Culture

Will streaming cause the loss of Disney?

Avalonia, the “Christmas Disney” put online this Friday, December 23 in France, will it be able to improve the financial situation of the brand? The flop of the animated film, released in theaters in the United States, does not suggest anything like it – even if it is partly offset by the triumph of the sequel Black Panther.

Since the end of November and the call for help from its former CEO Bob Iger, barely three years after his retirement, the difficulties of the Walt Disney Company are no longer a secret. In a memo addressed to the 190,000 employees of the entertainment and amusement park giant, the person concerned had not hidden his “amazement”.

A deficit of 4 billion dollars over the year

The return of the leader, to whom we owe Disney’s biggest acquisitions (Pixar, Lucasfilm, Marvel, Fox studios, etc.) between 2005 and 2020, says a lot about the consequences of the “streaming” shift operated by the company since 2018. Losses continue to widen, even as subscriptions to its online platforms Disney+ (content from the Disney catalogue), Hulu (generalist) and ESPN+ (sports) are growing – 235 million registered in total, against 223 million for the competitor Netflix. A deficit which reached 1.47 billion dollars (about 1.38 billion euros) on 1er October, over the last three months of the fiscal year, and 4 billion (3.76 billion euros) over the year as a whole. Leading the brand’s overall accounts, which in November showed lower than expected profits and revenues.

Bob Iger’s successor and predecessor, Bob Chapek, indicated in early November that the group’s “streaming” activities would be in the green by 2024, provided the economic situation did not deteriorate significantly. However, fears of a slowdown are real across the Atlantic, where layoffs in the media and tech sectors are increasing. The former CEO acknowledged this himself, in a memo sent on November 11 to division managers. Promising to start a business “more agile and better adapted to the environment of tomorrow”he announced a policy of partial hiring freezes and spending cuts.

In addition to these measures, Disney + launched, Thursday, December 8 in the United States, a new cheaper subscription formula ($ 7.99 per month), financed by advertising. It’s urgent. “Developing programming, attracting new subscribers, limiting unsubscriptions: all of this costs money. But no one expected these losses to be so great. They are explained by ever-increasing marketing and production costs.analyzes Gene Del Vecchio, professor of marketing at the University of Southern California.

The entire streaming sector concerned

That Mickey is reassured. The other players in the “streaming” sector (Apple, Amazon, Netflix, etc.), which exploded with the demand for content during the pandemic, are also encountering financial challenges. Faced with a drop in subscribers in North America (until the unexpected rebound in the last quarter of the fiscal year), the pioneer Netflix hinted this summer that it would reduce the number of its big, very expensive original productions and often low-paying, after the unsustainable boom of recent years.

But, in the case of a conglomerate like Disney, the miracle solution is even more difficult to find. Indeed, its portfolio includes several television channels (ESPN, Disney Channel, ABC…) whose revenues are undermined… by the very growth of its “streaming” activity.

The hope of appeasement at the head of the group

Last year, it played tricks on him. The giant was targeted by a complaint from actress Scarlett Johansson, who accused the company of having released her film Black Widow simultaneously in theaters and on the Disney+ platform. A decision that caused the star to lose part of his bonus linked to the sale of tickets. The episode, which ended in an agreement, illustrates the new frictions caused by the development of video on demand services vis-à-vis the traditional sectors (cinema, television).

Bob Iger will bring at least a little serenity to the head of the multinational. Indeed, the mandate of his predecessor, which began a month before the first containment measures, was marked by several controversies which did not help his cause: anger around the rise in the price of amusement parks, hesitation on a Florida law prohibiting any discussion around LGBT themes in public schools… “To lead Disney, you have to be both creative and strategic.analyzes Gene Del Vecchio. This was the case with Walt Disney. Bob Iger is too. »

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An agreement in sight between Disney and the French channels

Disney France had announced in June that its traditional Christmas animated film would not be released in French theaters and would be available only on its platform. A way for the American firm to challenge our media chronology system. It thus opposed the 17-month period imposed between the release of its films in theaters and their exploitation on its platform as well as the obligation to withdraw them from Disney + during the exclusivity window of the free channels (TF1, France TV and M6). If the Disney group did not win the case on the first point, it would have reached an agreement with these channels to postpone and reduce this window of exclusivity for big budget films.

Source : WORLD NEWS

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