Everything We Learned About Disney During Investor Day
In 1957, Walt Disney put pen to paper on a vital project.
He wanted to explain his company’s business model in a way that employees could understand.
The picture looks like this:
I’m not joking when I say that I’ve looked at this chart dozens of times during 2020, trying to figure out how to write an article about it.
I’ve looked like this:
For a while now, I’ve known that new Disney CEO, Bob Chapek, had paid attention to this chart and was building an updated business model around it.
During Thursday’s Investor Call, Chapek demonstrated that he’d done his homework.
Everything old is new again at The Walt Disney Company. Let me explain how and why Disney just showed investors its hole cards.
Here’s what we just learned during Disney Investor Day 2020.
A Four-Hour Flex
I will talk about the minutiae of Disney’s news items for a while. However, we should call the Investor Day event what it was: A four-hour flex.
Disney not-so-humblebragged about how it will revolutionize the distribution of streaming content. And it was a LOT to take in.
Executives highlighted every core aspect of Disney intellectual property (IP).
In fact, The Simpsons even animated a clip just to remind people Disney owns it.
The franchise didn’t even have an announcement. It was a power play, nothing more.
That’s where we’re at with Disney as we enter 2021. The company has cornered the market on desirable IPs.
Every time you log into Disney+, you can’t help but notice Marvel, Pixar, and Star Wars at the top of the screen, thereby highlighting the achievement.
The app features five boxes — National Geographic and Disney are the others — four of which the company didn’t own 15 years ago.
On January 25th, 2021, Disney will celebrate the 15th anniversary of its Pixar acquisition, the domino that triggered everything.
Since then, the company has targeted outside IPs that complement its existing ones. And it’s been a marriage made in merchandising heaven.
Please go back and look at Uncle Walt’s chart again. Films and television programs lead to merchandise licensing, which leads to strengthened parks.
Stuff that we watched during today’s glorified Zoom call won’t arrive for months/years. Still, it’s easy to envision the park merchandise we’ll buy.
For example, Disney will introduce a new TV show based on side characters from Zootopia. You’re gonna want those t-shirts and Funko POP!s.
That’s how Walt Disney did business. On Thursday, Chapek confirmed that his company will return to and augment its roots.
Disney Goes Back to the Future
On July 31st, 1995, then-CEO Michael Eisner pulled off a coup that secured Disney for a quarter-century. He purchased ABC and its associated brands.
At the time, ABC owned ESPN. In one fell swoop, Eisner purchased the dominant brands on network and cable television.
In the process, Disney ensured that its brand would remain in the public eye for decades to come.
Over the past few years, cable has declined dramatically. Much has been written about how much this consumer behavior hurts Disney.
During the Investor Day, Chapek and his team came out swinging, almost gloating.
These executives proved once and for all that they have turned a weakness into a strength.
Cable may be dying, but the House That Walt Built is very much alive.
Disney revealed that it counts 137M subscriptions across its portfolio. Disney+ claims 86.8 million subscribers, a comically large tally.
ESPN+ and Hulu, the afterthoughts, have crossed 50 million on their own. Hulu’s at 38.8 million while ESPN+ has reached 11.5 million.
None of this should have happened at this pace. The pandemic has microwaved Disney’s streaming service growth.
As such, the company has boosted its 2024 projections by an *ahem* modest amount.
Former CEO Bob Iger had optimistically suggested his new service could reach 60-90 million subscribers by 2024.
During Investor Day, the company boosted that estimate to – I kid you not – 260 million Disney+ subscribers.
Folks, at that rate, one out of every 33 people on the planet (!!!) would subscribe to Disney+.
In a 1995 article on Disney’s ABC takeover, a New York Times writer described the new entity as “the world’s most powerful media and entertainment company.”
That same statement applies to Disney’s OTT streaming service structure in 2021, only this time, the company has vertically integrated.
What’s the Plan?
Content is the plan. When Disney purchased Fox, I stressed that the old maxim is more accurate than ever. Content is king in streaming media today.
The Investor Day announcements came with one bombshell after another, and they crossed all parts of the Disney media empire.
ESPN shocked the south with its acquisition of rights to SEC football games, starting in 2024. CBS had owned those since 1996!
Also, ten Star Wars series, ten Marvel series, and several Disney/Pixar projects will come to Disney+ over the next three years.
Chapek indicated that Disney will offer more than 100 original pieces of content during calendar 2021.
In other words, twice a week, you’ll pull up Disney+ to discover new programming. This isn’t like that Netflix garbage, either.
Netflix’s business model relies on quantity over quality. Disney will go the other way, emphasizing its high-end brands.
In 2021, the Marvel Cinematic Universe will anchor Disney+ programming. Six series will debut on the service.
By my count, you’ll receive at least 40 new episodes of MCU television during calendar 2021. You’re on your own for those other 12 weeks.
I kid, but you get the point. Disney+ will evolve into the place where you expect new Marvel programming every week.
That’s not even half of what’ll be available, either.
Disney confirmed two spinoffs of The Mandalorian plus six new series and one previously confirmed Star Wars show.
Then, there’s the Disney/Pixar stuff, which left me breathless. Let’s talk about that in more detail.
The New Golden Age of Animation?
As a streaming media analyst, I’ve lamented the fact that there aren’t many useful metrics for judging programming success.
With Disney+, I’ve been reduced to tracking the Trending section of Disney+. For that reason, I know about the tremendous popularity of Moana.
This Disney animated story has captivated viewers to the point that it’s almost always one of the top 10 most watched shows on Disney+.
Similarly, other recent hits like Big Hero Six and Zootopia sometimes appear. These titles fall into that gray area for Disney strategists.
They’re not surefire hits as film sequels, but they possess devoted fanbases.
Disney tried to force a sequel and got somewhat burned with Ralph Breaks the Internet.
That film underachieved at the box office relative to expectations but still proved profitable for Disney.
Big Hero Six-Two (Seven?) would possess the same sort of doubt.
However, a television series produced by the film team would drive Disney+ subscriptions.
Similarly, we all want to know about those Zootopia characters I mentioned earlier. And then there’s Moana, which will get a series in 2023.
Yes, over the next three years, you may watch additional stories involving characters from Big Hero Six, Moana, and Zootopia…AT HOME!
Disney didn’t even stop there. We’re also getting Peter Pan & Wendy, Tiana, Dug Days, a Cars TV show, and a Beauty and the Beast prequel starring Gaston.
We’re talking full-fledged productions here, too. Luke Evans will return to portray Gaston with Josh Gad back as his adoring sidekick.
Which of those would you NOT want to watch?
I haven’t even touched on other stuff like a new Pixar series about a 13-year-old girl who turns into a red panda!
Director of the Academy Award-winning short Bao, Domee Shi, brings us Turning Red. Meet Mei: she experiences the awkwardness of being a teenager, with an added twist: when she gets too excited, she transforms into a giant red panda. Turning Red comes to theaters March 11, 2022 pic.twitter.com/2s5NgzqBHP
— Disney (@Disney) December 11, 2020
Oh, and Chris Evans will buzz one of your favorite characters in a new animated movie called Lightyear.
Disney Is a Streaming Service Now
Two months ago, I welcomed you to the new Disney, primarily a streaming service. The Investor Day call drove home this point emphatically.
Disney will approach streaming from all angles. For example, Raya and the Last Dragon will debut in theaters on March 12th.
You don’t have to head to the movie theater to watch it, though. It’ll debut on as a Premiere Access title on Disney+ on that date, too.
As a viewer, you’ll have the option to buy it at home or watch it in a theater.
Two months later, Disney will support the movie industry by releasing Black Widow exclusively in theaters. That’s the closest thing to a surprise here.
Executives aren’t ready to burn that bridge with theaters just yet. Instead, Disney will walk a fine line between at-home products and theatrical releases.
The (New/Old) Business of Disney
Chapek indicated that 80 percent of his company’s upcoming titles would debut on Disney+. Presumably, one out of five will receive a theatrical release.
Still, four out of five dentists recommending a toothpaste will make you want to buy it.
So, four out of five Disney projects debuting at home will cause you to subscribe to Disney+ and maintain membership for, well, forever.
For that reason, Disney will increase the price of the service by $1, starting in March.
In exchange, the company will spend $8-$9 billion on content in 2021.
That’s probably more than what a new theme park would cost, which isn’t accidental.
Chapek wants to secure his company’s revenue chain. For now, he has invested most of his resources on streaming content.
Afterward, those new projects will have ripple effects on our beloved parks.
The merchandise and attractions of tomorrow will come from Disney+ content arriving in 2021-2023.
Please look at that chart again and understand that Disney just went back to the same model Uncle Walt suggested more than 60 years ago!
Free advice: if you love someone and want to give them the perfect holiday present, send them a Disney+ subscription.