Disney CEO Says Not All Streamers Will Survive, But Disney+ Will; Even as Platform Transitions to ‘Lifestyle Brand’
The face of streaming media is changing and Disney plans on being at the forefront of that movement for years to come. On Wednesday, the company’s CEO Bob Chapek discussed a wide-ranging set of topics about Disney’s myriad businesses with Matt Murray at the Wall Street Journal’s Tech Live Conference, and central to many of those conversations was Disney+ and its multifaceted streaming aspirations.
For many watching the streaming space, the question of whether the market is oversaturated has become key to understanding the future of the industry. The rapid introduction of new services, combined with a dizzying number of mergers and bundlings, has made it difficult to keep track of what the actual streaming goals are for many companies. On Wednesday, Chapek echoed comments made by other execs in the industry in forecasting that there will be an eventual contraction in the number of streaming services on the market, but he was confident that Disney would not be exiting the space anytime soon.
“I think that not everybody who’s out in the marketplace today will make it ultimately, unless there’s some type of recombination of secondary players in the marketplace that combine to create something greater,” he said. “This is a critical mass business; streaming is a critical mass business. Scale is really, really important in order to be able to thrive, and so I think there’ll be fewer … but definitely, we’ll be there.”
Currently, Disney operates three distinct streaming services, Disney+ is the home to much of the company’s vast library of titles and streams primarily family-friendly originals as well. Hulu is currently a general entertainment joint venture with Comcast and airs next-day TV content along with more mature original series and films. ESPN+ is the sports-focused streaming arm of the ESPN cable networks.
Recently, Chapek has indicated that Disney would like to become the full owner of Hulu even before it has the contractual opportunity to purchase Comcast's third of the business in 2024. Whenever the company takes full control of Hulu, it is expected that it will be folded into the Disney+ platform, as it already is — under various different names — in regions outside of the United States.
While Murray did not ask the exec about the possibility of Disney becoming the sole owner of the service in the next year, such a move would come at a time in which the company is looking to move beyond its streaming platforms being solely used as video distribution platforms to turning them into full-fledged lifestyle brands.
“Part of the lifestyle brand is using Disney+, not as a movie service, but using it as a platform for experiential Disney engagement,” Chapek said. “And so, we have ambition to use Disney+ way beyond just the movie service.”
Last month, Chapek similarly discussed his desire to further integrate Disney's in-person experiences with its streaming platform in order to create more interactive experiences for fans at home. When asked about the metaverse on Wednesday, Chapek said that — while they don’t like to use that term — the idea does make a lot of sense for a company that thrives both in-person and digitally.
This concept applies to projects like “Remembering,” which debuted last month on Disney+ Day, that use an augmented reality app to turn wherever a viewer is watching into a fully immersive experience, but it also applies to how Disney fans and customers interact with the company both online and in the parks.
“For us, it’s the physical and digital aspects of your Disney lifestyle coming together so that if you’re on Disney+, we should be aware — assuming you give us the permission to have that awareness — we should be aware of what happened, what you experienced, what you liked the last time you visited the park and vice versa,” Chapek said. “When you’re in a park, we should know what your viewing habits are on Disney+ … But once that happens, we’ve now brought your entire Disney existence into a place where we can give you a better experience in the park because we know what your preferences are in terms of viewing, and a better experience on Disney+ because we know what your affinities are and what your behaviors are.”
The philosophy behind expanding beyond the standard premium streaming service is that there are inherent limitations to that business model, as so many media companies are figuring out. Whether that is the inevitable saturation of the market, the ease with which customers can cancel subscriptions, or economic headwinds that impact overall consumer spending.
In an effort to combat many of those issues, Disney is looking to create a product that goes beyond simple entertainment and becomes part of consumers’ entire lives.
“People have such a deep-founded relationship with Disney, I mean, they love this company,” Chapek said. “And frankly, they don’t even look at it as a company. They look at it as a utility, they look at it as something that’s part of their lives … part of their identity. We need to embrace that.”
As means of an example, Chapek said, “Say you were Pirates of the Caribbean rider. Okay? When you go home, we know that you rode Pirates of Caribbean, so maybe the first thing that pops up [on Disney+] isn’t other things that you’ve looked at in the past or people that look like you have seen in the past, but what you get is special programming tailored to Pirates of the Caribbean that would be unique to people like you that is personalized towards your preference.”
One way that Chapek indicated that Disney needs to further ingratiate itself into the lives of its most ardent customers is to continually provide them with fresh, compelling content to keep them engaged with Disney+ on a daily bases. The CEO said that the company does not have any interest in licensing outside content — like so many of its competitors do — noting that he believes that Disney has the “best creative teams and the best brands and franchises in the world.”
He did note, however, that because of the backlog of content from the pandemic, the flow of new titles to Disney+ has been not exactly been what the company had imagined for the service’s first three years of operation.
“Essentially, we stopped creating new things for way too long,” Chapek said of pandemic shutdowns. “But then finally, the dam broke and now all that content is rushing out. And so it gives us the opportunity now to feed each of our distribution entities, whether it’s theatrical, whether it’s linear television and streaming, without having to do what we did in the very beginning, which was select and choose … Now we can actually, very thoughtfully, plan the amount of content we need to maximize each channel without being inefficient by overproducing … And I think we’ve said in the past, that the fourth quarter of this year is where we’ll finally reach some level of normalization and going forward, do things on a very rational standpoint in terms of new content for each channel.
“When you have a streaming service that has the risk of churn, you need to constantly refresh your services with new content,” Chapek said. “So then it becomes a question of rate. What is the rate of replenishment that you need in order not to churn people out?”
Disney, as always, views itself as a leader in all entertainment spaces, and its multi-pronged approach to storytelling certainly sets it apart from its primary competitors. However, if the company is going to realize Chapek’s vision of becoming an all-encompassing, fully-integrated experiential company, Disney+ will need to become much more than the run-of-the-mill content provider that it currently is.
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