After yesterday’s surprisingly disappointing Netflix Q1 2022 earnings call, it is worth revisiting my favorite line in the IAC letter to shareholders about its investment in MGM Resorts:
Similar to Disney’s advantages over pure-play streaming companies with an iconic brand and multiple avenues to monetize the same intellectual property between streaming, theatrical releases, merchandise, and theme parks, we believe MGM also is an aspirational brand, which could be delivered with daily accessibility and offer gaming consumers (including the 34 million M-life Rewards members) a wider range of services, both physical and digital, than any competitor.
Netflix’s letter to shareholders outlined its challenges with revenue growth and its proposed solutions. Notably, none of them looked or sounded like what Disney CEO Bob Chapek outlined last year to the JP Morgan Global Technology, Media and Communications Conference:
…for the very first time, we've got the opportunity to take our original direct-to-consumer business, which is our park business, and use it for our newest direct-to-consumer business. And we've got [a] tremendous amount of information on our consumers from our parks business and what would happen if we married that and actually mine that data to help people subscribe to Disney+ knowing what we know.
Two of those opportunities emerged from Disney in the past two weeks:
Both appear to be early examples of Disney’s advantages over a pure-play streaming service like Netflix. But, given Netflix’s recent moves into gaming and charging for password sharing, are they truly advantages?
Surprisingly, the National Geographic Premium bundle offers the better answer than the Theme Parks bundle to why these are indeed advantages for Disney over Netflix.
The objective or business logic of the Disney World bundle seems obvious and objectively compelling: Disney+ families paying $6.99 per month as of the visit to a theme park will save on a visit that has a baseline cost of around $6,000. Savings on that price can total ...