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Tag: Disney Plus

  • Disney Accelerating Pivot To DTC-First Business Model

    Disney Accelerating Pivot To DTC-First Business Model

    During yesterday’s earnings call Disney CEO Bob Chapek said it has accelerated the company’s pivot towards a DTC-first business model. “Our recent strategic reorganization has enabled us to accelerate the company’s pivot, towards a DTC-first business model and further grow our streaming services,” says Chapek. “Disney+ has exceeded even our highest expectations, in just over a year since its launch with 94.9 million subscribers. ESPN+ and Hulu have also performed well, with 12.1 million and 39.4 million subscriptions, respectively.”

    Chapek attributes the company’s massive streaming growth to its huge collection of brands. “The wealth of IP from our unrivaled collection of brands and franchises provides us with an incredible breadth and depth of storylines and characters to mine for Disney+ and our other streaming services,” says Chapek. “We have the ability to interconnect these storylines and characters in unprecedented ways as we saw with The Mandalorian and WandaVision tying into the broader Star Wars and Marvel franchises. We’re excited to continue exploring the endless possibilities that this unique ecosystem provides.”

    DTC Results Improved By $650 Million

    “We believe that we’ve got a great price-value relationship,” says Chapek. “I think the best insulation we’ve got (to lower churn) is to keep the price-value relationship very high and there’s no better way to do it than powerhouse franchises cranking out regular new releases on a monthly basis.”

    Disney’s direct-to-consumer results have improved by nearly $650 million versus the prior year. “Last quarter, we guided to direct-to-consumer operating income declining by $100 million versus the prior year under our former segment structure,” says Disney CFO Christine McCarthy. “Our reported results are $750 million higher than that guidance.”

    Lower Disney Losses Attributed To Disney+

    Disney attributes their lower losses to the growth of the Disney+ streaming service. “A lower loss in the first quarter compared to the prior year was driven by subscriber growth partially offset by higher costs due to the launch and expansion of Disney+. With 94.9 million paid subscribers at the end of Q1, Disney+’s global net additions were 21.2 million versus Q4.”

    “Disney+ Hotstar subscriber additions continued their strong growth trend with Disney+ Hotstar subscribers making up approximately 30% of our global subscriber base,” said McCarthy. “We also saw strong additions to our subscriber base from our November launch in Latin America.”

    Disney Happy With Level Of Churn

    Disney is also very happy with its level of churn especially as it relates to subscribers who came into the Disney+ service via their Verizon partnership which helped power its launch last year. “We are very pleased with what we’ve seen so far on the level of churn,” said McCarthy. “And as our product offering matures and we put more content into the service and our subscriber base becomes more tenured, we expect to see our churn rates continue to decline.

    So in regard to the specific churn related to the anniversary of the Verizon launch promotion from last November 2020, we’re really happy with the conversion numbers that we have seen there going from the promotion to become paid subscribers.”

    100 New Titles a Year

    “With Disney+ originals along with the theatrical releases and the library titles, we’ll be adding something new to the service every week,” noted McCarthy. “We are very pleased with the engagement overall. We believe we’re going to reach that cadence of getting content on the service every week within the next few years. We’ve also set that target for 100-plus new titles per year. And that’s across Disney Animation, Disney Live Action, Pixar, Marvel, Star Wars, Nat Geo. And of course, we’ll continue to add more to our library as we go through time as well.”

    “Given the value of growing our sub base, we are continuing to invest in high-quality content,” says McCarthy. “We believe that content is the single biggest driver to not only acquiring subs, but retaining them.”

  • Not All Good Disney+ News… 25% Of Subs From India

    Not All Good Disney+ News… 25% Of Subs From India

    “An awful lot of Disney+ subs are coming from Hotstar in India where they are either giving away Disney+ for free or way under a dollar,” says Tom Rogers, executive chairman of WinView and former CEO of TiVo and founder of CNBC. “About 25% of Disney+ subs now are coming in on that basis. I think the bull case gets ahead of itself when it doesn’t look under the hood a bit about those streaming numbers.”

    Legendary media executive Tom Rogers says that investors need to look under the hood a bit with Disney+ because a quarter of its subscribers are from a low-revenue deal with Hotstar based in India:

    WTH… 25% Of Subs From India

    You’ve got to keep your eye on the long term prospects with Disney. They beat the drum about streaming. Their very good at getting people to focus on the shiny thing which is the streaming subscriber numbers for Disney+ that they put up. I think the bull case gets ahead of itself when it doesn’t look under the hood a bit about those streaming numbers. An awful lot of them are coming from Hotstar in India where they are either giving away Disney+ for free or way under a dollar. About 25% of Disney+ subs now are coming in on that basis.

    Then you’ve got to worry that they gave away an awful lot for free when they launched a year ago. How many of those are going to roll off which we will see in the next quarter? Everybody’s focused on Disney+ numbers but Disney+ if you are over the age of 12 is really not the offering you’re focused on, it’s Hulu.

    While people got a little disappointed in Netflix numbers last quarter, Netflix added 13 million subs for the year in the US. Hulu also added about 7 million subs and Hulu has about half the number of total subs so it has a lot bigger runway to grow. And that growth was not all that impressive. There is a lot of credit for the Disney+ launch that they had but there is a lot there that they got to still run with.

    Disney Pouring More Money Into Streaming Content

    The most significant thing on the earnings call yesterday was the announcement of the suspension of the dividend for January saying that they were going to heed the advice of Dan Loeb and pour more money into streaming content. While they certainly have beat the hell out of expectations that they originally set for subscribers for their streaming business they are going to have to re-stat in terms of what they laid out initially for programming expenditures.

    It’s going to be much much more expensive than anything they originally indicated. Not only because Netflix is out there going toward a $20 billion programming budget in the next few years. This will allow Netflix to probably introduce a new movie or series every day. The competitive pressures on Disney are going to be huge.

    Disney Now Has To Worry About Engagement

    Disney now has to worry about engagement. How many people are watching? How much time are they spending? People are overwhelmingly spending time on streaming when it comes to Netflix and YouTube. Disney hasn’t yet got the kind of engagement that gives you pricing power and that price-value perception which really makes for a profitable service over time. That’s all about having to spend more money on programming.

    They have a lot of competition for their programming dollar within the company because sports rights are coming up for renewals. Sports rights are going to go up 50, 60, 70 percent, or more and they have dwindling audiences to spread that rights cost around. That’s real competition internally for where they spend their programming dollars.

  • Disney: Less Theaters, More DTC

    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.

    Disney: Less Theaters, More DTC

  • Hopefully, It’s The Beginning Of The Golden Era Of Content

    Hopefully, It’s The Beginning Of The Golden Era Of Content

    “Hopefully, it’s not the end of the golden era of content,” says Howard Owens, Propagate Content founder and co-CEO. “Hopefully, it’s the beginning. For the producers and the writers and directors who are strong and have great new original ideas, they are going to be paid very well. You’re seeing that across the board. Those who have the best ideas and the freshest new approach are going to be rewarded. The rewards are just a little different. More upfront now so you’re taking less risk but there’s less long-term tail and opportunity.”

    Howard Owens, founder, and co-CEO of Propagate Content, discusses how streaming is disrupting the business model for content producers in an interview on CNBC:

    The Business Models Are Changing

    A lot of people are choosing sides. We’re choosing to play the field on the streaming side. It’s a great time for consumers right now. It’s a boom time for blue-chip iconic great television. There is so much opportunity for every part of the family. As producers, it’s also a very rich time because there are different kinds of content being made at the different platforms. It’s just that that rare moment that you can be as creative as possible and feel like they’re unlimited possibilities. 

    There’s a lot of cash (available) but the business models are changing. As producers, it used to be that you could own a piece of the show. You would approach your distribution partner as a creative business. You would be part of that show for the life of it. If that show was successful 20 years later you would participate 20 years later.

    Now the model is changing more to a goods and services model where you’re paid very well for delivering and rendering those goods and services. But once those goods and services are rendered there’s no real tail anymore. At least that’s what the streamers are leaning into.

    The Streamers Are Now Big Media Companies

    The streamers are now big media companies of their own right. They want the ability to window their programming anywhere they want. Take Disney which launches Disney+ tomorrow. They have a broadcast network, they have cable networks, and they are now going to have the Disney+ platform. They also have cable channels and FX channels and National Geographic networks. 

    They want to be able to window their programming how they see fit whether it be on Disney+ or whether it’s on the channel. Because of that every time the show moves they don’t want to have to do a new deal with the profit participants. They want to be able to move those shows freely. That’s why they’re paying upfront money but you’re not along for the long term ride. 

    Hopefully, It’s The Beginning Of The Golden Era Of Content

    Hopefully, it’s not the end of the golden era of content. Hopefully, it’s the beginning. I think the deals are going to change and work out. For the producers and the writers and directors who are strong and have great new original ideas, they are going to be paid very well. You’re seeing that across the board. It’s really still a meritocracy. Those who have the best ideas and the freshest new approach are going to be rewarded. The rewards are just a little different. More upfront now so you’re taking less risk but there’s less long-term tail and opportunity.

    Hopefully, It’s The Beginning Of The Golden Era Of Content – Howard Owens, Propagate Content CEO
  • Does Netflix Have Enough Stuff To Keep Us Coming Back?

    Does Netflix Have Enough Stuff To Keep Us Coming Back?

    “Does Netflix have enough stuff that’s good enough to keep us coming back?” asks Michael Pachter of Wedbush. “That’s the real acid test. I actually think all these metrics they’re giving us on the crap shows are telling you that people are willing to watch whatever they throw at them because they’re running out of really great stuff to watch. So you get 40 million people watching Adam Sandler, which shocks me, but it happened.”

    Michael Pachter, an analyst at Wedbush, discusses Netflix earnings, which reported a huge drop in US subscribers, and if Netflix can survive against Disney and other content streaming companies in interviews on CNBC and Bloomberg:

    Does Netflix Have Enough Stuff To Keep Us Coming Back?

    I think this is a blip. Netflix subscriber growth is going to be like the movie box-office and when there’s lots of great stuff they’re going to see an increase in subs. The numbers on Stranger Things are pretty impressive. It is a really good show. They have a handful of really great content. They’ll probably hit their 7 million subs number. I think the real problem is next year when there’s competition. We saw a preview of next year with this quarter. So I think next year you’ll probably have a couple of quarters where they actually lose subs.

    By my count, Netflix produces about ten times as many shows as HBO and they get about the same number of Emmy nominations. So throwing 10x at the wall they’re going to have their hits. I actually think subscriber growth is going to be based on one of two things, either water cooler chatter kind of shows like Breaking Bad, Ozark, and Stranger Things, that we talked about when they were on and we told people they have to see, or good enough content, which is a high quantity of okay content. 

    Do they have enough stuff that’s good enough to keep us coming back? That’s the real acid test. I actually think all these metrics they’re giving us on the crap shows are telling you that people are willing to watch whatever they throw at them because they’re running out of really great stuff to watch. So you get 40 million people watching Adam Sandler, which shocks me, but it happened.

    Price Increases Drove Subscriber Losses

    Price increases probably drove the subscriber loss domestically. I think that they’re probably bumping up against the ceiling on what they can charge and continue to grow. I personally believe that they’ll keep 80 percent of their domestic subscribers at as high as a $20 monthly charge. Their last 10 million subscribers are probably middle-income households and they notice when prices go up a couple of bucks, which they did in January. You’re going to see continued defections as content migrates away from the site and as competition starts to materialize. 

    There’s Disney Plus in the fall, Warner and Comcast next year, and more content leaving at the end of this year and the end of next year. Middle-income households are probably going to have to think about whether they subscribe to one or two or three plans. Yes, they can cut the cord and maybe afford all of them, but the fact is that Netflix did see a decline of domestic subs. That’s what fuels international expansion and they’re about to lower prices in India. So I just don’t see how they’re really worth the $450 price target most of my competitors have on the stock. Today’s correction makes a lot of sense.

    Does Netflix Have Enough Stuff To Keep Us Coming Back? asks Michael Pachter of Wedbush

    Netflix Is an Overvalued Company

    That’s the reason we have cable TV. It was just the easy way to get 200 channels and we’re going backward. Actually, the right solution which is not going to happen is that Hulu is going to be the aggregator. You had three of the four networks that owned Hulu. If they had pooled content I think that actually was the winning formula. Disney has pretty much consolidated ownership of Hulu. I think that ESPN Plus and Disney Plus layered on top of Hulu might actually get us back to that old cable model. We’re going to go over the top (OTT) but you’re going to have a content aggregator and I think it’s going to be Disney. That’s Bob Iger’s vision. and I frankly think you’ll get HBO Max layered on top of that as well.

    Netflix has a place. They’re not going out of business. I have a price target that implies an enterprise value of $90 billion which is bigger than Warner Brothers was sold for. So I don’t think this is a worthless company. I think it’s an overvalued company. If consumers are going to try to replicate what they have with cable now at a lower price, sure cut the cord, no more CNBC, too bad, and maybe you can get Hulu, Disney Plus, HBO Max, the Comcast service, Netflix, and Amazon for less money. That’s what Netflix is banking on. 

    At the End Of the Day, Disney Is Going To Win

    Investors are foolish to think that anybody’s going to win except the content creators. The point is we’re watching this show (CNBC) because of you, not because of the platform. We want to see you. You’re the insightful person on this platform. You’re the content and you should command a premium for the content that you provide. Disney’s going to win. I really think at the end of the day Disney has the content. They win. 

    Stranger Things isn’t going to cut it. It’s one good show out of hundreds and hundreds and hundreds. You can’t name a Netflix original that they own that you actually watch other than Stranger Things. They don’t own Ozark. They don’t own House of Cards. They don’t own Orange Is the New Black. They own stuff like Flaked which you don’t watch or The Ranch which you don’t watch.

    At the End Of the Day, Disney Is Going To Win and Netflix is Overvalued, says Michael Pachter of Wedbush


  • Disney Takes a Playbook Out of Digitally Native Companies

    Disney Takes a Playbook Out of Digitally Native Companies

    “All of a sudden people are realizing that Disney is going to take the advantages that they have, content that nobody else has, moats that give them actual real leverage in the negotiations, and then they’re going to actually take a playbook out of these more digitally native companies,” says Sean Ammirati of Birchmere Ventures. “They’re going to actually build direct relationships with their end customers. They’re going to switch their business model from transactional to a subscription model.”

    Sean Ammirati, Partner at Birchmere Ventures, discusses how Disney has potentially reinvented themselves with the launch of Disney+ in an interview with Bob Evans on the always engaging and relevant Cloud Wars podcast:

    Disney Takes a Playbook Out of Digitally Native Companies

    Innovation is not relegated simply to 20-something small brand new companies. Large companies are able to leverage their assets and their unfair competitive advantages to play in this also. For instance, Disney recently had its Investor Day and announced its Disney Plus streaming offering. Disney Plus has been framed by a lot of people as a kind of “Netflix Killer.” The interesting thing about what’s happened there is the reaction from Wall Street tech journalists. All these different groups have been incredibly positive.

    All of a sudden people are realizing that Disney is going to take the advantages that they have, content that nobody else has, moats that give them actual real leverage in the negotiations, and then they’re going to actually take a playbook out of these more digitally native companies. They’re going to actually build direct relationships with their end customers. They’re going to switch their business model from transactional to a subscription model.

    How Do We Transform Our Relationships With Customers?

    These are things that we’ve been talking about for four years with lots of legacy companies under the category of digital transformation. But it’s hard every time someone steps up and tries to do that, you’ve got to re-educate Wall Street on how to think about your financial metrics. It turns out that GAAP accounting is not that similar to subscription accounting. To be fair, that’s an easier challenge than it was a few years ago. I remember years ago when Adobe made that pivot and what a struggle that was to say (to investors) we’re going to make less money next quarter and you should be excited about that. Their stock went through kind of a full J-curve there as they walked people through it.

    What was encouraging is after Investor Day there was a massive jump in Disney stock. All of a sudden these pieces that you’d watch the leadership put together for a while kind of came into a full mosaic picture. Not only did Disney stock shoot up but this arch competitor Netflix, they took a hit right away, although they’ve come back a little bit with recent earnings. I’m hoping that other CEOs in other boardrooms are taking note of this and asking themselves the same questions. How do we create products and services that transform our relationships with our customers to allow us to have that same type of growth mindset?

    Case Study: How to Be a CXO In This Subscription Economy World

    We have gotten to a point where we assume that if you’re a company that was born in the digital age and you’ve gone through the full capital formation prospect and gotten out and gotten public you must have certain things in your DNA that makes you the only organization who can win a market. Just look at the grocery industry. Amazon’s coming into grocery so I’m sure Amazon’s going to be the winner in that business. Maybe. But then you see the largest grocery chain in the United States (Kroger) partnering with Microsoft to actually be proactive instead of reactive.

    Companies can actually play in this business that weren’t born in the last thirty years. Disney is a great illustration of that. Now Disney needs to continue to execute. They’re going to need to actually finish the vision that they cast. They’ve got to launch these. They’ve got to make it work. They’ve got to pick the right partners. I really think in a couple of years this will be a case study lots of executives point to and say, man, we can do it. In the same way that the Adobe thing has been how to be a CFO in this subscription economy world that we live in.

    Disney Takes a Playbook Out of Digitally Native Companies – Sean Ammirati on Cloud Wars podcast
  • Disruption Caused By Technology Certainly Is a Big Issue, Says Disney CEO

    Disruption Caused By Technology Certainly Is a Big Issue, Says Disney CEO

    “When I think about what is going on in our businesses and our world today disruption caused by technology certainly is a big issue,” said Disney CEO Bob Iger while sitting within the new Star Wars: Galaxy’s Edge at Disneyland. “It’s one that I don’t necessarily get anxious about but one that I spend a lot of time on and am deeply focused on it. What we’ve tried to do is build a company that is capable of adjusting.”

    Tour of Star Wars: Galaxy’s Edge at Disneyland

    Bob Iger, CEO of Disney, discusses the launch of Star Wars: Galaxy’s Edge at Disneyland (see video below) as well as how technological disruption is impacting media and advertising in an interview on Fox Business:

    Disruption Caused By Technology Certainly Is a Big Issue

    When I think about what is going on in our businesses and our world today disruption caused by technology certainly is a big issue. It’s one that I don’t necessarily get anxious about but one that I spend a lot of time on and am deeply focused on it. I happen to believe that because of the kinds of stories that we tell and the products that we have including Pixar, Marvel, National Geographic, Disney, Star Wars, FX, Avatar, to name a few, that we have products that are not necessarily bulletproof or invulnerable to change but are more likely to withstand that kind of disruption we’re seeing.

    What we’ve tried to do is build a company that is capable of adjusting. This is not just in terms of our culture and the wherewithal, but capable of adjusting in terms of the kind of products we have to new forms of monetization and new forms of delivery. What Disney Plus and ESPN Plus and Hulu are designed to do is not only to grow as businesses to themselves but to be there for us as major alternatives in terms of business models should disruption get so acute that the current business model ends up being less viable.

    We Priced Disney Plus To Be Very Accessible

    We priced Disney Plus to be very accessible. What we are putting on are incredibly popular products such as Disney animated movies going all the way back to Snow White, the Star Wars films, the Marvel films, and on and on. Also on Disney Plus will be all the new things we are making. We wanted as many people across the world to be able to afford what they love which is all these properties.

    I actually don’t believe that price is going to be much of an issue for us given what’s available in the marketplace. For people who maybe can’t afford to spend another $7 a month is it possible they will give something else up for it? Sure. Is it possible they will wait to subscribe? Of course. We purposely kept the price down so that it would be more affordable to more people.

    Most Focused Initially on Net Subscribers

    I think in terms of the metrics that we will be most focused on initially (with Disney Plus) it would be net adds or net subscribers. That’s probably the most important metric for the foreseeable future. Another metric will be just how much people are watching programs or movies that we put on. We are making a lot of original product including Star Wars product with a series called The Mandalorian.

    We’ll watch carefully in terms of what’s being consumed. We don’t have any worries about it. We bought a technology platform called BAMTECH. It’s going to be a great means of delivering a good experience to consumers. We certainly have an ample library of products through television and movies and we have a lot of original content being produced.

    Advertising Will Find Its Way To the Consumer

    I think there will be channel consolidation (in the future). I don’t know about companies. We are a little spent right now I should say. We’ve got a lot to digest still. I think you will see some more consolidation. More importantly, I think there will be consolidation in the types of products that are brought out, particularly channels. There will be fewer channels globally in five years than there are today.

    Advertising will find its way to the consumer. Hulu sells advertising and more than the majority of people who sign up for Hulu are watching Hulu programs with advertising in it. We know there is advertising on Facebook and advertising on a variety of new platforms. It’s not on Netflix and won’t be on Disney Plus. I think the advertiser, given the technology that’s available and given the data that will be available, will find its way to the consumer, a way of delivering their messages.

    Disruption Caused By Technology Certainly Is a Big Issue, Says Disney CEO Bob Iger
  • Disney CEO: What Netflix Has Done Has Actually Been Good For Us

    Disney CEO: What Netflix Has Done Has Actually Been Good For Us

    “We wouldn’t have been ready to launch it (Disney+) two or three years ago,” says Disney CEO Bob Iger. “We wouldn’t have even been ready to talk about it. It takes technology. It takes content. It takes the talent to make the content. It takes a marketplace. You could argue that what Netflix has done has actually been good for us because they’ve seeded the marketplace to robust over-the-top content distribution and presentation.”

    Bob Iger, CEO of Disney, discusses the launch of Disney+ and how Netflix may have actually paved the way for Disney in an interview on CNBC:

    What Netflix Has Done Has Actually Been Good For Us

    We did extremely well licensing our content and Netflix. We’re launching this product (Disney+) because we are ready to launch it. We wouldn’t have been ready to launch it two or three years ago. We wouldn’t have even been ready to talk about it. It takes technology. It takes content. It takes the talent to make the content. It takes a marketplace. You could argue that what Netflix has done has actually been good for us because they’ve seeded the marketplace to robust over-the-top content distribution and presentation. I like launching when we are launching and believe that it’s a great time for us and the Fox acquisition was had a lot to do with it.

    There is something interesting that I’ve observed and I don’t think I’ve said it publicly. We announced that we were doing (Disney+) in June 2017 and (when)  we decided to do it that led to the purchase of BamTech. Then the opportunity to buy Fox first came up later that year. In fact, just a few months after the Board approved us buying the majority share of BamTech, which was done for one reason to go into the direct-to-consumer business, Rupert and I sat down and talked about the transaction. We would not have done that transaction had we not decided to go in this direction.

    We Evaluated What We Were Buying Through This New Lens

    If we hadn’t we would have been looking at that business through a traditional lens. Oh we’re buying TV channels, were buying more movie making capability, etc. and so on. By the time the acquisition opportunity came up and we knew we were going in this space we evaluated what we were buying through this new lens. What could National Geographic mean to us? What could it mean to us being in the direct-to-consumer space in India? What could it mean having access to their library, not to monetize it through traditional means but to do it through this? Bam! I mean the light bulb went off.

    It maybe speaks to why people don’t acquire companies too, because you try to measure what you’re acquiring in a traditional sense. Our decision to buy Pixar, Marvel. and Lucasfilm was made because we believed that great storytelling would stand the test of time. No matter how much the marketplace was disrupted, whether it was cable and satellite, movie theaters, traditional television, you name it, a great story well told, was going to succeed as an investment or as a financial proposition no matter what.

    Related Articles:

    The Marketplace Has Never Been This Dynamic, Says Disney CEO

    Disney Can’t Begin to Catch Netflix, But They Don’t Need To, Says Media Innovator Tom Rogers

    John Malone says Disney Needs What Apple and Amazon Have… Massive Direct Consumer Relationships


  • The Marketplace Has Never Been This Dynamic, Says Disney CEO

    The Marketplace Has Never Been This Dynamic, Says Disney CEO

    “If you measure it against the present, the present doesn’t stay the present for very long,” says Disney CEO Bob Iger when discussing their Disney+ launch. “In fact, in today’s world that’s changing so much, the marketplace has never been this dynamic, meaning speed of change is much faster. That’s technology, that’s consumer behavior driven by technology, it’s economics, it’s how things are marketed, anywhere you look.”

    Bob Iger, CEO of Disney, discusses their new Disney+ service and the necessity for companies to innovate beyond their current business models in an interview on CNBC:

    The Marketplace Has Never Been This Dynamic

    I’m an optimist and a realist. I’ve been at the company for 45 years and I’ve been president or COO since 2000. I have a deep understanding and appreciation of Disney and its brand and its relationship to consumers. I’m pretty optimistic about the ability for this thing to work particularly when we make it accessible. Because of the content we’re putting on, because of the user interface, and because of the price, I believe this is going to be successful. If in 5 years time we prove to be wrong, we’re still making great content that’s going to be in great demand globally.

    If you measure it against the present, the present doesn’t stay the present for very long. In fact, in today’s world that’s changing so much, the marketplace has never been this dynamic, meaning speed of change is much faster. That’s technology, that’s consumer behavior driven by technology, it’s economics, it’s how things are marketed, anywhere you look. You can’t measure it against what it is today, you have to measure against what you believe it’s going to be tomorrow. One of the reasons why companies fail to innovate is they continue to measure it against today.

    Companies Should Think About Tomorrow’s Business Model

    If you’re in the business of selling physical film you want to keep selling as much of that film as you possibly can. You believe you may hit a speed bump here and there, whether it’s the economy or a new competitor enters the marketplace, but you’re not really thinking it’s going away. Your business is not about film, it’s about taking pictures, and (you should) let people take pictures no matter how they want to take them.

    It’s a lot of pressure to not do that in a way because you’re getting measured by quarterly earnings, annual earnings, how much you grew, and in many cases compensation is tied to near term versus long term. It becomes very difficult to innovate because you just you’re so tied to the business model that got you where you are. This could be great, but it often causes companies to not think about what is that business model going to look like tomorrow.

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