Disney's Long-Term Content Investment Strategy and Margins Outlook
Management discussed the importance of creating new IP while leveraging existing franchises, emphasizing a balanced approach.
The company is investing in original content under the 20th Century Fox and Searchlight banners to diversify its portfolio.
There is a focus on international markets, with increased content spend aimed at growing engagement and subscriptions abroad.
While current DTC margins are around 6%, management sees significant potential to accelerate content investment to gain market share and improve long-term profitability.
FX-Driven Revenue Growth and Underlying Business Strength
Full-year revenue guidance increased to $44.8-$45.2 billion, primarily due to FX impact from a weakening dollar.
Underlying business shows healthy member growth, especially in late Q2, and momentum in ad sales, which is on track to double revenue from ads this year.
Operating expenses are largely unchanged, allowing revenue increases to flow through to profit margins, with the full-year margin target raised from 29% to 30%.
Paramount's Strategic Shift to Streaming-First Model
Paramount has fully committed to transforming into a streaming-first company, with significant growth in Paramount+ subscribers, reaching 77.7 million, up 9.3 million year-over-year.
The company emphasizes a content strategy focused on high-quality original hits rather than volume, which has driven subscriber engagement and revenue growth.
Paramount+ revenue increased 23% year-over-year, with a record number of top 10 SVOD originals, and the platform is now profitable in the U.S. faster than many peers.
The shift is supported by a leaner organizational structure, with over $800 million in annual cost savings achieved through redundancies reduction.
Paramount's content strategy includes launching new hit series like Landman, Yellowjackets, and the Yellowstone franchise extension, aiming to sustain subscriber growth and engagement.
Strategic Revenue Management and Partnership Expansion with Disney and National Geographic
Implementation of new revenue management capabilities and strategic pricing architecture.
Enhanced partnership with Disney leading to a 45% increase in bookings from Disney travel advisers and enabling Disney Vacation Club members to redeem points for cruises.
Launch of National Geographic Refrain Travel campaign increasing search volumes by 122%.
Reactivation of youth travel program 'Explorers and Training' targeting multigenerational travel, with nearly 25% of travelers under 16 during peak seasons.
Strategic Acquisition of 9 Story Media Group and Content Monetization
Scholastic acquired 9 Story Media Group early in fiscal 2025, significantly enhancing its content reach and monetization, especially on streaming platforms.
Integration of 9 Story has led to increased engagement on YouTube, with average view durations exceeding 20 minutes, tripling the norm for children's content.
Development of new series for YouTube, including collaborations based on Bob Books, aiming for launch in fall 2026.
Content strategy focuses on building a robust pipeline of IP-based content for global streaming platforms, leveraging 9 Story's assets.
Dafinchi
