The Beginning of the End? Disney Shifts Focus to Streaming Content

In order to accelerate its direct-to-consumer strategy, Disney will be centralizing its media businesses into a single organization that will be responsible for content distribution, ad sales, and Disney+. This new structure means Disney is making streamable content its primary focus moving forward. 

The change comes as the coronavirus pandemic crippled theatrical business and ushered more customers towards its streaming options. This is a momentous shift in the way the largest studio thinks about entertainment, and makes a humongous change in the industry, with others likely to follow. 

As Deadline puts it, "Under the new structure, the focus will be on developing and producing original content for the company’s streaming services, as well as for legacy platforms. Distribution and commercialization will be centralized into a single, global Media and Entertainment Distribution unit led by Kareem Daniel, formerly president of consumer products, games and publishing."

We don't want to sensationalize this, but we do think it's important to point out that Disney is making a calculated move to focus on streaming. No word on if this will shift back when theatrical becomes viable again. 

Disney has seen how well its app has been doing, has seen how movies are struggling, and is going to now concentrate efforts on the ruling of what people stream at home. 

Did COVID make this happen? 

Not directly. 

“I would not characterize it as a response to COVID,” CEO Bob Chapek told CNBC. “I would say COVID accelerated the rate at which we made this transition, but this transition was going to happen anyway.”

In recent months, the company pushed its theatrical releases, including Marvel's Black Widow, to next year. They dropped Mulan online, without giving us numbers on sales, and they're doing the same thing with the Pixar film Soul, which will now arrive on Disney+ in December.

″[Consumers] are going to lead us,” Chapek said. “Right now they are voting with their pocketbooks and they are voting very heavily towards Disney+. We want to make sure that we are going the way the consumers want us to go.”

This is an unprecedented shift, spurred on by a lackluster year for the company's stock, which rose after this announcement. 

“Given the incredible success of Disney+ and our plans to accelerate our direct-to-consumer business, we are strategically positioning our company to more effectively support our growth strategy and increase shareholder value,” Chapek said in a statement announcing the reorganization. “Managing content creation distinct from distribution will allow us to be more effective and nimble in making the content consumers want most, delivered in the way they prefer to consume it.”

This is a changing of the guard. The idea that studios need tentpoles to survive is now gone. Sure, they help, but only if you can get them into theaters. The name of the game now is to have "content" that people can watch, which gets people to subscribe to your streaming service. 

While there will certainly be pushback, we will have to see what happens next. 

Obviously, an announcement that the coronavirus has been cured would surely send people back to the theater once vaccines come in, but that feels months, if not years, away. Disney is pivoting at a crucial time. Netflix has been cashing in during the pandemic, with lots of titles going viral. 

They've also been able to drop new content weekly, something other studios have not been able to accomplish as they hold out for theatrical releases. 

Will the rest of the studios sell off their titles and try this out? We don't know yet, but streaming is king right now and seems to be taking its place as the norm sooner than anyone ever expected. 

What do you think of this seismic shift in the industry? Let us know in the comments.