Disney Pivots to Streaming, as CEO Says Films and TV Go Wherever They Earn the Most

Disney, which owns Marvel, Star Wars, Pixar and is the dominant force at the domestic box office, will no longer produce a film with the assumption that it will appear in theaters. Instead, the next MCU rate could be exclusive to Disney + or rent for $ 30. It depends on what the reorganized Disney thinks best, and often the answer is "streaming".
"We want to leave it to a group of people who can really see objectively," Disney CEO Bob Chapek said in an interview with CNBC on Oct. 12, shortly after announcing the post-market reorganization. "[We want] to make the optimal decision for the company, rather than somehow predetermined that a movie is for the theater or that a TV show is for ABC." The stock exchange liked what she heard; Disney shares rose 5.4 percent after close of trading.
Under the new Disney model, a theatrical release is not determined by its cinematic size, price potential or the need to support exhibitors. The litmus test is dollars: will a movie make more money for Disney in theaters or streaming? "Consumers will actually be the ones who make those choices," said Chapek. "They will guide us as they make their transaction decisions. Right now they are voting with their paperbacks and they are voting very strongly for Disney +. We want to make sure we go the way consumers expect us to go."
Kareem Daniel, formerly President of Consumer Products, Games and Publishing and Chief of Staff for the CEO's Office, is responsible for deciding what goes where. Chapek announced that Daniel will lead a new division as Chairman, Media and Entertainment Distribution, which will encompass the company's streaming services.
This is just the latest signal that a pandemic-induced slump in television advertising and the theater insecurity associated with the streaming wars are forever changing the industry. Disney, for its part, is now officially platform independent, a move that Chapek described as "progressive". The pandemic "accelerated the rate at which we have made this transition," he said. "That transition would happen anyway."
While the pandemic has hurt some of Disney's top revenue streams, including theater revenue, theme parks, and television advertising sales, the company has had runaway success with Disney +. Less than a year after its inception, it has reached 60.5 million subscribers worldwide, making it number three after Netflix and Amazon. This puts Disney on the cusp of its 60 to 90 million subscribers, which it will have announced to investors by 2024.
Disney acted more cautiously in the first few months of the pandemic. While Universal abruptly tried to shorten movie theater windows after early success with PVOD, it wasn't until September that Disney released one of its tent poles, "Mulan," a Disney + PVOD release. The results of this experiment are unclear, but a month later the company decided to release Pixar's "Soul" exclusively to Disney + subscribers, this time at no extra charge. Regardless of the "Mulan" results, it was successful enough to move away from another payday at the theater.
Even with billions of annual theater revenues, Disney is about more than money. The theater platform is helping turn the studio's IP into events and is creating the excitement for a dedicated fandom looking to buy theme park tickets, subscribe to Disney +, and buy stuffed baby yodas. With box office and theme park revenues falling (and activist investors like Dan Loeb), the pandemic forced Disney to embark on a new strategy.
Chapek said Disney wanted to "make sure we continue to give consumers the opportunity" to watch movies in theaters. "At the same time, there are many consumers who want to experience movies in the safety, comfort and convenience of their own homes," he said.
The writing has long been on the wall: in 2018 Disney created its direct-to-consumer division to house its streaming platforms, and executives made streaming their top priority. Now Disney is keeping those promises to investors. Chapek promised that further details on the distribution of Disney's upcoming plan will be released on an investor day on December 10th.
A first clue might be in the first paragraph of Disney's press release announcing the reorganization: “Disney's world-class creative engines will focus on developing and producing original content for the company's streaming services, as well as legacy platforms . "
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