that “Avatar: The Way Of Water” will be released in China on Dec. 16, the same day it is slated to be released globally, according to people familiar with the matter.
Executives at Disney and at movie-theater chains had been closely watching for a decision from Chinese censors on the movie, director
James Cameron
‘s sequel to the 2009 science- fiction epic. It will be distributed by Disney-owned 20th Century Studios.
“This is fantastic news for Disney, for
James Cameron
and for the movie, because the potential box office from China is enormous,” Paul Dergarabedian, senior media analyst at Comscore, said in an interview. “This may be the pivotal moment that indicates that ‘Way of Water’ will earn enough money to justify further installments of the Avatar franchise.”
The last seven superhero films produced by Marvel Studios, Disney’s most-profitable film studio over the past decade, haven’t received release dates in the crucial China market, denting the global box-office gross.
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In July, for example, Disney cited the lack of a China release for “Thor: Love and Thunder,” the fourth solo film featuring Chris Hemsworth’s Thor character from the popular Avengers superhero team, as one reason the movie underperformed at the international box office.
Disney and other Hollywood studios have run up against Chinese censors in recent years, especially when their movies deal with sensitive political themes or when actors or directors make statements that Chinese authorities find objectionable.
Two recent Marvel films were blocked from release in China after comments that the Chinese government viewed as insulting, made by the director of one movie and a star actor of the other, were unearthed and circulated in the country.
While Disney hasn’t revealed the “Avatar” sequel’s budget, Mr. Cameron, the director, said in a recent interview in GQ magazine that the “Avatar” sequel was “the worst business case in movie history” and that it would have to be the third- or fourth-highest-grossing film in history just to break even. Disney has said that it plans to make five Avatar movies in total.
The first Avatar movie from 2009 grossed nearly $2.9 billion worldwide, with $259 million of that total coming from China, making it the highest-grossing movie of all time. It narrowly edged out Marvel’s “Avengers: Endgame” after a September 2022 rerelease of the movie added $73 million in ticket sales, according to Comscore, a box-office tracker.
It sparked a boom in multiplex construction in China, as Chinese audiences flocked to see the film in 3-D and government authorities sought to encourage consumers to spend more money in shopping centers.
Theaters saw lines for the first “Avatar” up to six hours long, and scalpers sold tickets for $100 apiece, according to
Richard Gelfond,
chief executive of the movie technology company
IMAX Corp.
In Beijing, Chinese authorities closed an IMAX theater so high- ranking party members could watch it at a private screening, he said. Before the 2009 movie, IMAX had 14 screens in China, but now has 800, with 200 more contracted to be built.
“Everything changed after ‘Avatar,’” Mr. Gelfond said. “It was really the match that lit the entire movie industry” in China.
All the Disney princessesPhoto: Olga Thompson (Walt Disney World Resort via Getty Images)
Now that another Disney+ Day has come and gone, we can get on to the meat of Disney’s big weekend: The D23 Expo, where the greatest fans in the world can get a look at the stuff they’ve already seen before but now reimagined.
Kicking off the day was Cynthia Orivio, our new Blue Fairy, who reminded the audience that there was a new version of Pinnochio currently being memory-holed on Disney+. Continuing the theme that these sorts of things were now the order of the day, Disney Studios chairman Alan Bergman took the stage to remind us that these reimaginings, such as The Lion King, Beauty And The Beast, Cinderella, and Cruella, were “iconic.” We assume he meant that the movies use “iconic imagery,” but regardless, more of these iconic reimaginings and sequels are coming down the pike.
Bergman then brought Walt Disney Studios president Sean Bailey out to take us through the upcoming ways they’re reviving old brands.
Don’t worry: Hocus Pocus 2 and Disenchanted are still coming
First up were the sequels. Hocus Pocus 2 debuts later this month, and since we already shared the trailer, we’ll move on to the other big sequel announcement: Disenchanted. Don’t get it twisted with Matt Groening’s Netflix comedy Disenchantment. This is a sequel to the wonderful Amy Adams comedy Enchanted from 2007. The whole cast is back, including Adams, Patrick Dempsey, Adele Dazeem Idina Menzel, and James Marsden. They’ve upped the ante by adding a Maya Rudolph, too. And now, there’s a trailer.
G/O Media may get a commission
Disenchanted lands on Disney+ on November 24, 2022.
Disenchanted | Official Trailer | Disney+
Reimagining the past is Disney’s future
The presentation was done round-robin style, with Bailey shuffling VIPs on stage for about five minutes, playing a clip, and then shuffling them off. So next up, Jude Law and the cast of Peter Pan & Wendy took the stage.
Directed by David Lowery, who directed one of the best films of 2021, The Green Knight, and Disney’s delightful remake of Pete’s Dragon, Peter Pan seems a bit more stylish than the other movies announced today. It’s still filled with nostalgic images pulled straight from the Disney vault, but also a distinct visual style, location shooting, and a fish-eye lens that won’t quit. So how will this differ from literally every other revisionist PeterPans fromthe last 20 years? Those got theatrical releases.
Our new Captain Hook, Jude Law, said that this version gets into the “backstory a little more” when Peter and Hook “were once friends.” But, again, it remains to be seen how this one will differentiate itself from the numerous other Peter Pans.
Perhaps the trickiest aspect of the movie is Tiger Lily, a character that hasn’t been treated with much respect by Disney in the past. Nevertheless, newcomer Alyssa Wapanatâhk said she was very “excited to have the honor” of playing Tiger Lily. “To be able to tell the story for her, that was phenomenal for me.”
Peter Pan & Wendy [sigh] hits Disney+ next year.
After pushing Peter Pan back to Neverland, Sean Bailey introduced the trailer of The Haunted Mansion and announced that Winona Rider was joining the cast. Director (and former Disneyland employee) Justin Simin also mentioned that “according to TikTok,” Jared Leto is playing the Hatbox Ghost. We await the horror stories from his fellow castmates about how hard he tried to fit into a hatbox for the role. But really, this one is for the real Hatbox heads.
“That script was funny and filled with interesting characters, but it had a little bit of like a dark edge to it,” Simin told the crowd at D23. “I just really related to it. I felt like I knew how to make it. I felt like I understood New Orleans. And, of course, I’m a fanboy. So I felt like I understood the ride, and I felt like I got a responsibility here to make sure all the little details, all the Easter eggs are there because I’m a nerd for real.”
Bailey brought out Oscar-winner Barry Jenkins for a sneak peek of Mufasa: The Lion King. Jon Favreau’s The Lion King made over a billion dollars, so that means people liked it. However, the “live action” animation in Mufasa probably won’t convert anyone turned off by the last trip to Pride Lands. Still, then again, Barry Jenkins is very good at making movies. Here’s what Barry Jenkins said about the film:
Mufasa is the origin story of one of the greatest beings in the history of the alliance. Mufasa, all caps. It’s a story told in a few different time frames. Rafiki, Timon, and Pumbaa, who we all know and love, are relating the story of Mufasa and how he came to a very beautiful, awesome, fantastic young cub. It’s a story about how Mufasa rose to royalty. We assume he was just born into his lineage. But Mufasa was actually an orphaned cub, who had to navigate the world alone. And in telling this story, we get to experience the real journey of how Mufasa found his place and the circle of life. It is pretty awesome.
I felt I had to make this movie because when I was 14, I was helping raise two nephews. And there was a VHS tape that we watched maybe 95 times in the span of 20 days. So I really knew this character. I loved him. But then as I was reading this wonderful script, I was thinking about Mufasa and why he’s great and how people become great. And it’s crazy. I am not a king, but when I make my movies, I was on stage at the Oscars with Moonlight, and I was there and five of my best friends from college were also there. And what you are learning the story is that Mufasa is who he is. He is great because of the family and the friends he has with them. And so I saw myself in that. I thought, this is a really beautiful story to tell.
For Marc Webb’s Snow White, Gal Gadot and Rachel Zegler took the stage to show some footage. There are no dwarves yet—and seeing as they were cut from the title, who knows what their role will be. Thus far, it looks similar to the other remakes, recreating the look of the animated classic. But we’ll need to see Dopey to know how scary this thing is going to look.
Similarly, Rob Marshall invited Halley Bailey on stage to show off The Little Mermaid teaser and a clip of “Part Of Your World.” It doesn’t look like all the effects are done yet, but right now, it’s reminiscent of Avatarand the “merman” commercial from Zoolander. On the other hand, Marshall did promise four new songs from Alan Menkin and Lin Manuel Miranda, so that’s something.
Pixar on Disney+
The director of The Good Dinosaur, Peter Sohn, is back, and he brought some clips and concept art for the next Pixar movie Elemental. Sohn described the film as “very personal” and that the germ of the idea came from his parents. “We immigrated to the U.S. from Korea in the early seventies,” Sohn said. “They had no money, no family, no English. But they managed to create a life in New York.”
Similarly, Elemental files a “fire family” assimilating in Element City, “where Earth, air, water, and fire are characters in our community.”
More Pixar is coming in 2023 as we got a little more information on Win Or Lose, the studio’s first television series. The show stars Will Forte as the coach of a ragtag little league baseball team, the Pickles, and the week leading up to their big game. Each episode will focus on a different character’s perspective, allowing for various animation styles.
Pixar also announced two new features Elio and Inside Out 2, which we wrote about here.
Wait! Disney also has some cartoons to share
Disney Animation Studios will not be outdone. Today, they showed clips of their upcoming series Zootopia+ and Iwájú.
Zootopia+ is a six-part series that, like Win Or Lose, focuses on a different character and genre in each episode with various animation styles—some of which look really cool and others like Pixar.
On the other hand, Iwájú is a downright historic collaboration between Disney and an outside animation studio. Jennifer Lee, the Chief creative officer of Walt Disney Animation Studios, retold the story of how she had read about a Nigerian animation studio that was going to take down Disney. So she did like many Disney execs before her and bought the competition.
With the team from Kugali, Disney will premiere the futuristic sci-fi series Iwájú next year.
Finally, Lee brought out the cast from their upcoming 61st animated feature, Strange World. Jake Gyllenhaal, Dennis Quaid, Jaboukie Young-White, and Lucy Liu star in an outer space adventure about a dysfunctional group of explorers. This one comes out on November 23.
Strange World | Teaser Trailer | Walt Disney Animation Studios
“Our film is inspired by some of the great adventure stories that we grew up with,” said co-director Don Hall. “Specifically stories about a group of explorers that stumble upon a hidden world.”
What are we most excited to discover? Jaboukie Young-White’s character, Ethan Clave, which Young-White described as “the vibe master” who makes “the vibe great.”
And that’s everything from the D23 Expo Disney Animation Studios and Pixar presentation. Check back tomorrow when Disney tries to bury us under a mountain of Star Wars and Marvel announcements.
to offer the entertainment company’s Paramount+ streaming service to subscribers of Walmart’s membership program.
Walmart has been exploring a subscription video-streaming deal to draw more people to Walmart+ as it seeks to challenge
Amazon.com Inc.,
which has grown its own Prime membership program to about 200 million global members.
The companies agreed to a 12-month exclusivity agreement and a two-year deal that would give Walmart+ members access to Paramount’s ad-supported streaming service, according to people familiar with the deal. The perk will be available starting in September, Walmart said.
Walmart’s announcement on Monday came after The Wall Street Journal reported the two companies had reached an agreement. Walmart is scheduled to announce quarterly earnings on Tuesday.
The deal is the latest tie-up in the fast-changing streaming industry, where a growing group of companies are looking to bundle content to draw viewers or customers. YouTube is planning to launch an online store for streaming video services and has renewed talks with entertainment companies about participating in the platform. YouTube, which is owned by
Alphabet Inc.,
would join
Apple Inc.,
Roku Inc.
and Amazon, which all have hubs to sell streaming video services.
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Walmart executives have held talks in recent weeks to discuss a streaming deal with executives at
Walt Disney Co.
,
Comcast Corp.
and Paramount Global, according to people familiar with the matter.
While this partnership is new, Paramount and Walmart have worked together for years. Paramount has had an office in Bentonville, Ark., dedicated to Walmart, which historically has been a big seller of its consumer products and home entertainment.
Paramount Global runs the Paramount+ service, which has shows such as “Halo,” the “Star Trek” series and “Paw Patrol.” The company said this month that Paramount+ had more than 43 million subscribers at the end of its latest quarter.
Walmart introduced Walmart+ in 2020 and aims to use the service to add new streams of revenue beyond selling goods, as well rival the success Amazon has had with its Prime membership services. A subscription to Walmart+ costs $12.95 a month or $98 a year and includes free shipping on online orders and discounts on gasoline. The retailer has added perks to build interest, such as six months of the
Spotify
music-streaming service.
Walmart said Monday that Walmart+ has had positive membership growth every month since its launch, without specifying membership numbers. A Morgan Stanley survey in May said the service has about 16 million members, compared with about 15 million the previous November.
Amazon has invested heavily to ramp up its own Prime Video service, adding original programming and live sports. Prime Video is included along with free shipping and other perks in its Prime membership, which costs $14.99 a month or $139 a year in the U.S. Amazon also recently added a year of Grubhub’s restaurant delivery services for Prime subscribers.
The deal would give Paramount+ a new avenue for growth in an increasingly competitive streaming market now that all of the major entertainment companies have streaming offerings and growth in the U.S. among many services, such as
Netflix Inc.,
has started to slow.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
The line between Amazon and Walmart is becoming increasingly blurred, as the two companies seek to maintain their slice of the estimated $5 trillion retail market while chipping away at the other’s share, often by borrowing the other’s ideas. Photos: Amazon/Walmart
and is calling on the media company to buy the rest of Hulu, explore spinning off ESPN and refresh its board.
Mr. Loeb on Monday said his firm, which liquidated a large Disney stake earlier this year, has repurchased a “significant stake” in the company and sent a letter to Disney Chief Executive
Bob Chapek
urging the company to engage with Third Point on a number of issues.
Mr. Loeb praised growth in Disney’s streaming subscriber base, but also wanted Disney to more aggressively cut costs and consider a number of steps to shake up its portfolio.
The investor’s calls come at an inflection point for Disney and the streaming industry at large, which enjoyed torrential growth during Covid-19 but now face headwinds that include financial losses, domestic subscriber saturation and the introduction of new ad-supported tiers.
Mr. Loeb also now represents a fresh challenge for Mr. Chapek, who assumed the CEO job in February 2020, one month before Covid-19 shut down his company’s theme parks and the nation’s movie theaters. Earlier this year, Mr. Chapek found himself under fire from his own employees and Florida Gov.
Ron DeSantis
over his response to the state’s bill known by opponents as the “Don’t Say Gay” legislation.
Mr. Chapek was renewed to a three-year contract this summer, and recent subscriber growth in Disney’s flagship service, Disney+, has shown the company is advancing on the streaming industry’s dominant player,
Netflix Inc.
A spinoff of ESPN—itself a source of paying subscribers through its ESPN+ offering—would radically alter Disney’s presence in the streaming ecosystem.
“We welcome the views of all our investors,” Disney said in response to Third Point’s letter. The company said its board has been continuously refreshed, “with an average tenure of four years.”
Third Point is pushing Disney to “make every attempt” to buy up
Comcast Corp.’s
CMCSA 1.26%
remaining minority stake in the streaming giant Hulu before its contractual deadline in early 2024. Under a 2019 agreement, Comcast can require Disney to purchase its NBCUniversal subsidiary’s one-third stake in Hulu by that deadline for at least $9 billion, assuming the streaming service has an equity value greater than $27.5 billion.
“We believe that it would even be prudent for Disney to pay a modest premium to accelerate the integration but are cognizant that the seller may have an unreasonable price expectation at this time,” Mr. Loeb’s letter says.
Disney and Comcast have been in a dispute over the value of Hulu, The Wall Street Journal previously reported. When Disney took majority control of Hulu in 2019, the service was valued at a minimum of $27.5 billion. Comcast believes the value of Hulu is now closer to $70 billion, people familiar with the matter have said.
The two companies have already started to unwind some aspects of their partnership. Comcast’s NBCUniversal earlier this year exercised an option to exit its content-sharing agreement with Disney, the Journal reported. Content from NBCUniversal that previously would have gone to Hulu after airing on NBC and NBC-owned cable channels will now go directly to Peacock, NBCU’s streaming service.
Mr. Loeb’s letter also states that there is a “strong case to be made” that Disney should spin off its ESPN business to shareholders to alleviate leverage at the parent company, despite ESPN’s centrality to the company’s streaming offerings and the significant free cash flow it generates.
Mr. Loeb suggests that synergies between Disney and ESPN could be replicated through contractual arrangements. A spinoff would drive better long-term value for Disney shareholders and result in a business “no longer haunted by the specter of cord-cutting,” the letter says.
Cord-cutting has driven Disney to make drastic changes to its business model in the past. In the summer of 2015, former Disney CEO
Robert Iger
acknowledged that the company was seeing “some subscriber losses” to ESPN. One year later, ESPN lost two million subscribers, dropping to its lowest count since 2005.
That steady decline became an albatross on Disney’s stock price, which fell as investors feared a future in which ESPN—once a top moneymaker—fell in relevance and revenue.
ESPN’s troubles—and Wall Street’s response to them—were one reason Mr. Iger would decide to launch his own streaming service. Disney+ premiered in the fall of 2019, and its rocketing growth in its first 18 months caused Disney shares to rise even as Covid-19 wrecked other parts of the business.
Hollywood has been rampant with rumors about the future of ESPN since those first indications of subscriber losses, with rivals speculating that a spinoff or sale was in its future. Today, the sports network is one of three core components of Disney’s streaming bundle, along with Disney+ and Hulu.
Disney+ has 152.1 million subscribers as of the most recent quarter, ESPN+ has 22.8 million and Hulu has 46.2 million.
Mr. Loeb’s letter also urges the company to rethink the makeup of its board and consider a list of potential new members that Third Point has compiled. It also advocates for a wide-ranging cost-cutting program and the continuation of Disney’s pandemic-era suspension of cash dividend payments.
Mr. Loeb has been a thorn in the side of studio chiefs before. In 2013, he bought a stake in
Sony Group Corp.
and publicly criticized the company’s movie arm, Sony Pictures Entertainment. He called on the company to make cuts to the division and introduce “discipline and accountability.”
Soon after Mr. Loeb’s disclosure of a 7% stake, Sony Pictures’ then-CEO pledged to find at least $350 million in annual savings. Mr. Loeb sold his stake about a year later, but has called on Sony to make changes to its entertainment division in the years since.
Last week, Disney reported better-than-expected earnings and added 14.4 million new subscribers to its Disney+ streaming service, many of which came to the service amid its expansion internationally.
The company’s new customer additions brought its total at all of its streaming services, including Disney+, Hulu and ESPN+, to 221.1 million subscribers, which puts Disney’s streaming total narrowly ahead of rival Netflix Inc., which last month reported it had 220.67 million subscribers.
Disney’s share price is up more than 12% in the past week, but remains down about 20% since the start of the year, amid a broad pullback in technology and media stocks.
Last week, Disney also announced price increases to its streaming services, including for its planned ad-supported tier of Disney+, a move that industry executives and analysts said is intended to help drive profitability at its streamers.
Disney, whose direct-to-consumer segment has lost more than $7 billion since Disney+ launched in late 2019, predicts that Disney+ will achieve profitability by September 2024.
“We have plenty of room on price value,” Mr. Chapek said last week.
Third Point previously held 4.1 million shares of Disney and successfully pushed the company to suspend its $3 billion annual dividend and plow the funds instead into the streaming business.
But by the first quarter of this year, the hedge fund had completely exited its position. Mr. Loeb had become worried that it would take years for Disney’s streaming business to reap the profits needed to boost the company’s share price, a person familiar with his thinking told The Wall Street Journal in May.
Since 1967, the Florida land housing Disney’s theme parks has been governed by the company, allowing it to manage Walt Disney World with little red tape. WSJ’s Robbie Whelan explains the special tax district that a Florida bill would eliminate. Photo: AP
Write to Dean Seal at dean.seal@wsj.com and Erich Schwartzel at erich.schwartzel@wsj.com
The growth-at-all-costs phase of the streaming wars is over; now, profits are the priority.
Faced with slowing subscriber growth in their core domestic markets, some streaming services are shifting their focus from adding users to increasing their bottom line. The result is that streamers such as
Walt Disney Co.
DIS 4.68%
,
Netflix Inc.
NFLX -0.58%
and
Warner Bros. Discovery Inc.
WBD 4.43%
are each doing some combination of reducing costs, raising prices and creating new ad-supported tiers that offer content at lower prices to consumers but also establish a new revenue stream for the companies.
The streaming providers said the price increases are warranted because of the amount of content offered. “We have plenty of room on price value,” Disney Chief Executive Officer
Bob Chapek
said Wednesday.
The price increases come as growth has stalled domestically, usually the most-profitable market for streamers. Just 100,000 of the 14.4 million net new subscriptions to its flagship Disney+ service in the most recent quarter came from the U.S. and Canada. Of the rest, about eight million came from India, while about six million came from other countries, including 52 new markets where Disney+ has launched since May.
“Domestically, Disney+ is tapped out,” said analyst Rich Greenfield of LightShed Partners. “Disney is operating under the belief that, just as in their theme parks, they can raise prices dramatically and count on customers not dropping the service.”
Disney said that in early December it will raise the price of its ad-free, stand-alone Disney+ service in the U.S., to $10.99 a month from $7.99, and the company will begin offering an ad-supported tier for Disney+, starting at $7.99. The company also announced increases to one of its bundle packages.
In addition, the company scaled back its projections for total global subscribers to Disney+, largely in response to lower anticipated growth in India, where Disney recently was outbid for the right to stream matches from a popular cricket league.
Markets welcomed news of the price increases and the company’s better-than-expected quarterly results. Shares of Disney rose 4.7% on Thursday to close at $117.69.
Investors and analysts expect higher subscription costs and the introduction of ads to Disney+ to result in higher profits from the streaming segment, but add that price increases risk alienating some customers and increasing the platform’s churn rate, or the percentage of users who cancel the service each month. The U.S. churn rate for Disney+ is already on the rise, increasing to 4% in the second quarter from 3.1% a year earlier, according to the media analytics firm Antenna.
“We do not believe that there’s going to be any meaningful long-term impact on our churn,” Mr. Chapek said about the price increases. He said Disney+ was one of the lowest-priced streaming services when it launched, and has become more valuable over time as it has added more popular shows and movies.
Other companies that focus on streaming video are making similar moves. Warner Bros. Discovery, the newly formed media giant that owns the premium television service HBO and the streaming services HBO Max and Discovery+, reported last week that it had added 1.7 million new subscriptions. As with Disney, about all of Warner Bros. Discovery’s subscription growth came from overseas—its direct-to-consumer segment lost 300,000 domestic subscribers in the quarter.
David Zaslav,
the newly formed company’s CEO, has taken an ax to Warner Bros. Discovery’s spending, scrapping multiple high-budget movies that were in production or near completion and destined for release on HBO Max, including “Batgirl” and “Wonder Twins,” after deciding that the best return on capital for them was a tax writeoff.
“Our focus is on shaping a real business with significant global ambition but not one that solely chases the subscribers at any cost or blindly seeks to win the content spending wars,” said JB Perrette, Warner Bros. Discovery’s head of streaming, on a call with analysts last week.
Warner Bros. Discovery said it expects losses in its streaming business to peak this year, and expects profitability for the segment in 2024. Similarly, Disney, whose direct-to-consumer segment has lost more than $7 billion since Disney+ launched in late 2019, predicts that Disney+ will achieve profitability by September 2024.
Warner Bros. Discovery has signaled it will launch an ad-supported tier of HBO Max next year. The company has alluded to a new pricing strategy focused on the goal of streaming profitability, but it hasn’t revealed pricing details.
“We will shift away from heavily discounted promotions,” Mr. Perrette said.
At Netflix, customer defections jumped after it raised the price of U.S. plans by $1 to $2 a month earlier this year. In the U.S. and Canada, the company lost 1.3 million subscribers during the second quarter, more than twice the 640,000 it lost in the region in the first quarter. Like Disney+, Netflix is now looking to increase the revenue per user that they draw by selling ads.
Doing so helps streaming services make more money from their existing customer bases, while offering an alternative to price hikes, according to industry analysts.
Existing subscribers to Disney+ will be automatically put into the ad-supported tier unless they elect the higher-priced ad-free version, and some shows, such as “Dancing with the Stars,” will stream with no ads on any tier, a Disney executive said. Disney said that in general, the ad load on Disney+ will be lighter than that of other services, and will benefit from consumers who cancel cable subscriptions and replace them with streaming services.
Netflix said in July that it expected some loss of customers following a price hike and that customer departures are returning to the levels where they were before the increase.
The Los Gatos, Calif.-based company has said its coming ad-supported tier of service is likely to appeal to more-price-conscious customers who are willing to pay less in exchange for viewing ads. Netflix hasn’t said how much its ad-backed tier will cost, but it is expected to charge less than the most basic plan that is currently available, which costs $9.99 a month for a single viewer with the lowest video-resolution quality.
While there has been an overall slowdown in net subscriber growth in the U.S. and more consumers jumping between streaming services, the amount of time people spend watching streaming content continues to grow, said Marc DeBevoise, CEO of the video technology company
Brightcove.
That trend makes selling ads a more attractive strategy for streaming services, he said.
“There aren’t more people to get to subscribe, but there are more hours to capture,” he said. “It is still a growing pie of total viewership.”
Write to Robbie Whelan at robbie.whelan@wsj.com and Sarah Krouse at sarah.krouse+1@wsj.com
Corrections & Amplifications JB Perrette is Warner Bros. Discovery’s head of streaming. An earlier version of this article incorrectly said J.B. Perette. (Corrected on Aug. 11)
reported a better-than-expected 26% jump in revenue Wednesday, driven by record results at its theme parks division and the addition of more new subscribers than projected to its flagship streaming video platform Disney+.
Disney’s results highlight the complex dynamics of the competitive streaming landscape. The company lowered its forecast for future Disney+ growth, raised the prices on its streaming offerings, outlined plans for a new ad-supported tier of Disney+ and said nearly all of the streaming service’s growth is coming from overseas.
The company’s earnings this quarter reflect the difficulties it and rivals, such as
Netflix Inc.,
face in attracting new customers domestically, where streaming options abound and many households use one or more services. Plus, in an increasingly difficult economic environment, some households are rethinking spending on in-home entertainment, industry analysts have said.
Chief Executive
Bob Chapek
said he didn’t think the price changes would result in any meaningful loss of streaming customers. “We believe that we’ve got plenty of price value room left to go,” Mr. Chapek said.
On the company’s call with analysts, Chief Financial Officer
Christine McCarthy
ratcheted down its forecast for Disney+, saying it now expects a total range of 215 million to 245 million subscribers by September 2024, in part because it lost the right to air popular Indian cricket competitions.
A few months ago, Mr. Chapek said the company’s previous target of 230 million to 260 million, set by the company in December 2020, was “very achievable.”
In the three-month period ended July 2, Disney+ gained 14.4 million new subscribers, bringing its global total to 152.1 million subscribers. Analysts were expecting 10 million additions, according to
FactSet.
Wednesday’s report brings Disney’s total subscriber base to 221.1 million customers across all of its streaming offerings, including ESPN+ and Hulu, surpassing Netflix, its chief streaming rival, in total customers. Netflix last month reported it had 220.67 million subscribers.
Disney shares rose about 7% in after-hours trading to $120.11.
Overall for the third quarter, the world’s largest entertainment company reported profits of $1.41 billion, or 77 cents a share, up from $918 million, or 50 cents a share, in the year-ago period. Revenue increased to $21.5 billion, above the average analyst estimate of $20.99 billion on FactSet.
Since 1967, the Florida land housing Disney’s theme parks has been governed by the company, allowing it to manage Walt Disney World with little red tape. WSJ’s Robbie Whelan explains the special tax district that a Florida bill would eliminate. Photo: AP
Sales at the parks, experiences and products division—which includes Disneyland, Walt Disney World and four resorts in Europe and Asia and has historically been Disney’s most profitable segment—reached $7.4 billion for the quarter, a record, and was up 70% from a year earlier. The division posted profits of $2.2 billion for the quarter, up from $356 million a year ago.
“Demand has not abated” at the parks, Ms. McCarthy said. Since reopening in 2021 after pandemic-related closures, Disney’s theme parks haven’t been running at full capacity, but a new online reservations system and ride-reservation apps have helped the company better respond to demand and generate more revenue per visitor.
Over the past year, CEO Bob Chapek and other top Disney executives have signaled an increased focus on international markets for growing its streaming business.
Photo:
Laurent Viteur/Getty Images
Ms. McCarthy said that if economic conditions worsen, Disney could tweak the reservation system to allow more visitors in on certain days, but as of now, demand is outstripping available spots.
Disney’s direct-to-consumer segment, which includes video streaming, lost $1.1 billion in the third quarter, widening from a loss of $293 million a year earlier. Since Disney+ launched in late 2019, the segment has lost more than $7 billion. On Wednesday, Ms. McCarthy said Disney’s estimate for overall spending on content for fiscal 2022 had fallen slightly, from $32 billion to $30 billion.
Disney gave a launch date of Dec. 8 and outlined pricing information for its previously announced ad-supported tier of Disney+ in the U.S., a new product designed to expand the reach of the company’s streaming business.
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The price of the ad-free stand-alone Disney+ service will rise from its current level of $7.99 a month in the U.S. to $10.99 a month, or $109.99 a year. The new, basic Disney+ service with ads will cost $7.99 a month.
The premium Disney streaming bundle, which includes ad-free versions of Disney+ and Hulu, as well as a version of sports-focused ESPN+ with ads, will remain at its current price of $19.99 a month in the U.S., while a bundle that includes all three services, but with ads on Hulu, will rise in price by $1 a month, to $14.99.
Mr. Chapek defended the price increases, saying that when it was launched, Disney+ was among the most competitively-priced streaming offerings and that the company has added more and higher-quality content to the service.
“I think it’s easy to say that we’re the best value in streaming,” Mr. Chapek said Wednesday.
Over the past year, Mr. Chapek and other top Disney executives have signaled an increased focus on international markets for growing its streaming business. Disney is spending heavily to produce hundreds of local-language television shows in countries such as India, and over the summer, Disney+ launched in 53 new countries and territories, mainly concentrated in Eastern Europe, the Middle East and North Africa.
Pricing for a Disney+ subscription in many of these new markets runs below the $7.99 a month that American customers pay. Still, Disney+’s average monthly revenue per paid subscriber—a key metric in streaming businesses—stood at $6.27 in North America, compared with $6.29 internationally, excluding Asia’s more inexpensive Disney+ Hotstar service.
Disney+ Hotstar, the service used by Disney’s 58.4 million subscribers in India, produces just $1.20 a month per user. Some analysts and former Disney executives predict that losing cricket streaming rights will result in millions of canceled accounts over the next year.
The flagging growth of North American Disney+ subscriptions is likely the result of a glut of content being released by in movie theaters and on a proliferation of streaming services, as well as fatigue the Star Wars and Marvel superhero movie franchises, said Francisco Olivera, a Disney shareholder who manages a small family fund based in Puerto Rico that has about 15% of its holdings in Disney stock.
The addition of an ad-supported tier, higher prices and possible further integration of the Hulu service in the future, could help reduce subscriber churn and make it easier to achieve profitability, he said.
“It’s a healthier market right now with the parks recovering, so they’re really flexing their muscles on pricing,” Mr. Olivera said.
—Sarah Krouse contributed to this article.
Write to Robbie Whelan at Robbie.Whelan@wsj.com
Corrections & Amplifications Disney+ launched in 53 new countries and territories over the summer. An earlier version of this article incorrectly said it launched in 54. (Corrected on Aug. 10)
The lineup of games showcased during last night’s PlayStation State of Play was a clear W for gamers from all walks of life, whether they be VR vampire dommy mommy enthusiasts, roller derby fanatics, or fighters who’ve finally crossed the street into the open-world. However, one game’s journey joining PlayStation’s stacked roster of game announcements was as anime as its own wacky premise. That game being Eternights.
Eternights, developed by Studio Sai, is a hack-and-slash JRPG that takes place in a post-apocalyptic world where a mysterious infection transformed humans into rampaging monsters. As you can see from its announcement trailer, Eternights is chocked full of all the things that make a JRPG great: You’ve got your cool protagonists with magical powers, dungeons riddled with traps and puzzles, and trusty party members who you can hold down the R2 button to hold hands with while watching the sunset–wait (checks Steam page) Oh, Eternights is also a dating sim. Right on.
Yes, that’s right. Love bay bay. Alongside Eternights blitzing anime-esque JRPG action, you’ll also be “fighting for those you love” in your downtime, scheduling dates and growing closer with the boys and girls in the apocalypse. After all, you’ve got two hands that can apparently grow back from dismemberment; why shouldn’t you use them to fight for a cure for humanity while also holding hands with one of the five cute survivors in your party?
Alongside some moderately spicy visual novel artwork during romantic scenes, Eternights also has 2D-animated cutscenes that change depending on which girl or guy you date. But time is of the essence. You can utilize it by deepening your relationship with your companions while also unlocking new skills (just like in real life), scouring the land for live-saving supplies, or simply saying “miss me with that BS” and Leeroy Jenkins-ing yourself into the first dungeon you see. To each their own.
If you’re thinking that a JRPG that doubles as a dating sim sounds awfully similar to the works of the Persona series, you’d be correct. In fact, after playing Persona 5, Persona 4 Golden, and Persona 3 FES, Eternights’ developer quit their job as a technical artist at Apple to pursue making their game.
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Growing up playing games Final Fantasy VII, FFVIII, and FFX, Studio Sia founderJae Hyun Yoo told Kotaku that the time spent building deep romantic connections with a small group of characters while dealing with the real-world time management of a calendar resonated with them the most.
“Creating those experiences [in Eternights] was [my] main desire,” Yoo said.
Eternights trailer featured quick time events as well as elemental power-based combat. Screenshot: Studio Sai / Kotaku
Yoo has an impressive resume. Prior to Apple, he worked as an engineer at Thatgamecompany and as a FX animator at Walt Disney Animation Studios. To give you an idea of Yoo’s chops, he worked on Elsa’s dress transformation in Frozen, portal magic in Big Hero 6, and the pixelated destruction of Sugarland in Wreck It Ralph.
The first footage the internet ever saw of Eternights was in a 2019 r/Unity3D subreddit post by Yoo. Back then, Eternights went under the project name Kafka and was described as Persona meets Devil May Cry. Jae posted the game having a calendar system, time management, and relationship-based gameplay with its RPG bits replaced by hacking and slashing.
Outside of fielding questions about 3D model rigging and sharing inspirational videos from Persona series director Katsura Hashino, Jae posted a series of updates on Eternights. These updates include Persona-inspired character introduction trailers, early animation cels of the trailer’s My Hero Academia-inspired punch, and battle footage.
“I remember my mom being worried about [Eternights],” Yoo said. “I guess she was relieved a bit yesterday.”
Nothing’s more anime than coming into your own after finding inspiration from the greats that come before you. Plus, having your debut game showcased alongside the likes of Final Fantasy XVI and Resident 4 Remake is pretty nutty.
“I hope you’ve enjoyed this first look at our debut game,” Jae said in a PlayStation blog post. “As a storyteller, I’ve always wanted to mix a love story with adrenaline-driven action. I wanted players to have a strong, personal reason to drive them forward in combat encounters and to feel they were fighting for more than just their own survival–they were fighting for those they love.”
Eternights is poised to carry the torch from Persona like gaming’s Prometheus passing on the fires of combat and romanceable party members with the masses. I can’t wait to hold hands and–dare I say smooch some waifus and husbandos–oh and also save the world when Eternights releases.
Eternight is slated to release in early 2023 on PlayStation 4, PlayStation 5, Nintendo Switch, and PC.
Updated: 6/3/22, 5:30 p.m. ET: This post has been updated to incorporate responses from the developers.
Cinderella, Elsa and their friends are moving back in with Barbie.
Mattel Inc.
MAT 9.05%
has won the license to produce toys based on
Walt Disney Co.
DIS 0.59%
’s princess lineup and from the recent blockbuster “Frozen” franchise, wresting the properties back from its rival
Hasbro Inc.,
HAS -2.23%
according to Mattel executives.
The deal reunites the characters with their previous home. Mattel lost the license to Hasbro in 2016, a financial and symbolic setback that precipitated a period of four chief executive officers at Mattel and compounding challenges as they tried to fill the $440 million hole from losing the business.
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Much has changed since then. Mattel CEO
Ynon Kreiz,
who joined in 2018, has stabilized operations with over $1 billion in cost cuts, overhauled leadership, revived key brands such as Barbie and rebuilt relationships with Hollywood studios. Since the day the Disney properties walked away, Mattel executives vowed to win them back.
“It was an important priority, and it’s something we worked hard to win,” Mr. Kreiz said. Mattel showed it could manage evergreen brands that aren’t dependent on big movies, he said.
Mattel will start selling new Disney toys in 2023, and the business will be managed by the same group that has overseen Barbie’s comeback. Financial terms of the deal weren’t disclosed.
For Hasbro, the change comes as the maker of Nerf guns and Monopoly games is making the transition to a new CEO following the death of its longtime leader,
Brian Goldner,
last year. Under his watch, Hasbro surpassed Mattel in annual sales and made an unsuccessful approach to take over its rival.
Hasbro declined to comment on losing the Disney princess and “Frozen” line but said it renewed its Star Wars license recently and will soon start making Indiana Jones toys too. Both are properties of Lucasfilm, which is owned by Disney.
Hasbro’s products inspired by Disney movies included a princess pop-up play set.
Photo:
Charles Sykes/Invision/Hasbro/Associated Press
Shares of Mattel jumped about 8% in early morning trading, after The Wall Street Journal reported on the deal. Shares of Hasbro slipped about 2.5%.
Mattel’s loss of the Disney license originally represented a high-profile fracturing of a relationship between one of the largest toy manufacturers and one of the most powerful companies in entertainment. It was a rare dust-up between companies whose founders worked together since the 1950s, when Mattel advertised toys during the “Mickey Mouse Club” show.
In the early 2010s, Barbie was floundering, with sales dropping for several years. Mattel devoted more resources to shoring up its marquee property. Disney’s princess dolls, meanwhile, were managed by a separate team in a competing unit.
Then, in 2013, Mattel came up with a toy line called Ever After High, which featured dolls based on the children of classic fairy tale characters, including Cinderella, Sleeping Beauty and Snow White. That flew too close to the Disney princess orbit. The following year Disney notified Mattel that it was going to Hasbro. (Mattel no longer sells the Ever After High toys.)
“Losing the franchise was not only a financial challenge for us but a really emotional one,” said Mattel President and Chief Operating Officer
Richard Dickson,
who rejoined Mattel for a second stint months before Disney made its decision. “It was a wake-up call for Mattel.”
The fallout started soon after. In early 2015, Mattel fired CEO
Bryan Stockton.
His successor,
Chris Sinclair,
focused on plugging revenue lost from the license with a range of items without staying power, which added complexity and extra costs to operations. Another CEO, former Google executive
Margo Georgiadis,
lasted about a year before leaving.
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Mr. Kreiz has brought stability to the top job at Mattel. The former television executive cut one-third of jobs and closed several factories to stem ongoing losses. He helped patch up Mattel’s fractured relationships with retailers and Hollywood studios. Key brands such as Barbie and Hot Wheels responded to new marketing and items. Fisher-Price has stabilized, too.
Though sales are still below their peak of $6.5 billion in 2013, Mattel is on pace for more than $5.3 billion in revenue for 2021, according to analysts, up more than 15% from 2020. Projections for net income of $789 million are the highest since 2013. Analysts expect Hasbro to bring in more than $6 billion in 2021 sales, according to FactSet estimates.
A bit of corporate restructuring allowed Mattel to present a stronger case to Disney that the properties would get appropriate attention, Mr. Kreiz said. Instead of organizing its business around boys, girls and infant products, Mattel is now structured around categories such as dolls, vehicles and action figures. The Disney characters will slide into the doll division and be managed by the same group that has overseen Barbie’s comeback.
Barbie has a more open-ended play pattern than the Disney characters, whose stories are imprinted on film and in books. “Side by side, we know that we can exponentially create more value, more play and more business by complementing the narrative rather than competing with it,” Mr. Dickson said.
The transition raises some questions for Hasbro, which aimed to use the Disney princess and Frozen license to build up its catalog of toys geared toward girls. But the property faltered a bit under its new owner, people in the toy industry said.
Jim Silver, CEO of TTPM, an online toy-review site, estimates that the Disney property is about half as big as it was when it left Mattel, in part because of a lack of new content to boost consumer interest in the characters. The Disney deal didn’t reach the levels Hasbro was hoping to achieve, he said.
Mr. Silver said Hasbro has other toys for girls on the upswing, including My Little Pony toys boosted by a recent Netflix movie, so the shift of the Disney license might not be as dramatic as it was when Mattel lost it. “I think Mattel will do very well with it, and for Hasbro, I don’t think the economics made sense,” he said.
UBS analyst Arpiné Kocharyan estimates the Disney princess and Frozen license could bring in about $300 million in a nonmovie year. Even after paying royalties to Disney, it could still produce a higher profit margin for Mattel than it did at Hasbro, she said, because Mattel owns much of its doll manufacturing, making it more economical to produce incremental units.
Ms. Kocharyan said Hasbro’s addition of the Indiana Jones license, with a feature film due in 2023, could offset more than half of the lost revenue. Hasbro also has the Disney license for Marvel characters.
ABC News President Kim Godwin told staffers on a conference call Thursday that she has requested an independent investigation into how the network handled allegations of sexual assault against the former executive producer of “Good Morning America.”
The comments came a day after a lawsuit was filed that alleged the producer, Michael Corn, sexually assaulted a current ABC News staffer and a former staffer in separate incidents. Mr. Corn denied wrongdoing and called the allegations fabrications. In response to a request for comment Thursday on the call for an ABC probe, a lawyer for Mr. Corn referred to his previous statement.
“We can’t have us investigating us. We need an independent person,” Ms. Godwin said, according to a recording of the conference call. “The process has to be independent.”
The lawsuit also named Walt Disney Co. ’s ABC as a defendant, saying the company didn’t adequately respond to complaints of alleged misconduct by Mr. Corn from several women.
On the call, Ms. Godwin said the ABC News staffers who were involved in handling complaints against Mr. Corn would get due process, but their role would be probed.
An ABC News staffer filed a lawsuit Wednesday against Michael Corn, the former top producer of “Good Morning America,” alleging he sexually assaulted her and fostered a toxic work environment.
Kirstyn Crawford, a producer on the morning show, alleged that Mr. Corn assaulted her in 2015 during a business trip to Los Angeles, according to the suit, which was filed in New York state court.
The suit also alleges that former ABC News producer Jill McClain was sexually assaulted by Mr. Corn when the two worked at ABC’s “World News Tonight” roughly a decade ago. Ms. McClain isn’t a plaintiff in the suit, but is supporting Ms. Crawford’s case, according to the complaint.
The suit also names ABC, a unit of Walt Disney Co. , as a defendant, alleging the company received complaints about Mr. Corn’s conduct from several women, going back roughly a decade, but failed to take disciplinary action.
In a statement, Mr. Corn wrote that he vehemently denies any allegation that he engaged in improper sexual contact with another woman. Mr. Corn called Ms. Crawford and Ms. McClain’s allegations fabrications. He said he would be defending himself “vigorously.”