April 17, 2021

DCTRS

Damascus Center for Theoretical and Civil Rights Studies

Disney flexes its streaming prowess with big content plans

Walt Disney Co. on Thursday unveiled its plan to supercharge its streaming services, including a robust slate of shows from its “Star Wars” and Marvel franchises, original movies and a new international service to expand its reach beyond family audiences.

In a more than four-hour presentation for investors, analysts and the media, Chief Executive Bob Chapek, Executive Chairman Bob Iger and a full bench of executives laid out an aggressive plan to grow Disney+ and other streaming businesses, including Hulu and ESPN+ to as many as 350 million combined subscribers in the next few years.

The company said it plans to bring more than 100 new titles a year to Disney+, representing a massive ramp-up from its initial schedule.

Disney said it has 10 Marvel series, 10 “Star Wars” shows and 15 live action, animated and Pixar shows in the works for Disney+. It teased upcoming series about “Star Wars” fan-favorite Lando Calrissian, a live-action “Pinocchio” feature, a “Moana” show and a “Guardians of the Galaxy” holiday special.

In another display of confidence, Disney said its would raise its price for Disney+ in the U.S. by $1 to $7.99 a month, starting in March.

The company said it will also make some of its big films available for streaming next year, previewing a future when more of Disney’s movies premiere in the home. Disney also touted upcoming original series for Hulu, ESPN+ and its new international Star brand.

Among the splashy announcements: a new Stephen A. Smith sports show for ESPN+, a series based on the “Alien” movie, a Rolling Stones series from FX, and the Kardashians bringing their reality TV shenanigans to Hulu.

The lineup comes as Disney+ and its sibling streamers need fresh content to continue to drive subscriptions, particularly after the pandemic slowed productions.

The Disney presentation amounted to a powerful statement showing how serious the Burbank entertainment giant is about growing its direct-to-consumer prowess. Disney and other companies — including AT&T’s WarnerMedia, Comcast’s NBCUniversal and ViacomCBS are trying to boost their streaming ambitions as the COVID-19 crisis accelerates the public’s move from in-person entertainment options (such as movie theaters) to phone apps and internet-connected TVs.

Iger, in remarks filmed on a soundstage at Disney’s Burbank studio lot, said the success of Disney+ so far encouraged the company to create a production lineup “much more robust than initially anticipated.”

“We’ve clearly positioned ourselves as the leader in the direct-to-consumer space, and the truth is, we’re just getting started,” said Iger, who oversees content efforts across Disney.

But despite the daunting schedule, Iger said the company is focused on quality, not quantity. “Quality holds its value, and that has been our mantra since we began telling stories,” Iger said.

The latest flex of muscle by Disney comes a little more than a year after then-CEO Iger launched Disney+ in a bold plan to adapt the company’s legacy entertainment brands for the streaming age. Tens of millions of subscribers, one pandemic and countless Baby Yoda memes later, Disney looks well on its way to a successful transition to a company that brings its movies and TV shows directly to fans online.

Disney on Thursday said Disney+ had 86.8 million subscribers as of Dec. 2, up from the 73.7 million it had Oct. 3.

Disney previously targeted 60 million to 90 million Disney+ subscribers, as well as profitability for the service by the end of fiscal 2024.

Thanks to hits such as “The Mandalorian” and the filmed version of “Hamilton,” a deep library of animated classics and families being stuck at home, Disney+ is well ahead of schedule. The company’s broader streaming business has 137 million subscriptions, including 38.8 million at Hulu and 11.5 million at ESPN+.

The company told analysts it now projects Disney+ subscribers to reach 230 million to 260 million through fiscal 2024. The company’s total subscriber base for all its services is expected to reach 300 million to 350 million in that time.

With all that additional growth and content comes bigger costs. Disney Chief Financial Officer Christine McCarthy said annual content expenses for Disney+ will hit $8 billion to $9 billion in fiscal 2024.

Netflix, currently the leading streaming service, counts 195 million global paying members.

Streaming has been a bright spot for Disney during COVID-19 stay-at-home orders, which have done severe damage to other parts of its business. Disneyland in Anaheim has been shut down since March, and the movie studio has pushed films that were supposed to come out this year into 2021, including Marvel’s “Black Widow.”

The company last month said it suffered a net loss of $2.8 billion for the 2020 fiscal year, plummeting from a profit of $10.4 billion a year earlier. The pandemic led to a $7.4-billion reduction in operating income during the year, the company said. Disney last month said it planned to lay off 32,000 workers by the end of the first half of fiscal 2021.

While flaunting its content slate, Disney detailed plans for a flexible film distribution strategy that allows it to choose whether to put films in theaters or send them directly to living rooms.

Many of Disney’s biggest movies will continue to go to theaters, including “Black Widow” starring Scarlett Johansson, a Buzz Lightyear origin story from Pixar and an animated feature, “Encanto,” with music by Lin-Manuel Miranda. In a major reveal, Lucasfilm’s Kathleen Kennedy announced that “Rogue Squadron,” the next “Star Wars” feature, is set to be directed by Patty Jenkins.

Other films will go straight to Disney+ at no additional cost. Disney was already planning to put Pixar’s “Soul” on Disney+ on Dec. 25. Also slated for the platform are features such as “Chip N’ Dale: Rescue Rangers,” an “Enchanted” sequel starring Amy Adams, “Peter Pan & Wendy” starring Jude Law, and “Pinocchio” starring Tom Hanks.

Disney+ additionally plans to continue its “Premier Access” strategy, in which certain movies are made available to streaming subscribers for an additional fee. The computer-animated “Raya and the Last Dragon” will be released through Premier Access for $30.

The company previously experimented with the new model by offering the live action redo of “Mulan” for $30 to Disney+ subscribers. Disney never released sales figures for the title, which was hobbled by controversy because of shots taken in a region of China accused of human rights abuses.

The plan is less extreme than the one WarnerMedia announced last week to launch all of Warner Bros.’s 2021 movies simultaneously on HBO Max and in theaters. The strategy, which starts Christmas Day with the release of Patty Jenkins’ “Wonder Woman 1984,” shook the film business as a tacit recognition that the studio does not expect the theatrical experience to return in a significant way for most of next year.

“Flexibility is going to be a big dynamic going forward for us,” Chapek said, noting that 80% of the titles Disney announced Thursday are going direct to consumer.

Key to Disney’s streaming strategy outside the U.S. is its Star brand, which will encompass content from Disney-owned channels and studios that don’t fit Disney+’s family focused vibe, such as Disney Television Studios, FX and 20th Century Studios. The offering will launch outside the U.S. in markets such as Europe and Canada as an additional “tile” within Disney+, with added parental controls. In Latin America, the company will offer a standalone service, Star+, which will include live sports.