon here, I think like Hexed is going to be the next one that's going to be on that wish level. Do they go all in from the start with some of this merchandise and consumer products or do they maybe pump the brakes? And do they kind of start to go all in on the ones that they know are going to perform and know that are going to do very well? Speaker 3 (14:12) it will potentially carry the movie. It will potentially, you know, do very well and, you know, just be an added bonus on top of everything else. Like we have to imagine that they're going to do this with doomsday. Like they're just gonna, you know, Speaker 4 (14:25) put Speaker 3 (14:26) things everywhere. So yeah. It's interesting that we're seeing Disney do this. It's interesting that you're seeing the rivals like Comcast and Universal do some strategic shifts right now. You've got it in all the other realms. You've got the Paramount, HBO things going on. I think we're just in this big shift of a marketplace. And I go back, I mean, you've put me on a soapbox at the moment, but I go back to when I originally... got angry and before I cut the cord with cable and everything. And I remember what I wanted as like an option back then. And it was literally a package where it's like every channel was a dollar or a dollar ninety nine. And I could build like what I watch on TV. But. and streaming started and you thought it was going to be that you thought maybe we're going to go in that direction. But I think I'd argue that all of us are probably paying more now for streaming, uh, across 12 different services than we ever did with a cable bill. And so are we reversing a little bit? Are we going to go back in that direction? I don't know. Like, yeah. Speaker 4 (15:33) Can I, can I say something which, um, I think what it comes down to is if we're talking about the theatrical experience, movies are expensive. So if I'm going to go to the movies, it's simple. Give me a reason to go to the movies. Give me a reason that I'm going to leave my house where I've got, like you said, Paul, 12 streaming channels, my God, thousands and thousands of movies. If you're going to put something in a theater, give me a reason to go to pay to go sit in a movie theater and I will go. Perfect example. Like I said, we haven't been to the movies in a long time. We maybe once, maybe twice a year. This is a big year. We've already been twice. And the first one was Toy Story 5. You know, it made it feel like it was event. It was coming. Everyone knew it was coming. And then, wait for it, it got great reviews. So I was okay spending money going to the movies to go see. Same thing with The Odyssey. We went and saw The Odyssey. Thought it was absolutely fantastic. Because ready for it. It's a great movie. The days of, you know, when I was growing up where people would just, that's the weekend. You want to go to the movies? Yeah. Let's just go see what's playing. I don't care if it's good or not. People give them a reason to go. That's why the live action Moana failed as horribly as it did. I'm sure it's a delightful movie, but for the love of God, the other one just came out. The sequel just came out, what, two, three years ago. Where was my reason? to spend all that money with my kids and buy the popcorn and buy the drinks when I know I just saw yesterday it's coming on streaming like in 10 minutes. And I'm not even kidding. Like it's already hitting Disney streaming, I think like next week. So again, give a reason to go. I can't remember, you know, like tell me I couldn't even make it through Elio. I thought Hoppers was fine. I watched it on streaming. You know, it was funny. It had some funny moments, but I feel like when it comes to the Disney movies, make it an event. Give me a reason to go because I've got a lot of other choices that I can watch from the comfort of my own house. That's all. Speaker 1 (17:45) Well, it's interesting. Oh, go ahead, Craig. Sorry. Yeah, I mean, it's interesting you bring up the live actions in particular because I feel like the live actions for Bob Iger were what the direct-to-VHS sequels were for Michael Eisner. You know, like we got Little Mermaid 2 and 3 and whatever. The Vault. Lion King 1 and a half, yes. And it's interesting that the last two live action movies to come out... have completely different tales, even though they're both like Polynesian based, right? So Lilo and Stitch comes out, it makes over a billion dollars. And then Moana flops. And I think it's just because of that nostalgia factor and how long it had been between the animated series and then bringing it to the live action as well. So I grew up with Lilo and Stitch. Now I've got a kid and I want to take my kid to see Lilo and Stitch. Whereas Moana, like you were saying, Derek, it just came out like two days ago. And I get that it's cool that The Rock is in both of them, but at the same time, we just saw that. And I mean, they didn't even really enhance the movie at all. And so, like you said, it really depends on what it is that they're putting out there. I wonder if something like Hexed is going to have that magic. You know, that Thanksgiving time slot has been really crucial for lots of big name movies, not the least of which is the Frozen franchise. And I guess we don't know if it's going to hit or not. I kind of hope it does because I feel like the studios need a little bit of a boost and not to lean so hard on the nostalgia and on the sequels. But we'll see. I guess, you know, I haven't heard much about Hexed and I followed this stuff, you know? Yeah. I Speaker 2 (19:24) remember Hexed when they first started talking about it and it feels like, yeah, it feels like there's been nothing left. I don't know. You were going to ask me what I thought, and I was thinking I should probably still be laying Speaker 1 (19:34) in the dog bed, but I Speaker 2 (19:36) don't. I just don't have a lot of movie experience, and it takes a lot to get me to a theater or to even be like, hey, let's sit down and watch a movie tonight. It has to be something I really, really want to see. That's Speaker 3 (19:51) where there's a missed market, I think, still. Jeff, you came at me from a business angle. The COVID era, I spent more money on movies during that period of time than I did in probably, you know, the 10 years prior in terms of going. And it was because, you know, I could pay $20, $25 and watch it right on my television that day. And I understand that there's a difference being in a theater. And I understand that the experience of that is part of it for a lot of people. But for other people to each their own, you know, and I think there's still a market where if you charged, you know, 20, 25, 30, $35, you know, for a family to be able to watch a movie the same weekend on streaming, like there's a lot of concerns and a lot of problems there, but still it would, I'd be spending more