Disney 1Q 2012 Results - Disney Impose 28 Day Rental Delay - Observing UltraViolet - High-Def Digest Forums
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Old 02-08-2012, 12:27 AM
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Default Disney 1Q 2012 Results - Disney Impose 28 Day Rental Delay - Observing UltraViolet

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Iger: Disney Implementing 28-Day Delays; Taking ‘Wait and See’ Approach Toward
UltraViolet


7 Feb, 2012
By: Erik Gruenwedel


Bob Iger

Walt Disney Studios plans to impose a 28-day rental delay on new-release disc titles, CEO Bob Iger said. He did not elaborate on timing but a rental source said Disney would embargo War Horse, which streets April 3..

During a Feb. 7 fiscal call with analysts, Iger said Disney remains on the fence regarding the rollout of the industry-wide initiative UltraViolet, the cloud-based digital locker aimed at jumpstarting sellthrough of both physical and digital content.

Without naming specific rental channels, such as Redbox, Netflix or Blockbuster, Iger said Disney would only sell directly to rental channels that agreed to adhere to the delays. At the same time, Iger acknowledged that rental channels have the right to buy titles at retail and rent as afforded by the First Sale Doctrine.

“This advantages the non-[rental] subscriber,” Iger said.


When asked why Disney has waited nearly three years to impose the new-release embargoes compared with delays imposed by other studios, such as Warner Home Video, Universal Studios Home Entertainment and 20th Century Fox Home Entertainment, among others, Iger said the studio had worried there was nothing to be gained by the delays and would actually hurt sellthrough.

“[We] have taken a hard look at the business overall,” he said. “I’d say the industry continues to suffer on the sellthrough side and the sale of goods digitally, or the rental side, have not made up enough of that fall off.”

The CEO admitted the rollout of KeyChest — Disney’s proprietary digital locker platform — remained behind schedule but that the studio was in discussions with a number of entites with nothing further to report. Iger said the studio continues to take a “wait and see” approach to UltraViolet.

He said Disney is not opposed to joining UltraViolet, but that initial industry efforts to introduce UV haven’t been “as robust” as he’d expected or as “consumer friendly as we had hoped.”

“We still feel it would be a smart thing to offer consumers a greater interoperability for the obvious reason because it would increase the price-to-value relationship that they’d be getting when they bought either a physical goods or digital goods,” Iger said.

Meanwhile, sales of higher-margin Blu-ray Disc titles helped Walt Disney Studios report first-quarter (ended Dec. 31) operating income of $413 million — up 10% from operating income of $375 million during the previous-year period.


Studio revenue, which included Walt Disney Studios Home Entertainment, declined 16% to $1.6 billion from $1.9 billion due to fewer Disney theatrical releases (and marketing and distribution costs) along with an adverse impact from the timing of title availabilities in television markets and lower DVD volumes.

The decrease in unit disc sales reflected the strength of Toy Story 3, Beauty and the Beast Platinum Edition, A Christmas Carol and The Sorcerer’s Apprentice in the prior year’s quarter, compared with disc releases of Cars 2, The Lion King Platinum Edition, Pirates of the Caribbean: On Stranger Tides and The Help in the current quarter, as well as lower sales of catalog titles.

Disney said the decrease in global home entertainment revenue primarily was due to a decline in unit DVD sales, partially offset by improved net effective pricing driven by a higher Blu-ray sales mix.
http://www.homemediamagazine.com/dis...raviolet-26354
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Old 02-08-2012, 12:34 AM
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Robert A. Iger

Spencer, we still think that it would be a smart thing to offer consumers greater interoperability for the obvious reason, because it would increase the price to value relationship that they'd be getting when they bought either physical goods or digital goods.

We haven't rolled out KeyChest as extensively as we hoped that we would at this point. We're in pretty significant discussions with a number of entities as we have been for a while, but there's nothing really further to report on that. I don't want to sound too critical, but we're taking a wait-and-see approach on UltraViolet. I'm not suggesting that we're not open minded about it, but so far, I'm not sure that it's proven to be as robust as we'd expected or as consumer friendly as we had hoped. Again that's not to say that we wouldn't necessarily consider it, but it's way too early to conclude that.
Quote:
Robert A. Iger

I read -- I know this sounds stupid here, but why not -- I read the Verizon Redbox article about 4x, and I even turned it upside down and sideways, and I'm still not 100% sure I understand what they're offering. But my sense is that it's going to be another opportunity for us to sell content to the marketplace. That it's another entity that will be looking for high-quality branded content. As to -- I think what was hidden or maybe not in your question about how we're looking at Redbox and a lot of these services, we are in discussions to go to the 28-day window to not make -- to not sell directly our physical goods to these entities unless they adhere to a 28-day window. Obviously, because of the first-sale doctrine, they would have an ability to buy those goods from normal retailers. But rather than us being part of that sale and in protection of the sell-through window, we feel that, that would be a wise thing for us to do. I'm not, obviously, as you anticipated, Jessica, going to comment about the Univision article that came out yesterday.

I've said before that ABC has a platform that we continue to invest in from a content perspective. And ABC News is a very important part of that platform. And we have an interest in seeing that ABC News continues to flourish and giving it an opportunity to look for and create some growth opportunities on its own.
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Tuna N. Amobi - S&P Equity Research

I've got one for Jay and one for Bob. So, Jay, can you just give us an idea of what we can expect from new deals with Amazon and Netflix in terms of the lumpiness or linearity of those revenues as they kick in for fiscal '12 and fiscal '13? That would be helpful for modeling.

And then for Bob. With regard to your earlier comment that protecting the Pay TV subs was -- is a paramount consideration, and you said also in response to a Verizon Redbox question that you are, it seems, revisiting your day-and-date strategy, is what I got out of it, given the current situation. It wasn't clear to me if that was a result of the Verizon Redbox announcement or why it took you so long to revisit this. I think it's been almost 3 years when a lot of the other studios have been imposing this window. So I wanted to get your sense of how this perhaps might also affect your view of the whole authentication philosophy, which Verizon itself is also a stakeholder. And now they're, kind of, in the streaming side, as well. So how do you balance all of these interests?
Robert A. Iger

I'll take it first, Jay, otherwise I'll forget it. There was no connection between the announcement that was made yesterday and the decision by the Studio, which was made by the Studio, to go to the 28-day window. The reason they hadn't gone to that window before is the Studio felt that it was not seeing any affect from these dollar rentals on their sell-through business. And it was their feeling that if they went to that model, it really wasn't -- there would be nothing to be gained from it. In fact they thought they actually might lose some. They have taken a hard look at the business overall. I'd say that the industry has continued to suffer on the sell-through side. And the sale of goods digitally or the rental side have not made up for enough of that falloff that's across the industry. And so they've decided to take a step in the direction of further protecting the initial window and the sell-through window.

The whole issue of authentication is somewhat different or separate from the discussion on windowing, although I understand why you would connect the 2. What authentication is about is we see it as really 2 things. One, it's recognizing the value of the multichannel distribution business model and working to protect it, but also working to enhance it by recognizing the value and the excitement of new technology platforms. And so what this does is it gives people, who have subscribed to those services, the ability to watch these channels and watch these programs in a much more mobile, much more flexible ways on all the new devices.

It also does create a window that advantages the subscriber and on, at least, the rental side, disadvantages the nonsubscriber. The nonsubscriber would still be able to buy some of these programs on a sell-through basis digitally, virtually right after they air, but would not be able to gain access to them on a rental or a video D model, unless they're subscribers of the service. And that's obviously designed to protect, again, the business model, while at the same time recognizing the importance of and the potential and the excitement around new technology-driven platforms.
http://seekingalpha.com/article/3485...ipt?part=qanda

http://seekingalpha.com/article/3485...ipt?part=qanda
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Old 02-08-2012, 12:38 AM
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Robert A. Iger

Turning to the Studio, our key upcoming titles are John Carter, an epic live-action adventure from Director Andrew Stanton of Pixar, Marvel's much anticipated The Avengers, which will be the first Marvel film marketed and distributed by Disney, Disney-Pixar's Brave, about a feisty heroine's adventure in the Scottish Highlands. And then later this year, we have Tim Burton's Frankenweenie and Disney Animation's Wreck-It Ralph. And those are both in fiscal 2013. Also in 2013, our tentpole releases are Oz, Iron Man 3, the Lone Ranger and Monsters University, the sequel to the very successful Monsters, Inc.
Quote:
James A. Rasulo

As I mentioned earlier, Studio Entertainment revenue decline compared to prior year. This decline was primarily due to the release of fewer Disney-produced titles compared to last year and higher worldwide box office performances of Tangled and Tron in Q1 last year compared to the Muppets this year. However, Studio operating income was higher in the quarter due to lower marketing, distribution and production costs associated with the release of these films.

http://seekingalpha.com/article/3485...all-transcript
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Old 02-08-2012, 07:39 AM
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Quote:
Disney Grows Quarterly Net Income By 12 Percent

1:42 PM PST 2/7/2012 by Paul Bond



UPDATED: The conglomerate says the studio and interactive entertainment are the two segments that didn't grow revenue in the most recent quarter.

Disney reported that net income rose 12 percent in the quarter ending Dec. 31 to $1.46 billion on revenue that was up 1 percent to $10.78 billion, news that initially sent the stock higher in after-hours trading on Tuesday though the gains quickly evaporated.

Disney blew past profit estimates, earning 80 cents per share while analysts expected about 71 cents, but was about $400 million shy of revenue expectations. Disney shares rose 1.3 percent during the regular session to $40.98 though most of the gain was wiped out after the closing bell.


Revenue rose at three of Disney's five segments, one of the exceptions being studio entertainment where revenue dipped 16 percent to $1.62 billion.

Disney blamed timing and lower DVD volumes for sinking studio revenue. In the year-ago quarter, Disney had Tangled and Tron: Legacy in wide release while in the most recent quarter it had The Muppets.

Disney also said the studio segment was hurt by falling sales of DVDs worldwide, though rising Blu-ray sales helped to stem the bleeding. Comparisons were also a problem, given that a year ago Toy Story 3, Beauty and the Beast, A Christmas Carol and The Sorcerer's Apprentice were selling well.


Even with falling revenue the studio managed to grow operating income by 10 percent to $413 million, in part due to lower costs associated with having fewer theatrical releases.

The standout segment during Disney's first fiscal quarter was parks and resorts, where revenue rose 10 percent to $1.62 billion and operating income grew 18 percent to $553 million. For the growth, Disney credited the popularity of its cruise line and its domestic theme parks. In a sign that the U.S. economy is on the mend, Disney said consumers were paying higher prices to enter the theme parks and, once inside, were shelling out more money to purchase food and other items.

Media networks, which is Disney's largest segment based on sales and profit, grew its revenue 3 percent to $4.78 billion and operating income 12 percent to $1.19 billion.

As per usual nowadays, media networks benefited from the immense popularity of ESPN and worldwide Disney Channels. Cable, in fact, grew revenue 8 percent to $3.31 billion and operating income 25 percent to $967 million while broadcasting revenue sunk 7 percent to $1.47 billion and net income there fell 23 percent to $226 million.

Lower sales of political advertising hurt the broadcast unit but the absence of costs associated with The Oprah Winfrey Show helped a bit.

Speaking to analysts during a conference call Tuesday, Disney CEO Bob Iger declined to comment on published reports that Disney is considering a partnership with Univision to create an English-language cable news network that would compete with MSNBC, CNN and Fox News Channel. The channel would allegedly launch prior to the November election for U.S. president.

Revenue at consumer products rose 3 percent to $948 million while operating income was flat at $312 million. Revenue at interactive media fell 20 percent to $279 million while its operating loss more than doubled to $28 million, the diminishing results being blamed on the strength of video games Epic Mickey, Tron: Evolution and Toy Story 3 a year ago.
http://www.hollywoodreporter.com/new...muppets-287757
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Old 02-08-2012, 07:46 AM
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Quote:
Disney May Impose a 28-Day Wait on DVD Rental Services


5:48 PM PST 2/7/2012 by Paul Bond

Chief Executive Bob Iger says "Redbox and a lot of these services" will have to adhere to a new window or get their DVDs elsewhere.

Disney may impose a 28-day window on services that rent DVDs, a policy similar to those that other studios have already adopted, CEO Bob Iger told analysts on Tuesday.

Iger said during the question-and-answer period on a conference call to discuss quarterly earnings that Disney's studio hadn't imposed a delay on the likes of Redbox before because "it was not seeing any effect from these dollar-rentals on their sell-through business."


Soft DVD sales, though, were cited as a reason Tuesday for Disney's studio entertainment segment reporting a 16 percent dip in revenue in its first fiscal quarter.

Fox, Universal and NBCUniversal already impose a 28-day window on Redbox and Netflix while Warner Bros. said last month it will switch to a 56-day delay.

Disney did not respond to requests for details, including whether or not Netflix would be included in such a delay.

Referring to "Redbox and a lot of these services," Iger said: "We are in discussions to go to the 28-day window -- to not sell directly our physical goods to these entities unless they adhere to a 28-day window."

The studio, Iger said Tuesday, "decided to take a step in the direction of further protecting the initial window of the sell-through."

Chief Executive Bob Iger says "Redbox and a lot of these services" will have to adhere to a new window or get their DVDs elsewhere.

Disney may impose a 28-day window on services that rent DVDs, a policy similar to those that other studios have already adopted, CEO Bob Iger told analysts on Tuesday.

Iger said during the question-and-answer period on a conference call to discuss quarterly earnings that Disney's studio hadn't imposed a delay on the likes of Redbox before because "it was not seeing any effect from these dollar-rentals on their sell-through business."


Soft DVD sales, though, were cited as a reason Tuesday for Disney's studio entertainment segment reporting a 16 percent dip in revenue in its first fiscal quarter.

Fox, Universal and NBCUniversal already impose a 28-day window on Redbox and Netflix while Warner Bros. said last month it will switch to a 56-day delay.

Disney did not respond to requests for details, including whether or not Netflix would be included in such a delay.

Referring to "Redbox and a lot of these services," Iger said: "We are in discussions to go to the 28-day window -- to not sell directly our physical goods to these entities unless they adhere to a 28-day window."

The studio, Iger said Tuesday, "decided to take a step in the direction of further protecting the initial window of the sell-through."
http://www.hollywoodreporter.com/new...-rental-287826
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Old 02-08-2012, 09:46 AM
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So does that leave just Paramount as the only non delay studio? Maybe Fox or Sony is another... I can't recall which.
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Old 02-08-2012, 10:09 AM
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Originally Posted by h0mi View Post
So does that leave just Paramount as the only non delay studio? Maybe Fox or Sony is another... I can't recall which.
Paramount and Sony. Fox has been an embargo studio for a while - like Uni and WB who is the only studio with a 56 day embargo
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Old 02-08-2012, 01:20 PM
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I despise Disney now for not releasing any of their live action classics on bd over the past 5+ years.
(besides Tron)
and they STILL have non-anamorphic dvds of many of their most classic films.
they have really turned their back on their own legacy except, of course, for the animated classics.
I just can't get past it no matter how hard I try that they haven't released films like "The Parent Trap", "20,000 Leagues Under The Sea", "Mary Poppins" "Old Yeller", etc. etc on blu-ray.
and what about all the legendary shorts Disney produced for decades?
Are they never going to release any of those on bd either?
I can't believe Leonard Maltin isn't calling and complaining every day.
what a sad joke Disney has become now.
I have no doubt Walt would kill himself if he could see what had become of his legendary studio.
Iger has largely failed as a leader imo.
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Old 02-08-2012, 02:43 PM
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I heard recently that the live action classics are being evaluated right now as Blu-ray releases with some thought that they were going to be be released on a similar schedule as the classic animation releases a few a year.

I'm hoping to see a couple of them this year as a start.

My understanding is that they were felt to be more marketable when Blu-ray household penetration was a but higher and family genre titles were higher in marketshare as they were not quite as prominent as the classic animation titles. But that point was probably reached last fall.

I know they are considered viable releases and will almost certainly be seen on Blu-ray eventually, the question is if they will be sooner or later. Family titles besides animation have been lagging genre's for Blu-ray for most of the years since release and its only last year that Blu-ray marketshare there has substantially risen.

It makes sense to me for Disney to have delayed their release until Blu-ray family household penetration has risen.
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Old 02-08-2012, 04:29 PM
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well I certainly hope you are right, but imo they have waited much too long already.
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