MMM: Disney's Epic Games Stake; Valentine Day Confections Advertising Trends

Disney's 1Q FY24 EPS exceeded expectations. The company saw a YoY increase in Disney+ subscribers and announced a new partnership with Epic Games. Sensor Tower data shows that this move could help Disney engage with younger audiences, who often spend more time on various types of gaming apps than the average smartphone user. US consumers are predicted to spend more on Valentine's Day this year, with candy being the top gift category.

Key Takeaways:

Disney’s 1Q FY24 EPS exceeded street estimates while revenue slightly missed the mark. The company has aggressively slashed costs over the past year with plans to have its streaming business reach profitability by 4Q FY24. Reported Disney+ core paid subscribers increased 7% YoY in Disney’s 1Q FY24 (4Q23), directionally in line with Sensor Tower mobile app MAUs for Disney+ including Star+ (3% YoY)
Disney also announced that it's taking a $1.5bn equity stake in Fortnite developer, Epic Games. This new partnership will provide Disney broader access to consumers in the gaming space, allowing the company to further extend its entertainment domain. Bob Iger called out the potential of the gaming space and its success in engaging a younger demographic, specifically noting “In fact, among millennials, Gen Z, and Gen Alpha, a significant amount of time spent on screen-based platforms is playing video games.”
- Sensor Tower Audience Insights data largely corroborates this statement, suggesting that on average, smartphone users between the ages of 18-24 years old in the US in 4Q23 spent 71% more time on Music, Action, Sports, RPG, Adventure, and Simulation games compared to the general population of smartphone users
Spurred by a likely desire to capitalize on outsized consumer interest during the Valentine’s Day season, US ad spend in the confections category has rapidly increased since the first week of January, growing an average of 57% WoW from 1/5/24-2/1/24
- In 2023, US ad spend in the confections category increased an average of 48% WoW leading up to Valentine’s Day, and then slowed dramatically as spend only increased an average of 3% WoW for the two weeks (2/11/23-2/25/23) following the holiday
Filtering US ad spend by Valentine’s Day keywords highlights the brands that are creating campaigns for the holiday. The top brands by US ad spend for 2024 include Reese’s seasonal, Dove chocolates, Brach’s seasonal, and Merci Chocolates with 38%, 14%, 10%, and 10% of spend across the category, respectively

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Written by: Seema Shah, VP, Insights

Date: February 2024