As the coronavirus ravages Hollywood, Disney sees the writing on the wall and chooses to stream over everything else.
To accelerate the direct-to-consumer strategy, Disney will centralize its media business into a single organization responsible for content distribution, ad sales and Disney +. This new structure means that Disney is making streaming content its primary focus.
The change comes when the coronavirus pandemic crippled the theater business and led more customers to its streaming options. This is a major shift in the way the biggest studio thinks about entertainment and is making a huge shift in the industry with others likely to follow suit.
As Deadline puts it, "As part of the new structure, the focus is on developing and producing original content for the company Streaming Services as well as for older platforms. Distribution and marketing will be combined into a single global media and entertainment distribution unit led by Kareem Daniel, formerly President of Consumer Products, Games and Publishing.""
We don't want to make this sensational, but we think it's important to point out that Disney is taking a calculated move to focus on streaming. Not a word about whether this will shift back when the theater becomes feasible again.
Disney saw how well their app worked, saw movies fight, and will now focus on deciding what people stream at home.
Did COVID make this possible?
"I wouldn't characterize it as a response to COVID," CEO Bob Chapek told CNBC. "I would say COVID has accelerated the rate at which we have made this transition, but this transition would happen anyway."
In recent months, the company has postponed its theatrical releases, including Marvel's Black Widow, to next year. They put Mulan online without giving us any sales numbers, and they're doing the same with the Pixar movie Soul, which is due out on Disney + now in December.
"[Consumers] will lead us," said Chapek. “Right now they are voting with their paperbacks and they are voting very strongly for Disney +. We want to make sure we're going the way consumers want us to go. "
This is an unprecedented change triggered by a weak year for the company's stock, which rose after that announcement.
"Given the incredible success of Disney + and our plans to accelerate our direct customer business, we are strategically positioning our company to more effectively support our growth strategy and increase shareholder value," Chapek said in a statement announcing the reorganization. "By managing the creation of content differently from distribution, we can make the content consumers want most, more effectively and flexibly, and deliver it as they prefer."
This is a changing of the guard. The idea that studios need tent poles to survive is now gone. Sure, they help, but only if you can get them to theaters. The name of the game is now to have "content" that people can see, which allows people to subscribe to your streaming service.
While there will certainly be a pushback, we have to see what happens next.
Obviously, an announcement that the coronavirus was cured would certainly send people back to the theater as soon as vaccines arrive, but that feels months, if not years, away. Disney turns at a crucial time. Netflix made money during the pandemic and many titles went viral.
They were also able to release new content weekly, which other studios couldn't because they are committed to theatrical releases.
Will the rest of the studios sell their titles and try this out? We don't know yet, but streaming is king right now and seems to be taking its place as the norm sooner than anyone ever expected.
What do you think of this seismic shift in the industry? Let us know in the comments.