Disney Plus: Challenges and Strategies for Streaming Success

Disney's streaming service faces challenges in subscriber growth and profitability, requiring aggressive content investment to ensure long-term success.

### Disney's Streaming Strategy and Reddit's Advertising Potential
* 📺  Disney's streaming service, Disney Plus, has achieved its first-ever profit by **increasing prices and cutting back on programming**, with a focus on **leveraging its movie library for subscriber retention**.
* 🏰  Investors are now questioning Disney's long-term streaming potential, wondering if it can become a **multibillion-dollar cash flow business like Netflix** or remain at a **low margin**.
* 💡  Analyst Rich Greenfield suggests that Disney needs to focus on creating **compelling content to drive consumer engagement**, rather than short-term financial strategies like **bundling discounts**.
* 📊  The unresolved valuation of Hulu, a key streaming asset, is a point of concern for investors, with estimates ranging from **$4 to $5 billion**.
* 🎢  The recent slowdown in Disney's theme park business has also raised investor worries about the company's **overall performance**.
* 🔴  Analysts like Jen Wong see **strong advertising potential** in Reddit, particularly due to its partnership with Google and its ability to **target ads without third-party data**.
* 📈  Greenfield recommends Reddit as a "**must-own stock**," predicting **rapid growth potential** in its advertising business.
* 💰  Despite concerns about a lockup ending, Greenfield believes Reddit is a good investment opportunity, setting a **$84 price target**.

First ever profit for streaming. Is this delight, Rich Greenfield, slow clap or you? Not so. Overwhelmed by that news. When you see subscriber growth slow effectively to a halt and the price has gone up pretty dramatically, it's, you know, it's pretty clear, I guess in many ways it's sort of this, hey, we don't know how to get more subscriber growth, so we'll raise the price and, you know, hope that people won't and will even cut back on programming. There's obviously a lot less programming. Disney's essentially going to rely on their movies to drive the streaming service and hope that the movies are strong enough when they flow to the streaming service that people don't cancel because they're not expecting a lot of growth in subscribers over the next few quarters. And so it's basically trying to, you know, you know, get to profitability, drive profitability of the existing

base.
But it doesn't really seem like there is a tremendous growth story here.
And I think that, sort of, you know, I mean, look, everyone's focus on the
parks. I don't think anyone's really focused on
Disney. Plus, at the moment, the streaming is a
nice data point. I think it's less about getting to
profitability and like how big a business can this actually be at?
Like, can this be a multibillion dollar free cash flow generating business, the
way Netflix, or is this, you know, going to essentially tread water, you know, at
a low single digit margin? I think that's what investors are really
going to focus on over time. I mean, you and I have discussed in the
past, right, achieving profitability by cutting, you know, cutting costs out of
the equation. So let's bring it back.
What you, what you really want to see is people, you really want to see people who
are so passionate.

They love this service.
They're willing to pay more because they're spending so much time.
Like you want to see consumer love, and based on that love, you can keep
raising the price, getting more people to subscribe because there's great buzz
and word of mouth. That's not what's happening here, nor any
of these other streaming services. So let's talk about Hulu.
I just finished Star Wars acolyte on Disney Plus.
And like everyone else, I love the bad on Hulu.
You know, we did the reporting on the negotiations for that.
The remainder of Comcast's stake is important if you, if the idea is to
achieve volume and get stuff that people want to watch.
Do you see Hulu as being a sort of something that needs to be resolved as
part of that? I mean, Hulu is going to be resolved.
We're just talking about the number now. And I think investors are, you know,
expecting several billion dollars.

Whether it's 4 to 5, we'll obviously
see. But I don't think this is, you know, I
think obviously probably Comcast would love more, Disney would love less.
But I don't think investors are stressing over what this number
ultimately is. Investors are just surprised that the
the option was exercised last October. I think it's sort of crazy that we're
still talking about this not resolved here in August.
Rich, if you could ask one thing of Bob Iger or give one piece of advice to him
to fix this in a way that you think would be positive, what would that be?
Look, I think the bottom line is if Disney is really serious about being a
long term, and you heard Hugh saying they're going to be, and the clip you
played earlier, if they want to be a long term winner in the streaming game,
it's not about discounting through bundling.
It's not about cutting back on

marketing.
What they really need to do is invest very aggressively, stop playing this
near-term Wall Street game of trying to get earnings growth.
They need to invest aggressively in making great content all the time that
gets consumers to engage with the Disney streaming platforms every single day.
4 hours a day like that should be their North Star versus trying to figure out
alternative ways to manage churn. That's what we'd like to see.
And look, you know, you've got all of these theme park concerns that are
sitting with the company right now. Like that's what investors are really
worried about, is how did the theme park slowdown this fast in the span of just
the last few months when Disney historically has pretty good visibility?
I want to get some time to talk about another name.
Red It. We had Jen Wang SEO on the show earlier,
very sort of patient, sanguine, calm about the ad environment, but sees a lot
of opportunity in sports.

I know that you like that name a lot.
We do. I mean,
you know, if you think about what Reddit is.
They really understand what consumers are interested in.
And they've got one of the biggest companies in the entire world, Alphabet.
Google is in their corner. You know, you can't do a Google search
and not see Reddit results rising higher and higher and higher.
Google's paying them for. I like Google is a firm believer in Reddit.
If Google believes in Reddit, everyone watching this show and investing should
believe in Reddit. Like I think that is a really important
data point is that there is this increasing visibility Reddit's getting
within Google. And Jan Wong, who is now building out an
ad business, Reddit was very slow to get going.
They've got it going now, and we've seen other companies, whether it's SNAP,
Pinterest, go back X, which used to be Twitter.
When those companies crossed a billion,

getting from 1 to 3 can happen very, very rapidly. And especially at Reddit, where they really know who you are. They don't need third-party cookies or data. They know exactly who Ed and Rich are. They have all of this interest data because you are searching Reddit for a topic, whether it's the Giants or whether it's video games, like they really know who you are, and it allows for really well-targeted advertising. I think Reddit is a must-own stock. We just put a buy on it with an $84 price target. I know people are worried about the lockup ending on Friday. It is a great opportunity. People are going to regret not buying it today.

Disney's Parks Slowdown Offset Streaming Profit

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Bloomberg Technology

Disney's Streaming Service Strategy and Profitability

Disney's streaming service has achieved its first profit by raising prices and cutting back on programming, but it's facing a slowdown in subscriber growth.

The company is now relying on its movies to drive the streaming service and is more focused on driving profitability than on significant subscriber growth.

Investors are concerned about whether the streaming service can become a multibillion-dollar, free cash flow generating business or if it will remain at a low single-digit margin.

The Future of Hulu and Disney's Streaming Strategy

Hulu's value is significant, as seen in the negotiations between Comcast and Disney.

The resolution of Comcast's stake in Hulu is anticipated to involve billions of dollars.

However, investors are more concerned about Disney's long-term streaming strategy than the specific financial details of the Hulu deal.

The Key to Disney's Success and Reddit's Rise

Disney needs to shift its focus to aggressively investing in high-quality content for its streaming platforms, rather than fixating on short-term earnings growth and churn management.

The sudden slowdown in theme park business is a major concern for investors.

On the other hand, Reddit's increasing visibility and partnership with Google make it a promising investment, especially with its growing ad business and understanding of consumer interests.

Reddit's Rapid User Targeting for Advertising

Reddit has the ability to rapidly gather user data and target advertising without third-party cookies.

The company is recommended as a must-own stock with a buy rating and an $84 price target.

Despite concerns about the lockup ending, it is seen as a great opportunity that people will regret not taking advantage of.