Hey everyone, Brayden here, coming to you with a breaking Disney News update as Disney has just
released their Q1 Fiscal Year 2022 earnings results. Providing us a first look into the
financial performance of the Parks since the introduction of the flat-fee Genie Plus as well
as the pay-per-ride Lightning Lane services here at Walt Disney World as well as out in Disneyland.
Today’s earnings also coincide with a fan and media push against the current, not so popular CEO
Bob Chapek. Levying criticisms over price hikes and a cheapening of the theme park experience.
These are some wild times in the world of The Walt Disney Company, so let’s get into it here
and see what exactly is going on. Firstly, this afternoon, Disney released their first quarter
results for 2022, where the expectations were extremely high on the part of speculative traders
going into it here. Disney’s stock, which has been down significantly since November, was up a good
bit today, and additionally, short term options calls on the stock were insane, premiums were up
as high as 154 percent today, that being people betting the stock would go up following earnings,
so safe to say there was a lot of hype going into these earnings. And, as it turned out,
the hype was absolutely warranted. Disney beat subscriber expectations for Disney Plus, it was
expected they’d come in around 8 million added subscribers. It turned out Disney gained close
to 12 million new subscribers this past quarter, which of course is very bullish. Disney is basing
their entire future around Disney Plus and it does seem that there is a good amount of interest.
Last quarter things were looking a little shaky, now here we’re seeing a lot more people
buy Disney Plus, which is definitely some good news there. At the same time, over at the Parks,
which are just a juggernaut. They generate amounts of cash that don’t even make any sense. The parks
just had their best quarter EVER in both revenue and segment income. The parks revenue this past
quarter, just the quarter, just three months time, was 7.2 billion dollars, with 2.6 billion of that
being income, which is just simply insane. That is one single quarter, and then looking at
Direct-to-Consumer with Disney Plus, Hulu, ESPN Plus, all that combined. The revenues were 4.7
billion, and income was negative in that segment where they lost 600 million dollars for the
quarter as Disney continues to invest huge sums of money into building out content on those services.
I put these numbers like this on purpose just to show you how important the parks are. I wish we’d
see a lot more of that reinvested in the parks, because looking at the kind of money the parks
are making right now domestically, Disney could definitely save up a lot of that. Build a 5th park
at Walt Disney World to compete with Universal, who’s also working on a new park in Orlando,
things like that. But Disney’s priorities, it seems like it is all about Disney Plus right now.
So beyond the earnings results, what I want to talk about in this video is, what on Earth is
going on with Disney, what’s the plan? What’s Bob Chapek up to here? Because right now,
the media is reporting on how shareholders want to vote him off the Board of Directors.
Now, you might look at these media reports and think ‘Wow! Shareholders are going to vote out
Chapek? That’s like what happened with Eisner back in the day!’ No, it’s not. When the New York
Post says “shareholders,” they don’t mean that a ton of people are going to show up to a meeting,
vote him out. That’s not even how that works. What they mean is there are discontented parks fans
posting stuff on Reddit about how they’re upset about what Disney’s doing. And of course, I am
a Parks fan, and I totally understand where these guys are coming from. But the thing is, Redditors
in that post, their combined let’s say hundreds of shares, they do not influence Disney. Blackrock,
Vanguard, State Street, Morgan Stanley, they have close to half a billion in shares combined. They
are what influence Disney, they OWN Disney. And I don’t mean to say resistance is futile or anything
like that. You guys know I’m not a fan of what Disney’s doing. What I mean to say is, a loud,
vocal minority of us, express discontentment with the direction things are going with the parks. For
years we’ve been prophesizing how all these short term decisions being made by CEO Bob Chapek will
culminate in things ripping apart at the seams. And you know what? We could end up being right,
it’s completely possible. But today, my faith in that was a little shaken because Disney rolled
out this ridiculously trying, I’ve equated it to Highway Robbery, this Lightning Lane pay-per-ride
thing. It’s absolutely outrageous. You guys want to know what we discovered today? Getting a first
look at the performance figures with the Genie service, during the earnings call, get this:
Chapek disclosed that during the holiday period more than FIFTY PERCENT of guests in the parks
purchased Genie Plus, Lightning Lane, or both. MORE THAN fifty percent. And you might be saying
oh does he just mean Christmas? This sounds very misleading. No, no, no. They elaborated,
averaging out for the entire quarter, the slow days, the in between days, all of that. Even
with those factored in, it still turns out that more than a third of the guests on any given day
purchased at least one of these services on top of admission, on top of food and
merchandise which is also ballooning in price. It is just absolutely outrageous and I told you guys
previously I heard Genie was not hitting Disney’s internal projections, Chapek contradicted that
directly today. He said they were ‘blown away’ by the response to Genie. Does that mean that
it actually met their expectations? I’m still a little suspect on that because Disney has
been tweaking the offerings with Lightning Lane ever since it started. It’s very clear that some
rides Disney thought guests would be willing to pay-per-ride in order to skip the line at,
that ended up not being the case. But still, the fact that most guests don’t care that this is,
just on its face, a terrible new precedent. It incentivises Disney to make the lines that you
pay for, you pay 100 dollars to get in there, make the standby lines go slow. You’re paying for it ON
TOP of 100 dollar plus admission, you’re paying individually for a faster line at rides which
oftentimes isn’t actually even that fast and used to be FREE! This used to be the FastPass line not
so long ago. It really just shows that you have this schism where you have these Parks fans that
really care about the history of this place, sort of the ethics, what it’s supposed to be about,
how things are supposed to work. And then you have the everyday guest that goes and is unthinking,
doesn’t care, enables Chapek, whatever they wanna do. And that really is just the way that it is.
And you know, a lot of people online today have been telling me ‘Brayden don’t be too hard on
the guests, it’s extortion, lots of people are going to end up paying up,’ and I know that. I
prophesied this way back when this thing started, that people aren’t going to have a crappy vacation
after they’ve already spent so much money to get there, you know, pay for the ticket, the hotel,
all that. They’re going to spend this extra little chunk here, to have what they feel is a
good experience. It totally is the fallacy of sunk costs that Disney is profiting off of here, and
we’re seeing it. So as much as a lot of parks fans might want to see Chapek exit, I think honestly
anyone you put in this CEO position is going to continue this kind of stuff. It’s here now,
it’s the way the company is. And the numbers that they’re seeing, especially with this Genie service
in particular, the guest adoption, reinforces the fact that things like this are likely here to stay
and we’re probably going to see more things like this in the future, it’s just going to get worse.
And on another note, a little bit of a different note, this quarter, it’s very fishy. We’re talking
about how great this quarter was, it’s totally goofy how Disney arrived at these amazing results.
We know Disney made 2021 a nothing year at the parks, and likely on purpose. They slow-played
everything. They loaded the start of the new fiscal year, which started October 1st,
with the new rides, the new shows. A lot of that stuff could have been ready earlier,
but they said ‘Oh! We’re doing it for the 50th anniversary!’ We know Disney doesn’t care about
the 50th anniversary, they really didn’t do a whole lot for it. They obviously placed these
few new attendance draws on that day and around that timeframe because it’s the new fiscal year.
That’s when we saw all that merchandise come out that the eBayers were getting after. And that’s
also when we started to see attendance loosen up, that’s when we saw bigger crowds. The latter part
of this last year there were not many limitations on the reservation system it was very easy to get
a reservation despite the fact that the crowds in the parks were quite substantial. They also added
this new revenue stream with Genie. Oh, what interesting timing for them to introduce this,
just in time for Fiscal Year 2022. I think they timed everything to make 2021 look bad
so 2022 could look absolutely insane, that is my personal belief. The silver lining here is, the
Chapek Effect, that strategy, taking a look at the stock after hours here, it’s absolutely worked,
now he has to TOP THIS. Genie, right now, is this new, untapped revenue stream Disney gets to brag
about for four quarters where they’re comparing it to last year’s quarters that didn’t have
this Genie revenue stream. Then, come 2023, when Chapek’s CEO contract is up by the way, this new
income stream will now be the expectation. So they’ll somehow have to find a way to top it.
So that means they’re going to have to raise prices, they’re going to have to increase
the share of guests that are paying for these services. And while I want to say ‘good luck,
this is where it’s all going to fall apart,’ you know, maybe it will. But honestly, that’s not how
it’s gone so far. That 50 percent number with the Genie adoption over the holidays is just crazy and
I think it’s indicative of the fact that Disney’s put their foot down on the accelerator and they’ve
not reached the point yet where they need to start pulling it off. Disney will know when guests are
really starting to get fed up with stuff, and right now it really just seems to be the hardcore
parks fans and everyone else is absolutely happy swiping those credit cards, doing whatever,
they don’t care. They will compromise. They will go along with a lesser experience,
at the Parks, which is kind of sad. And I do think we’ll continue to see things go in this direction.
And it almost becomes a self-fulfilling feedback loop, right? Where what’s going to happen is,
what you’re going to see moving forward is attendance at the parks, international guests
are going to come back. You’re going to see more and more attendance, the attendance is going
to increase throughout this year. And even if Disney doesn’t interfere with the standby lines,
you’re going to see standby waits go up. More guests are going to end up paying for the Genie.
So perhaps in 2023, that seemingly impossible mandate of Chapek somehow topping this year,
that’ll actually be completely possible. Because you’re going to have more guests in the parks,
so you’re going to have a larger quantity of people who are going to be willing to pay for
Genie, Lightning Lane, things like this. ANYTHING that might feasibly speed up the lines. And, since
Disney will see increased demand, they’ll be able to raise prices on everything. They’re already
doing that with food and merchandise. We know it’s inevitable they’re going to do that with tickets,
they’re going to do that again with annual passes I’m sure. And I think we’ll also start to see that
happen with Genie, with Lightning Lane as attendance kicks up, and Disney sees more
and more demand for these skip-the-line features. And then, think about this: the profits from that,
where are they going? Disney Plus. Where Disney makes more and more content.
Chapek keeps mentioning how they’re ‘influencing the zeit-geist’ in the world. They want to have a
new title out on Disney Plus every week. And then Disney’s going to tie in all those new properties,
they’re going to put that stuff in the parks. More people are going to go to the parks, attendance
is going to keep going and going and going. So even as you have some discontented fans like us,
Disney is going to find more and more people. They’re going to find new suckers who are going
to be perfectly willing, very excited to go to the parks, and they are going to slowly discover
all the things we already have and it’s just going to be this thing where it just keeps going
and going and going. And every year they’re going to be able to say ‘Hey, we made more
money than last year.’ So maybe this master plan, this thing that Disney’s been betting on,
maybe it’s going to pan out for them, we’ll just have to see. It’s kind of scary to think about,
it’s kind of sad. It’s the way of the world, at a certain point you just have to say you know what,
Disney’s going to do what they’re going to do. And the days of Walt, all that stuff. We are far past
that. We are far past the days where, you know, Walt went and founded WED Enterprises. You know,
Disney proper, the company only came in at the last second to fund the construction of the Park.
All that research, all that development work, that was Walt. And it was his brother who eventually
got Walt Disney Productions to put money into this project. Something like that I don’t think
would happen today. So as much as Chapek talks about how Disney’s so focused on ‘innovation,’
and things like this, I don’t know if we’ll ever see something TRULY innovative come out of a
machine like this. Chapek referred to the company as a ‘synergy machine’ during the call. I mean,
this thing is literally the Death Star. The Walt Disney Company is the Death Star. So this idea
people have that you’re going to see some new, innovative, incredible thing that we’ve never
thought of before, it’s going to come out of this company, I just don’t think that’s how that works.
And it’s so funny how Bob Chapek and these types they sort of act like stuff like Disney Plus is
so innovative and it’s like, you guys bought the company BAMTech who already had that technology.
Netflix has existed, this Over-the-Top Direct-to-Consumer content, this streaming method,
it has existed for many, many years, this streaming model. You guys are getting into it
late in the game, now everybody’s getting into it so I guess all these companies are so innovative
coming up with this idea for doing streaming services. It’s all sort of ridiculous. And now
they’re talking about the metaverse and things like this. What all this will materialize in,
we don’t know yet. But really, the message I want to get across is, it’s about greed. You know,
the sort of altruistic stuff that Walt and a lot of his friends from the studios did when it came
to the Parks, that sort of created that culture around the parks that we really appreciate.
It’s been on its way out for a long time. And I think the fact that you have a CEO like Chapek
now who has just totally done away with the public relations, fan-service aspect of the company and
is really showing you what the company is ACTUALLY about. How they ACTUALLY think. It’s actually kind
of refreshing, I really appreciate the fact that Chapek is so candid. It’s really opening people’s
eyes to how the company actually is, because for so long I would talk about some of these things,
and people just wouldn’t believe me. Because Bob Iger, the previous CEO, he was so, so good
at appealing to the fans, saying the things that they wanted to hear, even if behind the scenes it
was really all going down exactly like this, a lot of the same discussions, a lot of the same thought
processes. I think it was just much better masked in the era of Iger, where now Chapek is just
so frank about how it’s just about optimizing the business model, bleeding money out of the
consumers, just taking as much as they can. It IS Highway Robbery, that is absolutely the right
expression, and that is what is going on with The Walt Disney Company. So quite a stellar quarter
for Disney. My congratulations to the leadership, to CEO Bob Chapek, to CFO Christine McCarthy,
it looks like it’s all come together here quite nicely. And I think chances are good that we’ll
continue to see this trend going into the future. I am quite bullish on the short and medium term of
The Walt Disney Company, even if it’s something personally, from the consumer aspect, I am just
not as much of a fan of as we see a lot of the tradition, a lot of the core elements of the parks
be eroded here in pursuit of the dollar bill. Let me know what you guys think about everything we
talked about here, the state of The Walt Disney Company, my analysis, everything going on here.
It is quite a crazy time, as I said at the top, for The Walt Disney Company. Be sure to subscribe
if you haven’t already and I’ll keep you up to date on everything going on here. I hope
you all are doing well. Live from the Mickey Views Magic Studio, this is Brayden, Have a Magical Day!