Disney’s Biggest Business Stories of 2021
The Walt Disney Company oddly stumbled in 2021, even as it got its finances back in shape after a disastrous 2020.
Somehow, the company earned $2 billion more, but its market cap dropped by $55 billion. So what led to this unlikely turn of events?
Here are the biggest Disney business stories of 2021.
Disney Stores Die
This subject saddens many of us, myself included.
In 2019, Target unexpectedly announced that it would start hosting mini-Disney stores within its buildings.
For Disney, this move represented the best of both worlds. Target would pay to provide the building space to Disney.
Meanwhile, these sections of the stores would only sell Disney products. Name a business that wouldn’t sign up for that deal!
Unsurprisingly, these Targets sold plenty of Disney merchandise. So, both parties agreed to expand the deal into more Target stores.
For Disney, that led to a side discussion. Why would the company need Disney Stores if it had Target doing the heavy lifting already?
After all, there are exponentially more Targets than Disney Stores. So, executives inevitably decided to close virtually all stores.
As I type this, only 23 remain, and we’re heading toward a near-future where fewer than 10 exist.
In fact, one of the recently closed Disney Stores was the first one in the world.
So, this move is brilliant for Disney but a bummer for fans of Disney stores.
I saw this one coming a mile away, yet it still surprised some people.
When Walt Disney World reopened after the pandemic, it did so without the use of FastPasses, the virtual queuing system.
For 20 years, Disney had offered FastPasses for free as a way to enhance the guest experience.
However, the writing had been on the wall about FastPasses for a while by then. Disneyland had previously unveiled MaxPass in 2017.
That system worked just like FastPasses, only it cost money to use. So we all knew it was only a matter of time before Walt Disney World switched to that method.
Some fans refused to believe it. That wasn’t realistic, though.
For a time, Disney remained the only major theme park operator without a paid line-jumping system.
This move was always gonna happen. The only question was when. That answer proved to be October 19th.
On that date, the formerly free FastPass system switched to Disney Genie+ and Lightning Lane.
Disney Genie+ is basically MaxPass by a different name. For $15 per day plus tax, guests may book up to eight reservations in the shorter Lightning Lane lines.
Then, for $7-$20 each, guests can purchase single rides on Disney’s top attractions like Star Wars: Rise of the Resistance and Avatar Flight of Passage.
Disney has done these things as a way to solve two problems at once. First, the company is cash-poor due to the pandemic.
With Lightning Lane and Disney Genie+, attendance doesn’t increase at the parks. However, per-person revenue increases as much as 30 percent.
Meanwhile, guests don’t leave the parks unhappy because they missed their favorite rides. Instead, they can pay to ensure the experience.
Fans don’t like this change, but it makes perfect business sense.
The Lake Nona Move
Technically, this one’s still in the offing rather than something that has already happened.
Still, we’re already experiencing ripple effects from it. After months of rumors, Disney announced that it would transfer some of its core businesses.
For financial reasons, Disney is switching coasts from California to Florida. Specifically, the company has purchased land in Lake Nona, Florida.
Disney has informed many cast members, including most of the Imagineering team, that they must transfer.
That’s a big ask from a corporation. If your boss’s boss asked you to move 2,500 miles, would you go?
The answer is probably no, and that’s kinda the point here. Some executives want a changing of the guard. They feel Disney needs some changes.
In fact, the retirement of Joe Rohde at the start of the year worked as the first hint of this impending shakeup.
Since then, several other Imagineers have quit rather than move. Also, the Imagineering team recently gained a new leader, Barbara Bouza.
While Bouza’s resume is staggeringly good, she’d worked for Disney less than a year before she took over.
Disney has made this move to have more money and power. However, I’d be remiss if I failed to point out that something similar led to Michael Eisner’s downfall.
The former CEO also tried to modernize Imagineering, only to lose the respect and trust of many powerful Disney workers. It’s something to track.
By the way, the strangest part of this story is that Bob Chapek, the new CEO, purchased a $12.5 million mansion in California.
That’s kind of a mixed message, isn’t it?
The Vaccine Mandate
During the pandemic, many businesses have made some tough decisions. That’s especially true for Disney, whose core business models have suffered mightily.
So, when COVID-19 vaccines proved effective and readily available in 2021, Disney executives faced a dilemma.
Strategists wanted employees to return to the office. However, an outbreak would have jeopardized the health of co-workers.
In July, the company joined Wal-Mart, Google, Apple, and other corporations. Disney announced a vaccine mandate for all in-office workers.
Notably, the company required consent from several workers’ unions, which it got because they recognized the need for this move.
Later, the Governor of Florida sued to block this move. As a result, Disney has temporarily paused the mandate while the parties battle in court.
By the time that happened, more than 90 percent of Florida Disney employees had already taken their shots.
Ergo, the court fight is a non-factor anyway. Disney protected its staff and paved the way for a return to the office.
Disney’s Streaming Year
Disney+ subscribers grew by 60 percent in 2021. Meanwhile, the combination of Hulu+, ESPN+, and Disney+ started its chase of Netflix.
Those three Disney streaming services accounted for nearly 179 million worldwide subscriptions at the end of the fiscal year.
Conversely, Netflix currently stands at 214 million. So objects are closer than they appear in the rearview mirror.
The gap at the start of the year was 87 million. Yes, Disney’s trio of services gained 52 million more in fiscal 2021 than Netflix managed.
Obviously, three against one isn’t a fair comparison, but that’s been Disney’s plan all along.
Bob Iger wanted to create a new media empire to match the cable/network television one from the past 25 years. Chapek is now carrying that football to the end zone.
Of course, not everything is going smoothly. Disney just experienced a high-profile spat with YouTube TV over carriage fees.
Google, the owner of YouTube TV, drew a line in the sand over Disney’s demands and actually recommended that people change services if they wanted ESPN.
That bluff (?) lasted less than two days before even Google capitulated to Disney. ESPN is simply too powerful, especially during football bowl season.
Along the way, Disney also acquired rights to NHL games for the first time in many years – Barry Melrose was ecstatic – and secured NFL rights for many more years.
As we enter 2022, Disney holds all the cards in its bid to corner the streaming media market.
Even Netflix isn’t competing head-to-head. That’s a fight Reed Hastings knows he can’t win.
Disney Wins the Tax War
One of the strangest local sagas in recent Florida political history ended anticlimactically.
In 2015, Orange County Appraiser Rick Singh argued that Disney had vastly underpaid property taxes for its land.
Singh made it his personal mission to bill Disney what he believed was a fair amount.
Meanwhile, Disney officials strongly believed that this person’s account methodology was deeply flawed.
Now, many Disney lawsuits involve a fractional amount of money, even if the headline states that millions of dollars are involved.
Usually, somebody sues for $3 million, hoping to get a low-six figure check. This…wasn’t that.
Disney won this lawsuit in 2021 and will eventually receive $8 million for overpayments.
For his part, Singh lost a primary in his attempt to win a third tenure as Orange County Appraiser.
The person who beat him in the primary later won the job. This individual has shown no interest in taking on Disney over property taxes.
So, this saga has come to an end with Disney emerging with a decisive victory.
Overall, Disney enjoyed a solid business year despite all the ups and downs.
Why, I didn’t even mention that glorious day when all six Disney theme parks were open at the same time for the first time since the pandemic’s start!
Feature Image: Raftermen 2018