Disney Reveals Several Bombshells

Disney just revealed several bombshell announcements that will impact its business for years to come. Here are the huge stories you might have missed.

Disney Goes Epic 

The Walt Disney Company held its fiscal earnings report on February 7th, 2024. Many observers wondered whether Disney would announce anything to compete with Universal Epic Universe, which recently started its marketing blitz. 

While Disney did something epic, it had nothing to do with theme parks…yet. Disney announced that it had purchased a 1.5 percent stake in Epic Games, the creators of Fortnite and the Unreal game engine. 

Courtesy of the Walt Disney Company

As part of this deal, Epic will create “expansive and open games” and an entirely new “entertainment universe connected to Fortnite.” In other words, gamers will enter an adjacent realm to Fortnite. On it, they’ll find fully realized versions of Disney franchises like Star Wars, Marvel, and Avatar. 

Effectively, we’re talking about a Ready Player One type of deal hosted on Fortnite’s servers. The integration of this process shouldn’t be as challenging as you might expect. Disney has used the Unreal engine to create visual effects for some of its films, starting with Rogue One: A Star Wars Story. 

In case you didn’t know, 100 million people played Fortnite in November alone. It’s that massive, and Disney just bought part of the company while staking a claim to new territory within Fortnite’s virtual realm. 

This deal also raises a bigger question, one Disney hasn’t answered yet. If Disney is going to Fortnite, could Fortnite come to Disney? Epic Universe will host the East Coast’s first Super Nintendo World. So, Disney fans can’t help but wonder whether Disney may have sneakily introduced its countermeasure. 

Disney Announces Moana 2 

A bit of Disney cinematic history has repeated itself this week. During the development of Toy Story 2, Disney pushed back on Pixar’s plan to release the film as a direct-to-video sequel. Film executives felt strongly that the idea would stand on its own as a theatrical release. They were right.

More recently, Disney+ planned a direct sequel to Moana. The original idea called for an animated series about Moana answering a call from her ancestors, leading her to the outskirts of Oceania. 

During a CNBC interview before the earnings call, Iger revealed a change in plans. Disney has determined that the story works better as a film. So, we’re getting Moana 2 this year!

The movie will debut on November 27th, 2024. And it’s all but certain to become one of the biggest blockbusters of the year. 

I say this because Nielsen recently named Moana as THE most-watched streaming movie of 2023. That’s a stunning feat in and of itself, but it’s that much more impressive when we consider that Moana came out in 2016. 

Nielsen indicates that people have watched Moana 775 million times. A sequel to this project appears certain to succeed as long as the quality is there. 

Taylor Swift Is Coming to Disney+

Speaking of blockbusters, Disney won the streaming bidding war of the year. In 2023, Taylor Swift threw a lifeline to struggling cineplexes. She negotiated a deal directly with the CEO of AMC Theatres and released a concert movie outside the bounds of the Hollywood studio system.

While the Barbenheimer phenomenon garners most of the credit for the film industry surviving 2023, Taylor Swift was the true MVP. Taylor Swift: The Eras Tour earned $261.6 million in box office, which was found money to theater owners.

Swift emphatically stated she wouldn’t release the product on streaming until the Hollywood strikes ended. Now that it’s over, Disney has emerged victorious. 

Disney+ has secured exclusive rights to stream Taylor Swift: The Eras Tour. Even better, the streaming movie marketed as Taylor’s Version will feature five songs that weren’t part of the theatrical release. You can watch it on Disney+ starting on March 15th, 2024.

Disney+ lost 1.3 million core subscribers during the most recent quarter. It’s forecasting growth of 5.5-6 million subscribers during the current quarter. You can think of that growth as the Taylor Swift Factor. 

Disney Answers Theme Park Question

This earnings call/report didn’t focus much on the theme park division. Disney didn’t need to say a lot since this division experienced growth everywhere. 

During the call, Bank of America’s analyst, Jessica Reif Ehrlich, pushed for details regarding Disney’s expansion plans, though. 

The investment strategist asked, “I’ve heard you say that in parks, 70% of the $60 billion in CapEx that you outlined over the next 10 years…will go to incremental capacity. So, like over $40 billion in new parks and attractions. Can you give us some color on (the) timing and location? There’s been speculation that you may open a fifth gate in Florida.”

Iger had everyone’s attention at this moment, but he chose not to provide specifics. Here’s his response.

“We’re already hard at work at basically determining where we’re going to place our new investments and what they will be. You can pretty much conclude that they’ll be all over, meaning every single one of our locations will be the beneficiary of increased investment.

“Thus, (we’ll have) increased capacity, including on the High Seas, where we’re currently building three more ships. And in a business that is, obviously, extremely positive to us, we may look expansively, at least in the next decade in that direction.

“I’m not going to really give you much more of a sense of timing, except that we’re hard at work at getting these things basically conceived and built. And we’ve got a menu of things that will basically start opening in ’25, and there’ll be a cadence every year of additional — basically additional investment and increased capacity.”

Reading between the lines, Disney is setting the deck to start releasing annual park improvements in 2025. The comparison I’m using is the 2017, 2018, and 2019 openings of Pandora – The World of Avatar, Toy Story Land, and Star Wars: Galaxy’s Edge. 

By taking this approach, Disney ensures that it always has something to market. It’s a smart target that guarantees Disney fans, especially DVC members, always have something to anticipate.