Disney to focus on streaming as part of major reorganization

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Disney is reorganizing its media and entertainment businesses as it shifts its "primary focus" to online streaming, though it said the move isn't solely the result of COVID-19.

Credit: Disney
Credit: Disney


The company described the strategy shift on Monday as a way to bolster its direct-to-consumer strategy amid the coronavirus pandemic. The ongoing health crisis has crippled Disney's resort parks and theatrical releases.

As part of the shift, Disney will centralize its media businesses into a single organization that will handle Disney+, content distribution, and ad sales, CNBC reported. Disney CEO Bob Chapek said that the company is "tilting the scales pretty dramatically" toward its streaming business.

"I 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," Chapek told CNBC.

As part of the restructuring, Disney has promoted Kareem Daniel, its former president of consumer products, games, and publishing, to a new position that oversees the media and entertainment group. Rebecca Campbell will maintain her role as chairman of direct-to-consumer and international operations, but will now report to Daniel for Disney+, ESPN+, and Hulu operations.

"Right now [consumers] are voting with their pocketbooks and they are voting very heavily towards Disney+. We want to make sure that we are going the way the consumers want us to go," Chapek added.

Alan Horn and Alan Bergman will remain in charge of Disney's studios, but will increase their focus on creating content for Disney+ and Hulu, as well as for theatrical release.

News of the restructuring comes about a month after Disney laid off about 28,000 workers -- mostly as its California and Florida theme parks. The reorganization will not impact the company's parks business.

The ongoing pandemic has also disrupted Disney's theatrical plans, with the entertainment titan forced to delay the release of Marvel film "Black Widow" and Pixar movie "Soul." Last week, it was announced that "Soul" would skip theaters in favor of a Disney+ release this Christmas.

As of August, Disney had around 100 million paid subscribers across its streaming services. At least half, about 57.5 million, were signed up for Disney+

Comments

  • Reply 1 of 6
    entropysentropys Posts: 3,198member
    If this model includes rental on top of a subscription I will kill off my Disney+ Sub.
    Might as well just rent off iTunes movies without the sub.

    DancingMonkeys
  • Reply 2 of 6
    As long as States like California insist on following outdated and inaccurate lockdown guidelines (the World Health Organization no longer recommends this as a strategy), businesses like Disney which rely on in-person attendance for profits, their businesses will continue to be at great risk.

    Various links interpreting WHO guidelines:

    https://www.msn.com/en-us/health/medical/who-official-urges-world-leaders-to-stop-using-lockdowns-as-primary-virus-control-method/ar-BB19TBUo

    https://bgr.com/2020/10/11/coronavirus-lockdown-world-health-organization-new-warning-covid-19/

    https://www.npr.org/sections/goatsandsoda/2020/04/15/834021103/who-sets-6-conditions-for-ending-a-coronavirus-lockdown
    edited October 2020 razorpit
  • Reply 3 of 6
    When I put on my long term prognostication hat, I consider Disney to be Apple's potentially largest direct competitor in 2030. Disney's brand and IP could put them in a strong consumer facing position. They have a venture capital division that invests in high tech companies. The first segment they could easily dominate if they wanted to is an internet media streaming box. Note that Disney owns 60% of Hulu.
  • Reply 4 of 6
    When I put on my long term prognostication hat, I consider Disney to be Apple's potentially largest direct competitor in 2030. Disney's brand and IP could put them in a strong consumer facing position. They have a venture capital division that invests in high tech companies. The first segment they could easily dominate if they wanted to is an internet media streaming box. Note that Disney owns 60% of Hulu.
    So ... Disney is going to start making smartphones, tablets and computers? And people would - for some reason - buy them if they did? Fascinating.
    Yes, Disney owns Disney+, Hulu as well as the Disney Channel/ABC/ESPN cable and broadcast networks. That's only a fraction of the streaming landscape. Disney+ and particularly Hulu are dwarfed by Netflix and Amazon Prime. It would be difficult to identify someone who has Disney+ but not Netflix, for example. There are also streaming networks offered by their direct competitors i.e. Paramount+, HBO Max and whatever NBCUniversal purports to be doing. Are they going to put their channels on the DisneyBox? (Not likely.) And this goes back to my initial question: Disney is going to become a tech company with the capability to design and build a streaming box? Consumer-facing: Dell, HP and Lenovo don't have "consumer facing positions" yet they sell tons of computers primarily to enterprises each year. So these large (or medium sized or small) businesses are going to start buying Disney workstations and notebooks? Disney is going to have the software, support and cloud infrastructure to back them?

    Good grief, Disney+ doesn't even support single sign on - something that some niche streaming channels are capable of - and you want to make Disney the #2 tech company on the planet. Also, you might want to read the several columns floating around about how much debt Disney is servicing right now. Disney is focusing on streaming because the theatrical release game is getting to be unsustainable.
    Budget: $150 million (or no one will see it)
    Marketing: $125 million (or no one will see it)
    Theatres and distribution costs: at least 50% (or no one will show it)
    A Disney movie now needs to make $500-$600 million at the box office just to break even. Do they have very many potential projects in the can capable of it? Star Wars is a mess. No one wants to admit it but their superhero movies have an uncertain future without their two most popular characters (initially Iron Man and later Captain America). As for their other movies ... their big thing going right now is either sequels of remakes - Maleficient 2 was last year, The Lion King 2, The Jungle Book 2 and Aladdin 2 are all in the works - or more movies based on rides (Jungle Cruise starring The Rock was supposed to be their big summer movie this year). 

    The combination of their massive debt and not getting any real return on theatrical releases - to the point where their goal was merely to break even in order to make money on merchandising for a lot of their films - means they have no choice but to focus on streaming. And even streaming is going to cannibalize their cable channel revenues.
    Ofergilly33
  • Reply 5 of 6
    DAalsethDAalseth Posts: 1,812member
     will increase their focus on creating content for Disney+ and Hulu

    Well an easy first step would be to have more than just Disney movies and programs for Disney+ in Canada. Include Hulu, and the rest up here, and we might sign up again. I tried the 30 day free offer, but up here it was so crippled I dropped it after a few days.
  • Reply 6 of 6
    MacProMacPro Posts: 19,426member
    Day late and a dollar short IMHO.  Having had Disney Plus for a while now and found there is nothing left we want to see.  So it's down to new content and Netflix and Amazon Prime already provide more than we have the time to watch. Disney sadly maybe the next Kodak.  I sold all my Disney stock a while back.
    edited October 2020
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