Biggest Disney Business Stories of 2022
At the start of 2022, the Walt Disney Company had a market cap of $285 billion. As the year ends, it’s closer to $150 billion. Obviously, we have many shocking business stories to discus, most of which aren’t the greatest.
Here are the most impactful Disney business stories of 2022.
Disney Buys a Boat
There’s bargain shopping, and then there’s the nonsense Disney just pulled off when it purchased a new mega-cruise ship.
Here’s what happened. A billionaire doubled down on the cruise industry at exactly the wrong time.
He committed billions of dollars toward cruise ship expansion in 2019-2020.
You can already guess how and why this idea blew up in his face. COVID-19 collapsed the cruise industry seemingly overnight.
When that happened, the billionaire’s company, Genting Cruise Lines, went bankrupt.
This financial decimation included strange side effects within the insular cruise industry. Genting had commissioned one of the largest cruise ships ever.
The company expected to spend more than $1 billion, possibly as much as $2 billion, on the Global Dream, which would become the flagship of its fleet.
Alas, the shipbuilders had only completed part of the mighty vessel when Genting liquidated its assets.
In a remarkable bit of fortune, that shipyard was Meyer Werft, the same place where Disney was building its ship, one we’ll discuss in the next section.
Disney had strengthened its relationship with Meyer Werft during the pandemic. The shipbuilders there tipped the company on a hot rumor.
Someone could purchase the Global Dream for a fraction of its price.
While the bidding process proved challenging, Disney ultimately proved itself the only serious suitor for this incomplete cruise ship.
Reports suggest that Disney acquired a $1.8 billion luxury vessel for around $40 million. It’s like Disney Cruise Line used a coupon for a 98 percent discount!
Of course, that story comes with a flip side. The reason why Disney built such a strong relationship with a German shipyard was the pandemic.
When Disney announced its next cruise ship, the Disney Wish, everyone expected its maiden voyage to occur in 2021. Wouldn’t that have been nice?
Instead, COVID-19 concerns delayed construction and proved devastating to the cruise industry as a whole.
For this reason, Disney repeatedly delayed the launch of its next great cruise ship, partially because it wasn’t ready yet.
Even now, half a year later, a promised show on the Disney Wish has yet to open.
Still, Disney needed a win here, a cruise ship that demonstrated how Disney Cruise Line had returned to glory after the pandemic.
Thankfully, that’s what happened. According to Disney executives, the Disney Wish has maintained 90 percent occupancy since its maiden voyage in July 2022.
Simultaneously, Disney has redefined family vacation entertainment and amenities.
We may have waited an extra year for the Disney Wish, but it proved well worth the delay. Patience was a virtue here.
Star Wars: Galactic Starcruiser
In the tourism industry, 90 percent occupancy is challenging to top. Still, Disney managed that feat with its other showstopping new addition.
Star Wars: Galactic Starcruiser somehow overcame terrible early buzz and evolved into the must-do tourist event for Star Wars and Disney fans alike.
During its first eight months in operation, Galactic Starcruiser sold out virtually every three-day/two-night booking.
Folks, I’ve worked in the tourism industry for 30 years. I’d never heard of that until the Star Wars Hotel opened. It’s impossible!
Hilariously, many people proclaimed the new vacation experience a bust before it had even opened.
A poorly received marketing commercial cheekily imitated old Disney marketing campaigns from the 1980s and even starred that kid from The Goldbergs.
Few got the joke, though. Instead, they focused on Disney’s Star Wars-authentic designs, the ones George Lucas created during the 1970s.
Obviously, those look dated, as that’s the point. They’re charming throwbacks of how people viewed the future 50 years ago.
Star Wars fans weren’t distracted by the negative buzz and ventured into the unknown of fully immersive vacationing. And they loved it!
While we won’t know for a while whether Galactic Starcruiser possesses any staying power, its 2022 exceeded even the most optimistic projections.
The Goalposts Move on Disney Streaming
Heading into 2022, everyone knew the deal…or, at least, we thought we did.
Wall Street gave all the competing streaming services specific instructions.
The goal during the pandemic came down to one simple number: subscribers.
Disney did its part in capitalizing on its clever infrastructure. Way back when, Bob Iger and Kevin Mayer had created a three-headed streaming monster.
During calendar 2021 and 2022, Disney reaped the benefits. It overtook Netflix to claim the largest streaming subscriber base in the world.
Hulu+, ESPN+, and Disney+ expanded by 43.5 million subscribers during 2022.
That sounds terrific, right? NOPE! After Netflix missed its subscriber totals early in 2022, Wall Street changed its mind and moved the goalposts.
Suddenly, investors wanted streaming companies to show a profit, which wasn’t the deal.
Streaming services had committed tens of billions of dollars in future spending to entice more subscribers.
Now, Disney finds itself tethered to several mega-expensive contracts right when Wall Street is preaching fiscal restraint. It’s just terrible timing.
Not coincidentally, Disney stock has hit multi-year lows as 2023 approaches.
However, the company countered in December by adding a new ad-based tier of Disney+. It allows people to subscribe for less as long as they agree to watch commercials.
If that sounds like a familiar business model, it should. Disney just reinvented cable television for the streaming era. Many other companies are following Disney’s lead, too.
Strange World Bombs, Underscores Growing Disney Problem
In a past life, I worked as a box office analyst. So, I’ve covered my fair share of bombs over the years, including some infamous Disney projects.
You may not remember John Carter or Treasure Planet as box office failures since they’re pretty good films.
However, for a time, Disney answered many uncomfortable questions about each one’s theatrical performance.
When Strange World entered theaters, history repeated itself. Like Treasure Planet, this animated sci-fi flick failed to entice viewers.
The film will have earned about $35 million domestically and maybe $60 million worldwide by the time you read this. Its production budget was as much as $180 million.
So, yeah. This one’s an unmitigated disaster, something that happens at times with big-budget films.
Still, Strange World’s struggles have shined a spotlight on an emerging problem with Disney/Disney+.
Some believe that the emergence of Disney+ has undercut the need for fans to watch Disney animated films in theaters.
Disney’s decision to release titles like Turning Red, Luca, and Soul on Disney+ has blurred the lines about what audiences should expect.
Meanwhile, theater owners have assailed Disney for its pandemic-related business decisions, something I find almost childishly selfish and short-sighted.
Even acknowledging that, Disney does have a problem in need of a solution here.
Upcoming 2023 and 2024 releases need to re-establish that Disney is the alpha in the animated storytelling industry.
Of course, Encanto would have done that if not for COVID-19. It’s a masterpiece.
Disney Fights the Law, and the Law Wins…for Now
Let’s be honest. Florida politics has taken a turn for the insane during the pandemic.
Photo: WikipediaNo matter which side of the aisle you’re on – or whether you even care about politics – you’re aware that COVID-19 caused some battle lines to be drawn.
In the wake of these events, politics have turned into a kind of blood sport, something Disney discovered the hard way.
Florida’s government passed the so-called Don’t Say Gay bill, which angered many Disney employees. They pressed their employer, Disney, to take a stand.
At first, then-CEO Bob Chapek tried to work behind the scenes to alter the legislation. Eventually, internal pressure led him to strongly denounce the bill.
At this point, Florida’s government did something that’s probably unlawful. It voted to punish Disney by dissolving the Reedy Creek Improvement District.
As a reminder, that entity exists as a means of allowing Disney to self-govern rather than deal with local politicians.
Photo Credit: https://www.worldofwalt.com/disney-private-government-disneys-reedy-creek-improvement-district.htmlFlorida offered that concession in 1967 as a way to entice Disney to build a theme park in the state.
During the 50+ years that followed, Disney proved a reliable citizen/tenant that singlehandedly turned Central Florida into a tourist destination.
Without this district, Disney must negotiate with a local council before it can break ground on new projects.
Frankly, the move was ill-considered on the part of Florida legislators, something they’ve since recognized.
The state would find itself responsible for the payment of more than $1 billion in loans if it revoked Reedy Creek entirely.
However, the legislation still calls for this to happen in 2023. As such, this story is one we’re tracking as we enter the new year.
I don’t expect much of note to change, but if it did, that would be problematic for Disney.
Bob Chapek Loses the Game of Thrones
Finally, one business story towers above the rest, and you know what it is.
In truth, Disney’s biggest story in 2022 ties back to most of the others we’ve discussed here.
During the course of 2022, Bob Chapek proved himself unreliable as the leader at Disney.
His primary failing wasn’t that he was incompetent – I swear! – but that he was mistake-prone and inconsiderate.
When the Reedy Creek story broke, the main thing I heard from other business writers was a sense of disbelief.
Nobody could reconcile that Florida had turned on its most consistent source of revenue over the past half-century.
Similarly, the financial struggles of Disney+ and Disney’s theatrical releases hurt Chapek’s cause. After all, making money was supposed to be his special skill.
Despite the misgivings of Disney’s Board of Directors, Chapek somehow attained a three-year extension in June. He’ll spend most of that time picking up checks for doing nothing.
In late November, in one of the most stunning business stories I’ve ever covered, Disney replaced Chapek with his former boss, Bob Iger.
Remarkably, this change occurred on a Sunday evening, which demonstrates Disney didn’t want to spend another week with Chapek in charge.
The Board felt he needed to go right then, and they were thrilled to Iger agreed to return.
So, after three years of utter chaos, Disney once again has its most loyal captain steering the ship for at least the next two years.
Thank all the stars in the heavens.
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Feature Photo: Matt Stroshane/Courtesy Disney Parks