business news in context, analysis with attitude

by Kevin Coupe

2020 has been more nightmare than dream for the Walt Disney Co., as the pandemic affected much of its business model - shutting down theme parks, limiting the sports events that it televised on its networks, closing the theaters that played its movies, and forcing mass layoffs throughout the company's various divisions.

One of the few bright spots was Disney+, the new streaming network on which the company was able to offer content from its Disney archives as well as its Star Wars, Marvel and Pixar divisions, in addition to new programming (like the stage sensation "Hamilton" and the live-action Mulan) that originally might've been in theaters.

Yesterday, in a four-hour investor day presentation, the company gave a master class in how to pivot a business, saying that it plans to spend billions of dollars on content for Disney+ and other streaming services (such as Hulu and ESPN+), produce dozens of series (some original, some spinoffs, some prequels, some sequels) as it builds a streaming empire that it sees as intertwined with its theatrical movie business, which it anticipates as coming back, at least to some degree, next year.

The Wall Street Journal reports that Disney "plans to add more than 100 new titles to the service per year … drawing on franchises such as Star Wars and Marvel Studios to lure viewers."  It is a kind of flywheel concept, with gathering momentum created by new content creating an enlarged subscriber base, which then enables the company to create new content and ancillary products and experiences - an approach built deeply into the Disney DNA.

While it does not have as many subscribers as Netflix, which has close to 200 million globally, Disney+ is ahead of schedule in terms of subscriber growth - the company says it has 86 million subscribers;  it originally projected that it would have between 60 million and 90 million by 2024.  Now, it is projecting that by 2024 it could have as many as 260 million subscribers.

(Disney+ also is raising its subscription cost, from $6.99 a month to $7.99 a month.  I have to tell you that while I was a little skeptical about whether I would keep my subscription, I watch it enough to make it worth the money, and it remains cheaper than Netflix.)

The point - and business lesson - is this:  It wasn't that long ago that Disney was seen as being almost impregnable in the structure of its business - any company with the rights to Luke Skywalker, Indiana Jones, Captain America, Sheriff Woody, plus a wide variety of venues in which to exploit their popularity, was a behemoth with enormous competitive advantages.

And then, pandemic.  Suddenly, the losses were in the billions.

The pivot to a streaming-centric model - which has not just been successful in terms of subscriber appeal, but also creatively, as can be seen in "The Mandalorian" - has been remarkable, with the company willing to rethink its strategy, tactics, and organizational structure.

The goal is simple, I think:  go to where the customer is.  Understand what the core value proposition is, and be willing to cast aside things that might've been seen as core, but actually were just things with dust on them.

Making such Eye-Opening moves is remarkable for any company.  But for one the size of Disney, with so much legacy and so much as stake?  Remarkable.  A proof that to be successful, you can't just wish upon a star.  You have to make hard, fast moves.