Disney has announced that it will undertake a major reorganization of its media and entertainment business and focus on streaming.
After Disney announced its plan to reorganize its media and entertainment business to "further accelerate" its streaming strategy, the company's shares went up by approximately 5% in after hours trading.
Reorganization at Disney
The media and entertainment giant's reorganization will involve the creation of a new Media and Entertainment Distribution group that will be responsible for monetizing content via distribution and ad sales.
This particular business group will also handle the operations of the company's streaming services, including Disney+, Hulu and ESPN+. The new group will be under the leadership of Kareem Daniel, who previously served as president of consumer products, games and publishing division.
Disney's chief executive officer (CEO) Bob Chapek said: "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."
"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," Chapek explained.
In response to the announcement, Trip Miller, a Disney investor and managing partner at hedge fund Gullane Capital Partners, said: "This is further proof that the direct to consumer model is not only well received, but more critical than ever to Disney's future."
Miller added: "These moves will not only result in higher quality content, and focused distribution, but allow the company to streamline corporate complexity and hopefully lower expenses."
He also pointed out that the move will enable Disney to further monetize in demand content and possibly "make up for revenue and profit lost in other divisions this year."
Disney+ thriving amidst the pandemic
In early August, Disney announced that it will focus on its Disney+ streaming site and launch a new streaming service outside the US after it reported losses due to the coronavirus pandemic.
According to the entertainment giant, its Disney+ service had already attracted 60.5 million subscribers.
In the three months to June 27, Disney reported losses of $4.7 billion as it was forced to shut down its theme parks and delay film releases and production. In the same period last year, the company posted a profit of nearly $1.8 billion.
A few weeks ago, the company also announced that it will lay off 28,000 employees in the US due to the impact of the pandemic on its parks and resorts business.
Disney said the affected jobs will be those from its Parks, Experiences and Products unit and that 67% of the employees to be laid off will be part-time workers. There are over 100,000 US employees in the company’s parks and resorts division.
In order to counter the disruption caused by the pandemic, Disney is pushing plans to expand its streaming service as it tries to position itself as a competitor of Netflix, Amazon and other streaming sites.
After launching its Disney+ streaming service in the US last November and expanding into other markets, Disney said it now has more than 100 million subscribers across its on-demand sites, including ESPN+, Hulu, and the Hotstar streaming service in India.
According to company executives, the new international service to be launched will be somewhat similar to Hulu but will build on the recognition of the Star name outside of the US.
It will feature content from the wider Disney umbrella, which includes ABC, 20th Century Films and SearchLight Pictures.
