GROWTH AT FIRST
Disney greatly increased its content investment under Chapek, reaching over $30 billion in just one year. In addition, Disney+ was priced significantly lower than most of its competitors.
- The bet paid off and Disney expanded quickly, gaining more than 164 million customers in the three years following its launch
- When ESPN+ and Disney-owned Hulu are taken into account, the firm has now more streaming customers than Netflix
Wall Street first applauded Disney's decision to compete with Netflix when it debuted its Disney+ streaming service in 2019. Analysts expected this move would help Disney gain more control over its movies and TV series all while improving communication with its audience.
EXPLODING COSTS AND LOST CONFIDENCE
But Disney recently disclosed a loss in its streaming business of $1.47 billion, more than twice the loss posted in the corresponding quarter of the previous year. Both revenue and income fell short of analysts' forecasts.
- Theme parks, which have been Disney's best-performing sector over the past year, have experienced declining profit margins, according to the company
- And the streaming segment's target of becoming profitable by September 2024 may be in jeopardy if the economy continues to deteriorate
After Disney's disappointing quarterly report, Chapek conducted a conference call with analysts, which is when the problems reached a head. Despite the dire assessment, Chapek's tone and outlook were upbeat and he underlined his belief that the company was creating a soon-to-be profitable streaming business that creates shareholder value for the foreseeable future.
BOB IGER TO RE-ORGANIZE OPERATIONS
“Our goal is to have the new structure in place in the coming months. Without question, elements of DMED will remain, but I fundamentally believe that storytelling is what fuels this company, and it belongs at the center of how we organize our businesses, [...] This is a moment of great change and opportunity for our company as we begin our second century.” Bob Iger
In less than 24 hours at the firm, Bob Iger announced the departure of Kareem Daniel, the head of Disney's media and entertainment unit. The CEO also sent memos to staff sharing his vision for what is to come.
- On one hand, Iger wants to put back "creativity" at the center of Disney and push streaming services to the background
- All while cutting costs and making Disney more efficient
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Photo by PAN XIAOZHEN on Unsplash.