Disney is changing direction and charging into a new path. The company experienced a huge hit to its travel parts of the company like the theme parks, cruise ships and live sports businesses. Many movie theaters remain at a low capacity forcing movies pushed back a year. 2020 has been a tough year for may parts of the business, leading Disney to announce a major reorganization focused on streaming.
The massive changes mean Disney will focus on the development of productions debuting on the streaming and broadcasting services. The Disney ads, media businesses and ads, as well as Disney+, will now all be under a central “media and entertainment distribution” group. This group will handle all of the distribution of the company’s content and monetization while also work with the streaming operations. Content creation will be divided among different groups including general entertainment, sports and studios.Read More »
This announcement isn’t a surprise to many people. The company has been forced to delay or move many of its biggest new releases. Movies like “Black Widow” were rescheduled. “Mulan” and “Soul” were moved to debut on Disney+. “Mulan” was released in September for $30 to the service. The streaming service has remained stready through the changing economy. The Disney+ service has more than 60 million subscribers. Multiple movie companies has switched to stream services as a way to reach viewers and still continue their craft. This doesn’t mean a Disney movie will never be seen again on the big screen. Disney says they will continue to debut some movies online, but releasing blockbusters on the service will continue after the pandemic ends.
Disney’s chief executive officer Bob Chapek told the public in a written announcement that he hopes this will help accelerate their growth in the direct-to-consumer space. He believes the new structure and content creation will help them give consumers what they want. He stated that he understands people want to feel safe and comfortable in their own home. They are trying to ensure this is made possible with the reorganization.
The reorganization comes after shareholders like Third Point’s Dan Loeb urged the company to make a change. Last week he sent a letter to Chapek stating it was time to move on from the movie theaters. He compared them to horse-drawn carriages. Investors didn’t seem to hate the news. Shares of Disney went up as much as 5% after the announcement. The pandemic forced Disney to leave their cruise ships docked, close the theme parks, stop production on television and movies, and stop streaming almost all of the live sports. This caused Disney to lose about 15% since the beginning of 2020. has lost about 15% since the beginning of the year after the pandemic forced Disney to abandon cruises, close many of its theme parks, halt movie production, and stop streaming most live sports.
Disney Plus was a superhero for the company as people were forced to stay at home during the lockdown. Besides having over 50 million subscribers on the streaming service, there were over 100 million subscribers on all of the Disney platforms. These also include Hulu and ESPN+. The upcoming Star international streaming service will be another addition to the company.
The entire industry could make these same changes soon. TV networks are seeing many people switch from subscribing to cable to subscribing to one-demand services. Disney quickly became a powerhouse among the big players. Disney+ just launched in November, yet it’s become a huge hit. This move also came after WarnerMedia reorganized in August. The company aligned all of its units under its own service, HBO Max. This only launched at the end of May.
The new structure changes are in effect now. The fiscal changes will go into effect the first part of 2021. An investor day to unveil more of Disney’s direct to consumer strategies will be held December 10th.
Explore Games and Apps