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Tuesday, 13 October 2020

Disney: Less Theaters, More DTC

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Disney: Less Theaters, More DTC

“We’ve benefited from a tremendous relationship with theatrical exhibition for many years,” says Disney CEO Bob Chapek. “However, there are a lot of consumers that want to experience a movie in the safety, comfort, and convenience of their own home. We want to accelerate our transition to a real direct-to-consumer priority company. Ultimately, the consumer is going to be making the decision in terms of how they consume our media as opposed to some arbitrary decision that we may make from a distribution standpoint.”

Bob Chapek, CEO of Disney, discusses how Disney is transitioning to a direct-to-consumer company with less focus on the theatrical distribution of video content:

Accelerating Transition To Direct-To-Consumer Company

We want to accelerate our transition to a real direct-to-consumer priority company. We’ve got the opportunity to build upon the success of Disney+ which by almost any measure has been far and above anybody’s expectations. We really want to use this to catalyze our growth and increase shareholder wealth. In every territory and every platform, our expectations with Disney+ have been exceeded and exceeded every month. We’re thrilled with the way it’s going. We just think that this reorganization is going to catalyze growth even further.

I would not characterize (our reorganization) as a response to COVID but COVID accelerated the rate at which we made this transition. This transition was going to happen anyway. Essentially, what we want to do is separate out the folks who make our wonderful content based on tremendous franchises from the decision making in terms of where the prioritization is and how it gets commercialized into the marketplace.

We want to leave it to a group of folks who can really see objectively across all the constituents that we have and the various different considerations that we’ve got and make the optimal decision for the company. This is as opposed to somehow having it be predetermined that a movie is destined for theaters or that a TV show is destined for ABC. So really what we want to do is provide some level of objectivity and really make it a decision that benefits the overall company and its shareholders.

We’re Putting The Consumer First

What it says is that we’re putting the consumer first. The consumer is actually going to be who’s going to make this decision. They’re going to lead us with how they make their transactional decisions. Right now, they’re voting with their pocketbooks and they’re voting very heavily towards Disney+. We want to make sure that we’re going the way that the consumers want us to go.

Certainly, COVID has impacted all of our traditional distribution businesses. But this is even more than reactionary, this is really progressive. This is looking out with a vision towards where we see the world going and how we see that consumers are interacting with Disney+, ESPN+, and Hulu and where it’s going to go in the future in our international business with Star. We’re trying to as they say skate to where the puck is going to be.

Less Theaters, More DTC

We’ve benefited from a tremendous relationship with theatrical exhibition for many years. As dynamics change in the marketplace though we want to make sure that we’re giving consumers who want to go to theaters, to experience everything that a theatrical release can give them, we want to make sure that we continue to give them that option.

At the same time, there are a lot of consumers that want to experience a movie in the safety, comfort, and convenience of their own home for whatever reasons they do. We want to make sure that we put the consumer first. Ultimately, the consumer is going to be making the decision in terms of how they consume our media as opposed to some arbitrary decision that we may make from a distribution standpoint. We want to look at ourselves as consumer enablers.