Disney CEO: Won’t “Contemplate Rights Deals” Without ESPN+, Doesn’t See Long Theatrical Windows Coming Back

To say that Disney has been successful transitioning to a DTC company is in an understatement. In just over a year, the company reached nearly 95 million Disney Plus subscribers.

Unlike HBO Max though, they haven’t fully committed to releasing films on Disney+, the same day as theaters. They have tested with “Mulan” and will with “Raya and the Last Dragon”, their $29.99 “Premier Access” release. They have also shifted some movies like “Soul” directly to Disney+, and cut the time between theatrical and streaming release on others like “Onward” last Spring.

In an interview at the Morgan Stanley TMT conference, Disney CEO Bob Chapek says that he feels that theatrical releases will “continue to be a big deal”, but it’s a “very fluid situation.” Ultimately, he said the long-term shift comes down to consumer preferences.

“I think the consumer is probably more impatient than they’ve ever been before. Particularly since now, they’ve had the luxury of an entire year of getting titles at home, pretty much when they want them. And so I’m not sure there’s going back,” said Chapek. “We certainly don’t want to do anything like cut the legs off a theatrical exhibition run… I don’t think (the consumer) will have much of a tolerance for a title say being out of theatrical for months, yet it hasn’t had its chance to actually be thrown into the marketplace in another distribution channel just sort of sitting there getting dust.”

In terms of their recently released Star brand, “overall strategy is to make sure that content for Star is rooted in properties and content that we own, as opposed to third party properties.” This is why Chapek says the plan is for Star to have 50 original series on the service by 2024.

On the U.S. side, Chapek is still bullish on Hulu, saying “we’re really thrilled with everything that Hulu’s accomplished.” He says the power in Hulu is their advertising business and their ability to offer the Disney Bundle with that service. “The secret weapon with Hulu is obviously the rapid growing, robust advertising business, that’s inherent in this. That plus the Disney bundle. And those two things are - sort of make it a very impressive force for us.”

Chapek also shared that ESPN+ “absolutely critical to us going forward in the future.” He says that the company is “steering as many rights as possible towards ESPN+.” The service has 12.1 million subscribers, but is targeting 20-30 million by 2024.

“We won’t contemplate rights deals going forward, that don’t envision ESPN+ being a major player in the use of those rights. And whenever we get into any kind of rights negotiations with ESPN+, we are making sure that yes, with our rights holders, we’re making sure that+ Plus is going to be a really big part of that, in terms of our flexibility, because as the consumer flexes once again, we want to be able to flex with him.”

Disney and the NFL are currently in a negotiation to renew Monday Night Football rights for ESPN and ABC. There has also been speculation that they could be a top bidder for NFL Sunday Ticket rights for ESPN+ when they expire after next season.