A “Dramatic” Reorganization Is Underway
Disney announced a revamp of its media and entertainment business a few months ago to put more emphasis on streaming, which has become the most important aspect of its operations.
Disney’s plan to boost its direct-to-consumer strategy involved merging its media divisions into a single unit that will handle content distribution, ad sales, and its streaming platform Disney+.
The decision to reorganize came as a result of the coronavirus pandemic, which has battered the company’s theatrical operations and driven consumers toward Disney+ and other streaming options. Disney now has about 100 million paid subscribers across its streaming services.
“I would not characterize it as a response to COVID,” said Disney’s chief executive Bob Chapek at the time. “I would say COVID accelerated the rate at which we made this transition, but this transition was going to happen anyway.”
“We are tilting the scale pretty dramatically,” Chapek added. He also said Disney is welcoming all types of investments, including dividends in a bid to inject more money into new content.
Hedge fund manager and activist investors Dan Loeb asked Chapek to halt Disney’s yearly $3 billion dividend in order to invest more in new Disney+ content.
Under its restructuring efforts, Disney has promoted Kareem Daniel to the chairman of the media and entertainment distribution division. Daniel has previously served as president of consumer products, games, and publishing.
New Shows Announced, Pricing Hiked
Disney did not wait long to start introducing new streaming content, with the mass media company announcing new Marvel and Star Wars series on Disney+, as well as new programming which will include the popular Kardashians show.
Along with announcements of new content, Disney also presented its new business targets, including programming expenses of as high as $16 billion in financial 2024 as the company tries to close the gap between itself and Netflix.
Disney said it expects to have 350 million worldwide paid subscribers across its streaming offerings, which is nearly triple the number it has today. As of March next year, the company will increase the subscription price of Disney+ by $1 in the United States to $7.99 per month and by €2 in Europe to €8.99 ($10.92).
“It is clear our strategy has already positioned us as a leading global streaming service provider, and that is within just one year of launching Disney+,” said Christine McCarthy, CFO at Disney.
The entertainment giant said it will launch ten new TV series as a part of the Marvel and Star Wars franchises. Disney+ was additionally fueled by the popular “The Mandalorian” TV series, a Star Wars spinoff featuring the beloved character Baby Yoda, with additional spinoff series, including “The Rangers of the New Republic” and “Ahsoka," also announced.
Furthermore, the company will add 15 live-action Disney Animation and Pixar movies, and 15 Disney Animation and Pixar feature films on Disney+.
Disney’s officials told investors that the streaming service’s users can expect 100 or more new releases each year. The company reported that Disney+ Hotstar contributed around 30% to 40% to the new subscriber estimates.
Two new live-action movies, “Pinocchio” and “Peter Pan & Wendy” — which were initially supposed to be released in theatres — will be directly launched on Disney+.
Patty Jenkins, who directed “Wonder Woman,” will also direct the new Star Wars live-action movie “Rogue Squadron,” scheduled to be released at the end of 2023.
Other companies from the entertainment industry have also announced restructuring plans this year to focus on streaming businesses, including AT&T’s WarnerMedia, and Comcast Corp’s NBCUniversal.
Goldman Sachs analysts raised their price target on Disney stock to $200.00 pre-share on the impressive Disney+ subscription numbers.
“Our higher price target reflects a material increase in our long-term forecasts for DIS’s direct-to-consumer (DTC) subscribers and revenue as we factor in the company’s newly revealed Star offering and the higher price points for Disney+ that going into effect in 2021,” analyst Brett Feldman wrote in a note sent to clients.
Disney is bringing a flurry of new content to its streaming options, including new series in Marvel and Star Wars franchises, new programming for Hulu and Star, and much more after the company announced its restructuring a few months ago to focus on its streaming services.
About the Author
Mariliana has an MSC in consumer analytics and business strategy. She has a special interest in fast-moving industries and big data.