Q3 2024 The Walt Disney Co Earnings Call
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Operator: Good day, and welcome to the Walt Disney Company third quarter 2024 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After some brief introductory remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad to which are your question; please press start on them to. Please note, today's event is being recorded. I would now like to turn the conference over to Alexia Quadrani, Vice President of Investor Relations. Please go ahead.
Robert Iger: And we feel very bullish about the future of this business. We're not saying, you know, much more about it, except you can expect that it's going to grow nicely in fiscal 2025. The other thing I want to add is that we've been talking a lot about adding the technology features that we need to basically make it a higher return, a higher margin business, and a more successful business, and we're doing that right now.
Hugh Johnston: Sure, happy to talk about it. The advertising market is actually very healthy right now. We saw overall advertising grow 8% for the quarter. ESPN was up 17%. DTC streaming was actually up 20%. So certainly feeling very, very positively in that regard. And in terms of the categories, financial services, consumer products, consumer services, and technology are doing very well. Auto is a little bit softer in that regard.
Speaker Change: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Speaker Change: After some brief introductory remarks, there will be an opportunity to ask questions.
Speaker Change: To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two.
Robert Iger: We started our password sharing initiative in June, and it kicks in in earnest in September. By the way, we've had no backlash at all to the notifications that have gone out and to the work that we've already been doing.
Alexia Quadrani: Good morning. It's my pleasure to welcome everybody to the Walt Disney Company third quarter 2024 earnings call. Our press release, forum 10Q, and management's prepared remarks were issued earlier this morning and are available on our website at www.disney.com forward slash investors. Today's call is being webcast, and a replay and transcript, as well as the third quarter earnings presentation will all be made available on our website after the call. As we previously announced, today's call will follow a new format consisting only of a question-and-answer session.
Robert Iger: We know that we need stronger recommendation engines, and we're working on that technology, and we need to make our marketing more efficient. But by adding all of these features, both on the technological side and also on the programming side, we're bullish about the future of this business. And then when you think about it, over – Hugh mentioned Moana and Mufasa. Let me just read to you the movies that we'll be making and releasing in the next almost two years.
Hugh Johnston: But overall, the ad market is really, really strong and healthy for us, and a lot of that is a product of the fact that we have live sports and the fact that our streaming service is doing so well in terms of the IP that we have. It's an attractive audience.
Speaker Change: Good morning. It's my pleasure to welcome everybody to the Walt Disney third quarter 2024 earnings call.
Robert Iger: We have Moana, Mufasa, Captain America, Snow White, Thunderbolts, Fantastic Four, Zootopia, Avatar, Avengers, Mandalorian, and Toy Story, just to name a few. And when you think about not only the potential of those at the box office but the potential of those to drive global streaming value, I think there's a reason to be bullish about where we're headed.
Hugh Johnston: We also have a new capability called Disney Streaming that allows us to basically sell across our platforms very effectively. We're selling audiences rather than just selling streaming channels, which enables advertisers to more effectively target the audiences that they're seeking. So from a technology perspective, we're seeing good payback.
Speaker Change: Our press release, Form 10-Q , and management's prepared remarks were issued earlier this morning and are available on our website at www.disney.com forward slash investors.
Robert Iger: And Ben, to answer your other question, Flattish was a reference to...
Hugh Johnston: The second piece was around licensing. The licensing numbers that you see are mostly a reality around the fact that we've had so much success at the box office. That's really what's driving things more than anything else.
Alexia Quadrani: Joining me this morning are Bob Iger, Disney's Chief Executive Officer, and Hugh Johnston, Senior Executive Vice President and Chief Financial Officer. As we start the Q&A session, we ask that you please try to limit yourself to one question in order to help us get to as many analysts as possible today. And with that, Operator, we're ready for the first question.
Operator: Thank you. Next question, please.
Hugh Johnston: No change in our licensing strategy, which has been pretty clear. The things that we consider core IP for the company, we don't license. There are things that are non-strategic, we'll continue to license tactically, but it's not a big strategy for us. The big strategy is producing our own IP and monetizing it.
Operator: Yes, ma'am. Our next question today comes from Robert Fishman with Moffitt & Nathanson. Please go ahead.
Unknown Speaker: So maybe in theme parks, I mean, there's a few growth elements, I guess, over the next few years in terms of cruise ships and, you know, broadly other capex investments that you're making in the park.
Robert Fishman: Thank you. Bob, as you think about the future of content spending for Disney, especially after the NBA deal and all the content that you just talked about, what is the right balance of investment between sports, scripted TV, and movies going forward? And then for Hugh, can you just update us on free cash flow expectations for this year with one quarter to go, and how to think about the park's impact and content spending on free cash flow in 2025? Thank you.
Robert Iger: Well, we obviously are investing significantly in all directions because of the value that it creates and also because of the value that it represents to our future in streaming. We talked about sports, the long-term deals that we've made, obviously college football is part of that, and on top of the NBA, on top of the NFL. On the movie side, we've talked a lot about the creative improvements that our studio has brought to bear, and the quality of the IP, and the known quality of our IP. And on television, I can't say enough about how great our television businesses have been performing, both in terms of the bottom line, but also in terms of creativity. You don't get 183 Emmy nominations by accident.
Robert Iger: That's the work of a lot of really great, talented people, meaning on the management side, working with a lot of talented, creative people. So it's a balance. It's a mix. And I think it's one that you'll ultimately see really blended together as our streaming platform grows over time.
Speaker Change: As we start the Q&A session, we ask that you please try to limit yourself to one question in order to help us get to as many analysts as possible today. And with that, operator, we're ready for the first question.
Hugh Johnston: And, Robert, on free cash flow, we had previously guided to $8 billion. We don't have any news on that, but if there were a material change to it, obviously, we would have changed the guide.
Operator: Yes, ma'am. And before the first question, just as a reminder, please press star then one to enter the question queue, and star then two will remove yourself. Today's first question comes from Jessica Reeve Ehrlich with Bank of America. Please go ahead.
Operator: Thank you. Next question, please.
Unknown Speaker: Note that a reconciliation of non-GAAP measures that were referred to on this call to the most comparable GAAP measures can be found on our investor relations website. Let me also remind you that certain statements on this call, including financial estimates or statements about our plans, guidance, or expectations and drivers, including future revenues, profitability, DTC subscribers, free cash flow, adjusted EPS, and capital allocation, and other statements that are not historical in nature may constitute forward-looking statements under the securities laws.
Operator: Thank you, and our next question comes from Steven Cahall with Wells Fargo. Please go ahead.
Unknown Speaker: Forward-looking statements are subject to a variety of risks and uncertainties, and actual results may differ materially from those expressed or implied in light of a variety of factors. These factors include, among others, economic or industry conditions, technological advances, and paid sharing efforts, our ability to continue to rationalize costs while preserving revenue, and macroeconomic conditions, all of which, while based on extensive internal analysis, as well as recent experience, provide a layer of uncertainty in our outlook.
Jessica Reeve Ehrlich: Thank you. I'm going to try to squeeze in one on theme parks and one on the NBA. So first on theme parks, there are really a lot of moving pieces here. Can you provide color on global park demand and where you expect this protracted weakness to occur? on maybe include the benefit from cruise ships since you have three ships coming on over the next, I guess, 18 months or so. And with the stated fiscal Q4 mid single-digit decline and the expectation that this will last for several quarters, is that the right level to think about OI?
Speaker Change: Thank you. I'm going to try to squeeze into one on theme parks and one on NBA.
Jessica Reeve Ehrlich: As we think about fiscal 25, and on the NBA, with the rights now complete, you'll likely have several hundred million dollars in revenue step up when the new contract begins in fiscal 26. Are there incremental monetization drivers, including maybe WNBA growth, that can make the new contract profitable in the early years?
Speaker Change: And with the stated fiscal Q4 mid-single digit decline.
Speaker Change: And the expectation that this will last for several quarters, is that the right level to think about OI?
Speaker Change: as we think about fiscal 25. And on the NBA, with the rights now complete, you'll likely have several hundred million dollars step up when the new contract begins in fiscal 26. Are there incremental monetization drivers, including maybe WNBA growth, that can make the new contract profitable in the early years? Thank you.
Operator: Thank you.
Steven Cahall: Thanks. Hugh, you talked about DTC getting to double digit margins with the big price increases and the page sharing efforts coming. I was wondering if you could just update us on your thinking. We'd love to get some timing around double digit margins if that's something you're comfortable with at this point, but any context would be helpful. And then just on parks, as we think about cruise ship pre-opening costs for them, what's implied in the fourth quarter?
Unknown Speaker: Forward-looking statements are subject to a variety of risks and uncertainties, and actual results may differ materially from those expressed or implied in light of a variety of factors. These factors include, among others, economic or industry conditions. In particular, our expectations regarding DTC profitability, subscriber levels, and ARPU are built on certain assumptions based on the future strength of our content slate. Current expectations, the financial impact of the Disney Plus ad tier and ESPN flagship, pricing decisions, bundling, and availability of our other streaming services on Disney+, technological advances and paid sharing efforts, our ability to continue to rationalize costs while preserving revenue, and macroeconomic conditions, all of which, while based on extensive internal analysis, as well as recent experience, provide a layer of uncertainty in our outlook.
Steven Cahall: And as we think about the cruise pre-opening costs in fiscal 25, what do those look like? I think you'll sail on the treasure, but you've still got the adventure and the destiny. I think the Singapore dock is a little heavier on costs, so I'd just love to understand that component. Thank you.
Operator: Thanks for watching!
Speaker Change: Great. Thanks, Jessica. This is Hugh. Good morning.
Operator: Good day, and welcome to the Walt Disney Company third quarter 2024 financial results conference call.
Speaker Change: First, just to sort of peel apart Q3, again, I want to emphasize, you know, we actually had 2% revenue growth in Q3. The reason, obviously, is...
Speaker Change: The IP is so strong in our parks, it really does attract a strong audience and people are reluctant to cancel vacations. So while we saw a slight moderation in demand, I certainly wouldn't call it a significant change.
Speaker Change: That said, 40% of the experiences business is actually not domestic parks, it's either international parks or consumer products, and that's from an operating income perspective. 60% is domestic parks, including cruise ships.
Speaker Change: Within that, we saw attendance flatten a quarter and we saw per caps up a little bit.
Speaker Change: Really just a few quarters, so I don't think I'd refer to it as protracted But just a couple of quarters of likely similar results now keep in mind. We we do have
Speaker Change: some expenses attached to our ships coming in. And that'll affect us a bit in 24 and a bit in 25. But overall, I would just call this as a bit of a slowdown that's being more than offset by the entertainment business, both what we've seen so far.
Speaker Change: and our expectations for Moana 2 as well as Mufasa.
Hugh Johnston: Great. Thanks, Jessica. This is Hugh. Good morning.
Hugh Johnston: That was a six-part first question, so I'll try to answer it as best I can. First, just to sort of peel away Q3, again, I want to emphasize that we actually had 2% revenue growth in Q3. The reason, obviously, is that the IP is so strong in our parks; it really does attract a strong audience, and people are reluctant to cancel vacations.
Hugh Johnston: So while we saw a slight moderation in demand, I certainly wouldn't call it a significant change. That said, 40% of the experiences business is actually not domestic parks. It's either international parks or consumer products, and that's from an operating income perspective. 60% is domestic parks, including cruise ships.
Speaker Change: Just to remind you and everyone that the deal doesn't kick in next year. It's a year later. We have one more year on the current deal. And as we looked at it, first of all, one goal was to maintain what we'll call the A package.
Speaker Change: Which means we've got the finals for 11 more years or now we have the finals for 12 years and they drive significant value
Speaker Change: for us. Also, overall, the deal reflects the value of live programming. We know that that's been an advertiser's delight and also an audience delight.
Speaker Change: It Also Reflects the Growing Value of Basketball and the Growing Value of Women's Sports as a Large WNBA Component to This. Also as part of this deal.
Speaker Change: So we believe that by the time this kicks in a year from now, that a lot of the pieces will be in place in terms of driving more advertising revenue, more distribution revenue, moving to digital. And another thing that we've done here is we've secured international rights.
Speaker Change: particularly to the finals, not in every market around the world, but in most markets, and that will drive some added revenue as well. Not going to be specific about the profitability in the early years, but there's tremendous value in this deal.
Speaker Change: Lot of sports ESPN coming in you've added the international NBA rights to the product overseas
Hugh Johnston: Within that, we saw attendance flatten a quarter, and we saw per capita go up a little bit. We expect to see a flattish revenue number in Q4 coming out of the parks, and as we mentioned earlier in the letter, really just a few quarters. So I don't think I'd refer to it as protracted, but just a couple of quarters of likely similar results. Now, keep in mind, we do have some expenses attached to our ships coming in, and that'll affect us a bit in Q4 and a bit in Q5.
Speaker Change: Consumer Pushback. So I'd love to get your thoughts on on that big topic. And then just wanted to clarify, Hugh, when you say flattish revenue, Q4, are you talking about at the experiences segment level, or is that just a domestic parks comment? Just wanted to clarify. Thank you.
Hugh Johnston: But overall, I would just call this a bit of a slowdown that's being more than offset by the entertainment business, both what we've seen so far and our expectations for Moana 2 as well as for Mufasa.
Hugh Johnston: Regarding the NBA deal, Jessica, first of all, I mean, just remind you and everyone that the deal doesn't kick in next year. It's a year later.
Hugh Johnston: We have one more year on the current deal, and as we looked at it, first of all, one goal was to maintain what we'll call the A package, which means we've got the finals for 11 more years, or now we have the finals for 12 years, and they drive significant value for us. Also, overall, the deal reflects the value of live programming. We know that that's been an advertiser's delight and also an audience delight.
Hugh Johnston: It also reflects the growing value of basketball and the growing value of women's sports as a large WNBA component to this. Also, as part of this deal, which has been the strategy of ESPN for a while to lock in sports rights for a long period of time, it secures our ability to bring ESPN into the digital direction, particularly as we look to launch our flagship sometime at the end of 2025. So we believe that by the time this kicks in a year from now, a lot of the pieces will be in place in terms of driving more advertising revenue, more distribution revenue, and moving to digital.
Hugh Johnston: And another thing that we've done here is we've secured international rights, particularly for the finals, not in every market around the world, but in most markets, and that will drive some added revenue as well. I'm not going to be specific about the profitability in the early years, but there's tremendous value in this.
Operator: Thank you. Next question.
Speaker Change: Well, let me start by saying that what we've been seeing with streaming is significant success driven largely by the success of our...
Speaker Change: Whether it's in the television side, the company had 183 Emmy nominations, for instance, led by shows like Shogun and The Bear and Abbott Elementary and Only Murders in the Building, and I can go on and on.
Speaker Change: And obviously on top of the television success creatively, we've had huge success in the motion picture front recently. And when you look at what the current motion picture lineup drives in terms of value on streaming, it's profound. So inside out, it's in our comments today.
Speaker Change: The first film has had tremendous consumption since the first trailer for Inside Out 2 launched in November .
Speaker Change: programming from FX, programming from ABC, National Geographic.
Speaker Change: ...and the popularity of our offerings, which gives us the pricing leverage that we believe we have. So, every time we've taken a price increase, we've had only modest...
Speaker Change: Turn from that nothing that we would consider significant
Speaker Change: You know we believe that as we add these new features like the channels that we're going to be adding
Speaker Change: later this year, that, and the success of our movie slate, and I'll get into that a little bit more, that the pricing leverage that we have is actually increased, we're not concerned.
Speaker Change: The goal is to grow engagement on the platform. And what I mean by that is obviously offering a wider variety of programming, which is why we're adding news, why we're adding the ESPN tile to it, while we're bundling aggressively to give consumers the ability to buy across all of our basically
Speaker Change: And we feel very bullish about the future of this business. We're not saying, you know, much more about it, except you can expect that it's going to grow nicely in fiscal 2025.
Hugh Johnston: Sure, happy to talk about both. In terms of the journey on getting to double-digit margins, the levers haven't changed, and frankly, we're actually doing quite well with them. Bundling has had a positive impact on churns, so from that perspective, obviously, that helps us with growth, which is one of the drivers. Password sharing is just starting to roll out.
Speaker Change: And we're doing that right now. We started our password sharing initiative in June . That kicks in in earnest in September . By the way, we've had no backlash at all.
Speaker Change: to the notifications that have gone out and to the work that we've already been doing.
Speaker Change: We know that we need stronger recommendation engines, and we're working on that technology, and we need to make our marketing more efficient.
Speaker Change: And Ben, to answer your other question, Flatish was a reference to experiences.
Operator: Thank you. Our next question today comes from Ben Swinburne at Morgan Stanley. Please go ahead.
Ben Swinburne: Thank you, good morning. Maybe for Bob, I want to ask you about sort of the outlook for Disney+, both in the context of where the product's going, but also how this will become a significant earnings contributor to the company. As you look ahead, we look at a product that's really broadening. You've got, you know, obviously brought in Hulu, now you're adding news, a lot of sports, ESPN coming in, you've added the international NBA rights to the product overseas. What's the vision here?
Speaker Change: Thank you. Next question, please.
Robert Iger: And in your mind, does it support both continued subscriber growth and pricing power? I think there's probably some concern out there that the recent price increases might face some consumer pushback. So I'd love to get your thoughts on that big topic. And then just wanted to clarify, Hugh, when you say flattish revenue, Hugh, were you talking about at the experiences segment level? Or is that just the domestic parks comment? Just wanted to clarify.
Speaker Change: What is the right balance of investment between sports, scripted TV, and movies going forward?
Robert Iger: Well, let me start by saying that what we've been seeing with streaming is significant success driven largely by the success of our creativity. Whether it's on the television side, the company had 183 Emmy nominations, for instance, led by shows like Shogun and The Bear and Abbott Elementary and Only Murders in the Building, and I can go on and on.
Speaker Change: We talked about sports, the long-term deals that we've made, obviously college football is part of that, and on top of the NBA and top of the NFL.
Robert Iger: And obviously, on top of the television success creatively, we've had huge success in the motion picture front recently, and when you look at what the current motion picture lineup drives in terms of value on streaming, it's profound. So Inside Out, which is in our comments today, the first film has had tremendous consumption since the first trailer for Inside Out 2 launched in November. The same thing is true for the early Deadpool movies, for the early Planet of the Apes movies, I could go on and on.
Speaker Change: On the movie side, we've talked a lot about the creative improvements that our studio has brought to bear and the quality of the IP and the known quality of our IP.
Speaker Change: And television, I can't say enough about how great our television business is.
Speaker Change: and others have been performing both in terms of the bottom line, but also in terms of creatively, you don't get 183 Emmy nominations by accident. That's the work of a lot of really great talented people, meaning on the management side working with a lot of talented creative people.
Speaker Change: So it's a balance, it's a mix, and I think it's one that you'll ultimately see really blended together as our streaming platform grows over time.
Speaker Change: Thank you. And our next question comes from Steven Cahall with Wells Fargo. Please go ahead.
Stephen Cahill: Thanks. So Hugh, you've talked about DTC getting to double digit margins with the big price increases and the page sharing efforts coming. I was wondering if you could just update us on your thinking. We'd love to get some timing around double digit margins if that's something you're comfortable with at this point, but any context would be helpful. And then just on parks, as we think about cruise ship pre-opening costs in there, what's implied in the fourth quarter? And as we think about cruise pre-opening costs in fiscal 25, what do those look like? I think you'll sail the treasure, but you've still got the adventure and the destiny. I think the Singapore dock is a little heavier on costs, so I'd just love to understand that component. Thank you.
Speaker Change: The levers haven't changed. And frankly, we're we're actually doing quite well with them. Bundling has had a positive impact on churns. So from that perspective, obviously, that that helps us with growth, which is one of the drivers.
Hugh Johnston: That's also going to be helpful in terms of driving growth. We've announced pricing, and we feel good about all of the value that we're providing to consumers with all the content that Bob mentioned earlier and all the content that's still to come. We do feel like we've earned that pricing in the marketplace, and we feel positively about that. With that will come scale benefits. The product improvements should also reduce churn and keep our consumers with us as they're evaluating their options.
Speaker Change: We've announced pricing and we feel good with all of the value that we're providing to consumers with all the creative that Bob mentioned earlier and all the creative that's still to come. We do feel like we've earned that pricing in the marketplace and we feel positively about that.
Hugh Johnston: And then, obviously, we're going to look at the entire cost structure and continue to drive productivity. In terms of timing, there is no update on that. It's something that we've said we're approaching with great urgency. We still intend to do that. Obviously, I think we've made a ton of progress. We were losing a billion dollars a quarter not all that long ago, and now we're making money. And our expectation is that we're going to continue on that journey to making more and more money to get to and then ultimately well surpass the double-digit margins that we've talked about.
Speaker Change: And then obviously we're going to look at the entire cost structure and continue to drive productivity.
Speaker Change: In terms of timing, no update on that. It's something that we've said we are approaching with great urgency. We still intend to do that. Obviously, I think we've made a ton of progress. We were losing a billion dollars a quarter not all that long ago, and now we're making money. And our expectation is we're going to continue on that journey to making more and more money to
Speaker Change: get to and then ultimately, well surpass the double digit margins that we've talked about.
Operator: Thank you. Next question, please.
Operator: All right, thank you. On sports, Bob, I wanted to see if you could give an update on strategic partner conversations for ESPN. Is this still a priority? And if so, can you refresh us on what you're looking for in terms of marketing or content? And then for Hugh, in the exact commentary, there are multiple references to tightly managing costs. So I wanted to see if you could expand on this. Where are you realizing savings now? How much opportunity is left? Thanks.
Speaker Change: I know I've sounded like a broken record because I've talked about strategic partnerships for ESPN over the last number of quarters. The only thing I can say is, believe it or not, we're still having conversations.
Speaker Change: About it, we thought and continue to believe there may be opportunities to partner with others.
Speaker Change: Particularly on the content side, and that's why we've continued to explore it, but nothing more to add.
Hugh Johnston: And regarding cost, recall our original cost estimate was five and a half billion. We raised that to in excess of seven and a half billion. Look, in big companies, my worldview is there's always opportunity to do more with less. So we're going to continue to go after it aggressively as we can to both deliver the bottom line and to invest back in the business with all the great opportunities we have.
Speaker Change: Right. And regarding cost, recall our original cost estimate was $5.5 billion. We raised that to in excess of $7.5 billion. Look, in big companies, my worldview is there's always opportunity.
Unknown Speaker: Unknown Speaker
Speaker Change: Thank you. Next question, please.
Speaker Change: Thank you. And our next question today comes from John Hodulik with UBS. Please go ahead.
Speaker Change: Attendance vs. Per Caps
Speaker Change: You know the lower income consumer is feeling a little bit of stress the high income consumer is traveling internationally a bit more, I think you're just going to see more of a continuation of those trends in terms of the top line, and then the bottom line, it'll be reflective of the fact that, you know we've got some one time costs coming in and going out, both this year and last year. I do expect to see international strength. in Disneyland Paris, is obviously felt some challenge due to the Olympics.
Speaker Change: Not a surprise, but something that happens. And the good news is the Olympics are over in a couple of weeks. And the booking will certainly look good in that regard. So overall, feeling positively on that front.
Unknown Speaker: Thank you. Good morning, guys.
Speaker Change: We generally think of Parks Vacations as being booked pretty well in advance.
Speaker Change: Regarding visibility, we do have very good visibility, which is why I'm emphasizing these are really all changes at the margins, daily visitors and late bookers and things like that. Looking forward, we have very good visibility into the book that we're expecting, which is why I've got a good level of confidence in the projections that I'm sharing with you.
Speaker Change: Thank you. Next question, please.
Speaker Change: Our next question today comes from Brian Kraft at Deutsche Bank. Please go ahead.
Brian Kraft: Hi, good morning. Head to if I could just first on advertising, you highlighted the strong results from the upfront this year, which is very encouraging. But I wanted to ask what you're seeing more immediately in terms of advertising demand today, given some of the macro pressures that have recently come to light.
Speaker Change: And then just on the content sales and licensing part of the business, the press release mentioned increased sales of TV content and content sales, licensing and other as a driver of DOI performance this quarter.
Speaker Change: Sure. Happy to talk about it. Ad market is actually very healthy right now. We saw overall advertising grow 8% for the quarter. ESPN was up 17%. DTC streaming was actually up 20%.
Speaker Change: Financial services, consumer products doing very well, consumer services.
Speaker Change: What's up kids! The ad market is really strong and healthy for us. A lot of that is a product of the fact that we have LiveSports and the fact that our streaming service is doing so well in terms of the IP that we have. It's an attractive audience. We also have a new capability called Disney streaming that allows us
Speaker Change: to basically sell across our platforms very effectively. We're selling audiences rather than just selling streaming channels, which enables advertisers to more effectively target the audiences that they're seeking. So from a technology perspective, we're seeing good payback.
Speaker Change: The second piece was around licensing.
Speaker Change: Yeah, the licensing numbers that you see are mostly a reality around the fact that we've had so much success at the box office. That's really what's driving things more than anything else. No change in our licensing strategy, which has been pretty clear. The things that we consider core IP to the company, we don't license. There are things that are non-strategic, we'll continue to license tactically, but it's not a big strategy for us. The big strategy is producing our own IP and monetizing it.
Speaker Change: Thank you. Operator, we have time for one more question.
Speaker Change: Yes, ma'am. Our next question comes from Kannan Venkateshwar with Barclays. Please go ahead.
Kannan Venkateshwar: Maybe if you could just step back and, you know, talk about what kind of growth impact do you expect maybe over the next two or three years and
Speaker Change: We feel very, very good about it. It's been a great returning business for a long time. So while I'm not here to give you long-term guidance in terms of that segment of the business, we wouldn't be making capital investments in an accelerated way if we didn't expect to accelerate growth out of those businesses. And that's true of the cruise ships as well. Now, keep in mind,
Speaker Change: The lead time on investments in this business are multiple years. So, when exactly all of that manifests, we'll share with you as we go along. But obviously, we're investing because we're looking to accelerate growth, hence the term turbocharge. Regarding the...
Speaker Change: The India question, we'll share that when we close the deal. I think that's the right time to do it and we'll lay it out for you all very clearly so that you can model it very, very effectively.
Speaker Change: Okay, thank you. Thanks for the questions. And I want to thank everyone for joining us today.
Speaker Change: Let me also remind you that certain statements on this call, including financial estimates or statements about our plans, guidance or expectations and drivers,
Speaker Change: Inc, Future Revenues, Profitability, DTC Subscribers, Free Cash Flow, Adjusted EPS and Capital Allocation, and other statements that are not historical in nature may constitute forward-looking statements under the securities laws.
Speaker Change: These factors include, among others,
Speaker Change: In particular, our expectations regarding DTC profitability, subscriber levels, and ARPU are built on certain assumptions based on the future strength of our content slate.
Speaker Change: technological advances, and paid sharing efforts, our ability to continue to rationalize costs while preserving revenue, and macroeconomic conditions, all of which, while based on extensive internal analysis as well as recent experience, provide a layer of uncertainty in our outlook.
Speaker Change: For more information about key risk factors, please refer to our Investor Relations website, the press release issued today, and the risks and uncertainties described in our Form 10-K , Form 10-Q , and other filings with the Securities and Exchange Commission.
Speaker Change: [music].
Robert Iger: So when we look across our portfolio of IP, and this includes Disney branded, Fox branded, obviously everything that's on Hulu, programming from FX, programming from ABC, National Geographic, you know, what we're basically seeing is we're seeing growth in consumption and the popularity of our offerings, which gives us the pricing leverage that we believe we have. So every time we've taken a price increase, we've had only modest churn from that, and nothing that we would consider significant.
Unknown Speaker: I wanted to ask you about ARPU at Domestic Disney+. It did slip a little bit in the quarter, and you cited the impact of the subscriber mix shift. Are you saying that that's a function of bundling in terms of mix shift, or is it mix shift to the ad-supported tier? And if so, can you talk a little bit about what you're seeing in the CTV environment, and how you're performing there? And just one follow-up on the experiences segment.
Robert Iger: You know, we believe that as we add these new features like the channels that we're going to be adding later this year and the success of our movie slate, and I'll get into that a little bit more, that the pricing leverage that we have has actually increased. We're not concerned. The goal is to grow engagement on the platform, and what I mean by that is obviously offering a wider variety of programming, which is why we're adding news, why we're adding the ESPN title to it, while we're bundling aggressively to give consumers the ability to buy across all of our basically creative engines.