Walt Disney is going part Netflix. The $226 billion company is moving responsibility for distribution and profitability of all its content under one unit with a new leader. That knocks powerful movie studios and sports channels down a few pegs, and sets the company led by Bob Chapek up to focus on streaming its wares direct to consumers.
The company’s media networks and movie studios represented nearly 60 per cent of $50 billion in total revenue for the nine months ending in June. While films, general entertainment and sports content will still be created separately, the task of selling all of them now falls to Kareem Daniel, one of Disney’s top consumer executives, with a bent toward streaming services Disney+, Hulu and ESPN+.
It’s a blow for traditional distribution partners like movie-theater chains and possibly its own cable and broadcast channels. It also reduces the chances of empire-building and feuding among studio heads, network executives and sports programmers. Those leaders still report directly to Chapek, but they have now lost their historical grip on the financial success of their fiefdoms.
Since Chapek took the reins in late February, Disney has been forced to shutter its amusement parks, rethink theatrical film releases and come to grips with the oddball experience that is now live sports. Disney’s stock has suffered as a result: It’s down 13 per cent year-to-date compared to Netflix, whose shares are up 65 per cent.
But even if the coronavirus existed only in a disaster movie, streaming would still be the main event. Pushing for greater focus on digital distribution is one of the reasons activist Dan Loeb’s Third Point has taken a stake in the company. Disney+ has been a smashing success since its November launch, far outrunning even internal targets with 60 million subscribers so far.
The part of the revamp that’s not influenced by Netflix’s success is Disney’s other big business, theme parks. That division, another facet of the company’s storied past, remains intact. Much of the rest of its history, be it movie studios or live TV sports, is now being cannibalised to feed a streaming future.