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“[Disney] is asking more and more of the customer . . . while the amount of new content on offer will likely decline,” said analysts at media consultancy Enders, who warned of “a negative spiral and real consequences” if the strike drags on.
“Lack of fresh content, particularly for Disney+, will increase churn,” they added.
After a period of stagnation, many of the core business lines at the US tech mega-caps are back to posting respectable growth figures. The rest of the year will bed in strong revenue growth.
However, the sector is still facing a transition to new priorities. Core business strength should allow firms to shift from cost-cutting to the investment needed to fight the more competitive era they are facing.
AI is the number one focus, but the market for AI tools themselves is still nascent. Applying AI to internal problems has more promise. For instance, it is helping Meta solve its measurement and engagement problems.
Thanks to Parks (+11% YoY, $2.43 billion), Disney's Q3 operating income remained flat, balancing the decline from Media and Entertainment (-18% YoY, $1.13 billion) as DTC only lost $512 million and linear dropped by 23% ($1.89 billion). No new major growth initiatives were announced but Disney will look to stem DTC losses through Disney+ price rises and a password sharing crackdown.
Major segment resets are looming as Disney looks for new partners for ESPN and possibly buyers for its legacy TV business, ABC.
A difficult remainder of the year will be prolonged if the Hollywood talent unions strike into the autumn and beyond, while Bob Iger stays on as CEO through 2026.
In a reform of the competition regime for digital markets, by 2025 the UK will have conduct regimes for platforms including Google, Meta and Apple, overseen by the Digital Markets Unit.
Nested within could be a ‘fair bargaining’ regime for platforms and news groups, following Australia and Canada, whose lessons could be valuable to preserve platforms’ incentives to serve news. In Canada, platforms are refusing to pay to serve news links to their users, and plan to exit this form of content.
Financial transfers to UK news groups by platforms is among the new UK regime’s aims, but is unlikely to make up for the declining revenue trend of local news provision whose sustainability is most at risk.
Alice said: 'The live music sector has long been a marvel for all to see, both here and around the world, because it provides an experience, both in terms of the music, socially and just being there for your favourite artist.'
'It is also currently still benefiting from the post-pandemic bounce-back of demand, like travel. Glastonbury was another huge bounce for UK entertainment spend,' she said.
According to a recent report by media research firm Enders Analysis, Spotify’s big bet on podcasts “has spectacularly failed to deliver the anticipated financial rewards to shareholders”.
Alice explained to City A.M. that “in essence, the costs of the exclusive podcasts far exceeded the revenue opportunity”.
James said: “All major telcos face the challenge of updating their ageing customer service IT systems, and finding ways to differentiate their connectivity services, with smaller, nimbler rivals at their heels.”
While VMO2's fixed price rises this year were always going to be quite tricky, the 1ppt boost to revenue growth was nonetheless disappointing on the back of price rises of 14%.
Both mobile and EBITDA performances were better, but H2 EBITDA growth will need to be considerably stronger to get to guidance levels, which will be all the more challenging with the loss of the Lycamobile MVNO.
With the erosion of VMO2's differentiators of split contracts and broadband speeds, growth at VMO2 will require addressing new parts of the market—both geographically and across the customer range.
