Check out the latest Disney earnings call transcript.
There's a lot to be excited about when you look at Walt Disney's (NYSE:DIS) 2019 box-office slate. The company has seven of the 10 most anticipated releases for 2019. It also has the two Star Wars lands opening this year and a huge slate of theme park additions coming. The company has also learned from some of its past mistakes in building anticipation toward those theme park changes.
A full transcript follows the video.
This video was recorded on Jan. 22, 2019.
Dylan Lewis: We've painted a little bit of an uncertain picture for Disney in this first half of the show.
Dan Kline: It's uncertain if your timetable is short.
Kline: They own everything they need. They just don't know how to deploy those assets. Even if you look at, the movie theater business is becoming blockbuster-driven. The arthouse film is much more likely to have a limited release and go to Netflix now. The only films you're going to see are the Disney ones. We passed around this list, was it seven out of the 10 most anticipated -- it was a Fandango list?
Lewis: Oh, yeah, it was something ridiculous.
Kline: Seven out of 10 are Disney movies. They have the next Star Wars movie and Avengers: Infinity War and Frozen 2 -- which didn't make the list! -- coming out next year. That's $4.5 billion in the box office if they don't do well.
Lewis: Yeah, to your point earlier about the Disney standards being a little different, there's a lot to be excited about with this company. You named a couple, but the slate for 2019 releases is darn impressive. I have to think, looking back at how we were talking about it before, the studio business fuels the merchandise business fuels the theme park business. You get those types of hits, it could be off to the races again, especially because so many of these are proven franchises.
Kline: They've also gotten smarter about their business. Part of the reason for the Fox acquisition is so, when Disney makes its box-office slate every year, it can line up and say, "We have 10 guaranteed hits. We're taking two shots, of maybe a remake, and maybe one new property," which they're more likely to do animated because the failure on an animated can be made up in the secondary market, there's still a DVD market, there's still a kid's market. If you put out a Cars 3 and it doesn't do as well in the box office, it's still going to do fine. Kids like to watch movies. Parents can't pay attention all the time.
Lewis: Parents love for their kids to be watching movies. [laughs]
Kline: [laughs] Yes. But the other thing they've gotten really smart about doing is, there are all sorts of additions coming to the theme parks. There's a Tron roller coaster. There's the Guardians of the Galaxy roller coaster at Epcot. There's a pretty major makeover at Epcot. There's some tweaks and some new shows at Hollywood Studios. They aren't telling you when any of those things are coming because if I really, really want to go to Hollywood Studios because of the new Mickey Mouse ride, which is the first-ever Mickey Mouse-featuring ride, and some people are very big Mickey Mouse fans -- I know, living in Florida -- they're not letting you know exactly when that's going to open because they don't want me to say, "Eh, I won't renew my pass. I'll wait six months until I know when that ride is opening."
Lewis: That dynamic reminds me a little bit of the Apple iPhone product release problem. They say, "OK, we've got the new device coming out. Here's where it is." And then sales halt. Everyone is like, "Well, I'm not going to buy a new one. I'm going to wait until the next one comes out. I want to see what the specs look like."
Kline: Right! And the other thing that Disney has fallen victim to is, when you put something out that's kind of underwhelming -- their big release this year was Toy Story Land. Toy Story Land was an existing ride, Midway Mania!, which is a great ride, it's really fun, it's a shooting gallery, it's interactive, it's a lot of fun; a carnival spinner ride that's nothing special, there's 30 other versions of it in the parks; a family roller coaster; and a couple of new quick-serve restaurants. A very nice addition to a park that needed it, but nobody's taking your vacation for that one.
The same thing happened at Universal Studios. Their big ride this year was Fast and the Furious, which is a fine ride. It's not that fast, it isn't at all furious. It's not a thrill ride. And that was the big release for the year. Now, they're only going to do major releases when it really is something major. When it's just an incremental, "Here's something cool that's new," they're going to downplay it a little bit and try to even out their business. The biggest challenge Disney's going to have in the next two years is, how do you manage capacity? When you have the Star Wars ride that has, you're piloting the Millennium Falcon, and there's six simulators, and six people can sit in six, and it's a six- or seven-minute ride, you can see how the line's going to get pretty long for that one. So, how do they entice you -- and they're doing it with pricing -- to go to Animal Kingdom that day? Or to go to whichever park isn't going to do well? Take a water park day?
The pricing on the tickets for one day is different by park. It's different by crowd. There's all sorts of premium up-charges. If you want to ride that ride five times in a row and you're willing to pay $200, there will be an option for you to do that.