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Summary
- Walt Disney set to reorganise media and entertainment business to capitalize on the growing demand for its online streaming service Disney+.
- The content creation will be managed by one team, and media and entertainment distribution will have a different group.
- Disney original content will be available across various platforms such as Disney+, Hulu, ESPN+ and upcoming Star international online streaming platform.
Nations across the world are struggling to fight the coronavirus crisis in many ways. The virus has successfully wreaked havoc across industries, shutting down many companies. Travel and entertainment sector is perhaps the most affected one. Leading media and entertainment company, The Walt Disney Company (NYSE:DIS), incurred heavy losses during the pandemic.
Disney parks have taken a double blow from the coronavirus health crisis. With parks shut for many months, Disney laid off around 28,000 workers from its theme parks in California and Florida.
Pandemic effect on Disney park and movie business
Disney World in Florida was first to close, and early to reopen in mid-July. The park had to follow various restrictions and guidelines for safety purposes such as masks, social distancing, mobile ordering, contactless payment. The enhanced cleaning procedure is making sure of the no virus spread in the park.
Disneyland in California was scheduled to reopen in July, but it was postponed due to resurgence of coronavirus cases in the state. Disneyland Hong Kong reopened for the second time in September.
Disney's film releases are also postponed because US movie theatres are closed to prevent the spread of COVID-19.
Disney’s live-action much-awaited film "Mulan" was set to hit theatres this year. Because of the delay in reopening theatres, the film was made available on Disney+ for an extra US$29.99 charge. The Pixar film "Soul" is also set to premiere on Disney+ during Christmas holidays, but the movie will be available with no additional cost.
Booming demand for Online streaming content
Amid all this disruption, online streaming portals are booming with success, as people are locked at home, and online entertainment is the only option for many to experience fun and to put aside the worries of an uncertain future.
Online streaming platforms such as Netflix (NASDAQ:NFLX), Amazon.com, Inc. (NASDAQ:AMZN), Hulu and others not only stream entertainment content but also create their original content. These platforms sell the content directly to the consumers, and they are relentlessly growing each other.
So much so, that the movie theatres and legacy studios have started to taste the fear of their popularity and success. Especially in the coronavirus pandemic, many movies which were slated to premiere in theatres were launched on online streaming platforms or postponed for an uncertain period.
Disney is all set to make its fans binge-watch on streaming media
The Walt Disney Company recently announced that it is reorganising its media and entertainment businesses, as it witnesses losses with theme parks and theatres being shut or operating limited capacity due to pandemic.
Walt Disney Company will now include a new group that purely handles media and entertainment distribution for all the original content Disney produces. The content made for theatre, TC and online streaming will debut on its streaming and broadcast services.
Also Read: Covid-19 Tales- Online Streaming and Related Businesses Under Limelight
The Company said in its statement that Disney's media businesses, ads and distribution, and Disney+ would be under the new business unit. The new group will also monetise Disney content via distribution and ad sales.
Disney decided to segregate teams so that one team will effectively create the content consumers want, whereas the other will swiftly deliver the distribution in a way consumers prefer.
The teams will focus on churning world-class, franchise-based content. The global distribution team will deliver as well as monetise the Disney original content. It will be available on various platforms such as Disney+, Hulu, ESPN+ and also the upcoming Star international online platform.
Key focus on delivering and monetising content
As Disney plans to expand its businesses with a reformed strategy rapidly, the Company will compartmentalise its businesses in three media and entertainment content groups. Disney Studios will have content created for Disney, Pixar, Marvel and Lucasfilm. The other theatrical and TV content which is designed for theatres and online streaming services will also come under Studios. General Entertainment will have series and long-form content which goes on streaming platforms and TV networks such as Fox; ABC News, Disney channels.
Its Sports section will solely focus on ESPN and ABC programming.
Not just the content and distribution, but Disney is also channelling its strategy towards advertising, marketing and sales functions, which will now lean on its direct-to-consumer business strategy.
Good Read: Here’s Why these big giants are in the news- Disney, Amazon
Disney's platform gain success
Disney+ was launched in 2019, and within less than a year the online streaming platform has a subscriber base of 57.5 million as of June 27. ESPN+ started in 2018 and had 8.5 million subscribers.
Disney gained a controlling stake in Hulu as a part of its Fox acquisition and had 35.5 million subscribers. Majority of them paid for on-demand service, whereas 3.4 million subscribers paid for its live TV screening.
Disney's success is substantially multi-folded with its studio acquisitions in the past. It acquired Pixar studios in 2006 for US$7.6 billion. Disney bought Marvel Studios in 2009 and Lucasfilm studios in 2012 for US$4 billion each.
Subsequently, Disney acquired 21st Century Fox for US$71.3 billion in 2019 and gained various Fox entertainment assets such as Fox movie and TV studio, FX and National Geographic.
Bottom line
Disney's success in the online streaming market within just a year is giving tough competition to the existing media. Disney’s reshaping its focus and strategy on online streaming certainly demonstrates that they are sailing the wind of change.
Also See: Price hike in Netflix subscription for Australia | ASX Market Update
