Disney Will Now Focus on Streaming
The Walt Disney Company has read the writing on the wall. Mounting losses in its theme parks and theatrical releases led to the inevitable. The company will now restructure its media and entertainment divisions. As such, Disney will now focus on streaming services. And why not? They most likely saved the company from the pandemic.
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On Monday, Disney announced it would centralize its media business. This entity will take care of content distribution, ad sales, and Disney+. This move aims to further speed up its direct-to-consumer strategy.
Investors Applaud the Move
Shares of Disney rose more than 5% during after-hours trading following the move. This came at a time when one of its shareholders demanded change. Last week, activist investor Dan Loeb lobbied Disney for changes. He asked to divert more capital to creating new content. He suggested that Disney CEO Bob Chapek end Disney’s annual $3 billion dividends. Instead, they use the money to produce new content. Loeb’s Third Point Capital is one of Disney’s largest shareholders. Loeb actually bought more shares earlier this year. He anticipated Disney moving its focus on Disney+, its flagship subscription streaming service.
Loeb is thankful that Disney listened to its shareholders. He told CNBC: “We are pleased to see that Disney is focused on the same opportunity that makes us such enthusiastic shareholders: investing heavily in the DTC business, positioning Disney to thrive in the next era of entertainment.”
More Staff Reduction at Disney
Chapek said the reorganization can lead to some redundancies. the layoffs won’t be as large as the recent one at its theme parks. Disneyland cut 28,000 jobs recently as its California parks remained closed.
At the same time, movie theaters remain a risky proposition. Since March, very few theaters have attempted to open, leading to low ticket sales. The attempt to reopen last August ended early, as outbreaks were still rampant. Disney held back its planned theatrical releases. This includes potential blockbusters such as Marvel’s “Black Widow” and Pixar’s “Soul.” Instead of theaters, “Soul” will debut in Disney+ this December. It is yet unknown how much the movie “Mulan” earned after its release on Disney+ for $30. Analysts expect more details during Disney’s next earnings report in November.
Analysts are still awaiting word from Disney about how “Mulan” fared. Set for theatrical release, Disney instead showed it through Disney+ for $30. Details about Mulan’s receipts are due during the next earnings report in November.
New Sheriff in Town
Disney promoted the president of consumer products, games, and publishing Kareem Daniel. He will take charge of the new media and entertainment distribution group. Among his first tasks is to ensure the profitability of streaming. Daniel will manage the entire Disney’s streaming services and domestic television networks. This includes content distribution, sales, and advertising.
Alan Horn and Alan Bergman will continue manning Disney’s studios. Peter Rice remains the head of the general entertainment group. James Pitaro will stay as head of the company’s sports content. All will report directly to CEO Bob Chapek. Meanwhile, Rebecca Campbell will remain chairman of direct-to-consumer and international operations. She will report to Daniel when it comes to Disney+, Hulu, and ESPN+.
Kareem Daniel is a 14-year Disney veteran. He helped create the successful Wars: Galaxy’s Edge lands in Disney World and Disneyland. He also helped bring Toy Story Land, Pixar Pier, and Avengers Campus to the parks.
Chapek said: “Kareem is an exceptionally talented, innovative, and forward-looking leader, with a strong track record for developing and implementing successful global content distribution and commercialization strategies.”
Coronavirus accelerated the move
The pandemic hastened the process where Disney pivoted to streaming. Chapek explained that he “would not characterize it as a response to Covid. I would say Covid accelerated the rate at which we made this transition, but this transition was going to happen anyway.”
“It’s about streamlining the decision making, looking at it from a 50,000-foot view,” Chief Executive Officer Bob Chapek said in an interview, “as opposed to a movie that’s made in the studio, therefore it goes to the studio, or a television show that’s made at ABC studios, therefore goes on ABC.”
Watch this as Bloomberg Quick Take reports on Disney’s plan to shake up its operations and focus on streaming:
Do you prefer theaters over streaming movies? Has the pandemic changed your view? Will you dare watch a movie in a theater this year? Let us know what you think by placing your comments below.
My wife and I would still go to a theater if the streaming movies are too expensive. We are senior citizens and we get into theaters where we live for $1.00 each. We were going to watch Mulan on Disney+ but the $30.00 price tag was to much for us since we are retired and on a fixed income.
As a retired person, I can not afford to go to a theater nor can I afford the cost of a provider for streaming all these movies. We used to enjoy going to the movies for a night out, but it is not worth our health nor the risk of catching this Covid 19 or any other illness out there. It’s funny how no company offers a discounted rate for those of us on a limited income that might want to see these new programs. I feel that they are missing the boat, there are more of us old folks out there that don’t get these services, than there are those who have the funds to pay for sites that are so expensive! Enjoy the movie folks, you can tell us all about it.
Disney and ESPN are garbage.