It’s Disney, so hope for a happy ending.

Disney has assembled an incredible portfolio of brands and companies including Marvel, Fox Studios, Lucas Films, ESPN and Pixar.

Disney is a case-study of a diverse business that has made bold decisions to remain relevant. Strong story-telling franchises ensure cross-generation appeal and are translated into engaging experiences via theme parks or resorts globally. The company is also emerging as a major streaming player with more than 50 million subscribers since the launch of Disney+.

The power of the Disney business model is the connection across diverse businesses. New film releases fuel the interest and engagement in franchises and this in turn sustains a flow of park visitors, merchandise purchases and streaming subscriptions. It remains a long-term competitive advantage Vs Netflix but it is a problem in a pandemic.

Disney is a business that powerfully connects story-telling assets. 7 Disney movies made over $1 billion at the box office in 2019. Each boosted a symbiotically beneficial relationship across businesses.

Covid-19 has kicked Disney (and many employees) very hard. Film releases are postponed, cinemas, shops and resorts are shut globally and ESPN has lost sport content. The company has stopped paying 100,000 workers and needs a $5 billion one-year loan. Netflix’s valuation rose above Disney’s on April 16.

Black Widow, Soul, Mulan and Raya & the Last Dragon releases are all postponed.

Disney now faces some choices. Normality is unlikely to quickly (or perhaps, fully) return to socially compact cinemas, but this remains where the big audience reach is. Netflix’s 170 million subscriber base is big, but it is also only the equivalent of the UK’s annual cinema attendance or Disney’s annual park visitors.

Certainly, Disney has a window of opportunity to accelerate subscription take-up of Disney+ while cinemas are shut. A faster global roll-out and new exclusive content will consolidate a strong start. The company’s plan to release Artemis Fowl first on Disney+ suggests a few more exclusive films and content will be deployed to boost subscriptions.

Disney made around $26bn in revenue from parks and resorts. The absence of franchise blockbusters “The Rise of Skywalker” will impact visitor volumes.

But, like many businesses, Disney must diagnose their current situation as bad luck and assess their business model against future challenges and opportunities. For Disney this means patience, significant short term pain – but no radical pivot. Moving a major film to subscription-first release removes much more than just box office revenue in Disney’s connected model. Sustained success requires synergy across businesses that will include rather than depend upon a growing streaming subscriptions.

Post-pandemic Disney’s model makes sense. Stronger story-telling assets and more customer touch-points should mean a long-term happy ending for the business, but sadly not for all employees.

The inspiration for this blog came from reading a CNN article by Bill Carter which highlights the influence and achievement of Bob Iger as CEO for Disney:

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