Disney CEO Says Covid Isn't To Blame For Streaming-Focused Reorg
This time last year, Disney was a company with a new streaming service. Now, Disney is a streaming-focused company.
Just a year ago, Disney+ was a brand new beast in the streaming space, hitting the ground running with a fabulous first season of The Mandalorian. Now, streaming is becoming a focus for the company and prompting a major reorg in the process.
Disney is restructuring to focus on its direct-to-consumer strategies, and will centralize its various media businesses into a single organization responsible for content distribution, ad sales, and streaming.
"I would not characterize [the reorganization] as a response to Covid," Disney CEO Bob Chapek said on CNBC's Closing Bell program. "I would say Covid accelerated the rate at which we made this transition, but the transition was going to happen anyway."
"We are tilting the scale pretty dramatically [towards streaming],” Chapek also said. He added that the company is looking at its investments, including suspending the yearly shareholder dividend (payout), to increase how much it spends on new content.
″[Consumers] are going to lead us,” Chapek said during the same interview. “Right now they 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.”
Disney has over 100 million subscribers to its various streaming services, and 60-plus million of those are on the hook for Disney+, with others spread across Hulu and ESPN's offerings.
Chapek also said that the shift could result in layoffs, but "not likely at the same scale" as the layoffs last month that saw 28,000 workers laid off in light of ongoing park shutdowns in California.
"Given the incredible success of Disney+ and our plans to accelerate our direct-to-consumer business, we are strategically positioning our Company to more effectively support our growth strategy and increase shareholder value,” Chapek said in an official statement. “Managing content creation distinct from distribution will allow us to be more effective and nimble in making the content consumers want most, delivered in the way they prefer to consume it.”
Disney shares jumped 5% following the announcement.
Disney+ continues to grow. On the television side, the Mandalorian's hotly-anticipated second season premieres on October 30. WandaVision, the first of Marvel's laundry list of announced TV offerings, drops in December. On the movie front, Disney sent Mulan directly to streaming earlier this year, while Pixar's next bit movie, Soul, is heading directly to Disney+ in November. We can't help but wonder if the much-delayed Black Widow is headed that way, too.
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