Disney Doubles Down on D2C Streaming Video Success with Strategic Reorganization

Company wants to build on success of Disney+.

Earlier this week, Disney surprised everyone with a strategic reorganization of its media and entertainment businesses, doubling down on its direct-to-consumer streaming video subscription success. By reorganizing this segment of the company, Disney plans to focus on producing original content for its streaming video subscription services (Disney+, Hulu and ESPN+) and legacy platforms, and on distribution and monetization opportunities on a global scale.

“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,” said Bob Chapek, CEO of The Walt Disney Company, in the announcement said.

“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. Our creative teams will concentrate on what they do best—making world-class, franchise-based content—while our newly centralized global distribution team will focus on delivering and monetizing that content in the most optimal way across all platforms, including Disney+, Hulu, ESPN+ and the coming Star international streaming service,” added Chapek.

According to the announcement, the new Media and Entertainment Distribution group will be responsible for the monetization of all content, including distribution and advertising sales, the operations of the company’s streaming video subscription services and be solely responsible for the profits and losses of the Disney’s media and entertainment businesses.

Content groups

As part of the reorganization, the creation of content will be broken out into three groups – Studios, General Entertainment and Sports – which will be led by Alan F. Horn, Alan Bergman, Peter Rice and James Pitaro. Kareem Daniel, who was previously the president of consumer products, games and publishing, will head up the Media and Entertainment Distribution group. All five of these leaders will report directly to the CEO.

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Staff realignment

Under Studios, Horn and Bergman will create branded theatrical and episodic content, including content from The Walt Disney Studios, Walt Disney Animation Studios, Pixar Animation Studios, Marvel Studios, Lucasfilm, 20th Century Studios and Searchlight pictures.

Under General Entertainment, Rice will oversee the creation of general entertainment episodic and long-form content for Disney’s streaming video subscription services and its cable and broadcast networks, including 20th Television, ABC Signature and Touchstone Television, ABC News, Disney Channels, Freeform, FX and National Geographic.

Under Sports, Pitaro will oversee ESPN’s live sports programming plus sports news and original and non-scripted sports-related content for ESPN+, ABC and cable.

Daniel will be responsible for the division’s financials as well as distribution, operations, sales, advertising, data and technology functions for Disney’s “content engines.” He will also manage operations of the streaming services and TV networks, working closely with content creation teams. Rebecca Campbell will serve as the chairman for international operations and direct-to-consumer streaming content.

“Kareem is an exceptionally talented, innovative and forward-looking leader, with a strong track record for developing and implementing successful global content distribution and commercialization strategies,” said Chapek. “As we now look to rapidly grow our direct-to-consumer business, a key focus will be delivering and monetizing our great content in the most optimal way possible, and I can think of no one better suited to lead this effort than Kareem. His wealth of experience will enable him to effectively bring together the Company’s distribution, advertising, marketing and sales functions, thereby creating a distribution powerhouse that will serve all of Disney’s media and entertainment businesses.”

The reorganization is effective immediately.

Insider Take

Disney has done exceedingly well with its streaming video subscription services, but particularly with Disney+ which launched in November 2019. By early August, Disney+ had reached 60.5 subscribers, already achieving its five-year goal of attracting 60 million to 90 million subscribers by 2024. The reorganization is not necessarily a surprise, but the timing is. Variety reports that Disney insiders are confused by the changes.

Another question is why now? Disney has experienced great success with Disney+, but it keeps making changes. In June, the company discontinued free trials and, in a controversial move, in August, the company made subscribers pay a premium to watch Mulan. It almost feels like they are scrambling to hang onto their growth, and they may mess up a good thing in the process. Instead of trying something and evaluating the results, they keep making changes to their model – and now the operations that support the model. We’re curious to see how this all pans out.

Disney Doubles Down on D2C Streaming Video Success with Strategic Reorganization