“We Dramatically Underestimated the Hungry Beast” — See Disney CEO Bob Chapek’s Comments on Disney+
Disney+ has seen some BIG success when it comes to subscriber numbers, but the service is still requiring a lot of investment and is LOSING money.
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Though some have become a bit weary of the streaming world in general, especially after Netflix experienced streaming struggles, Disney has continued to announce shows for the platform and send what could be BIG films directly to the streaming service (skipping traditional theatrical releases in some cases). So what’s going on with Disney+ and what is Disney’s plan moving forward? An interview with Bob Chapek has given us some insight.
Recently, current Disney CEO Bob Chapek sat down with The Hollywood Reporter to discuss streaming, the controversy with Scarlett Johansson, and more.
At one point, the interviewer pointed out that some investors are re-evaluating going “all in on streaming,” and asked whether Chapek and Disney were re-evaluating that strategy too. If you’ll remember, back in 2020 Disney actually restructured some of the Company’s organization to make streaming their primary focus — so they truly have gone “all in” in some ways.
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In response to the question, Chapek noted that back when they first launched Disney+ they “dramatically underestimated the hungry beast” (referring to Disney+) and “how much content it needed to be fed” to really maximize its potential. Chapek said that once they realized that they’d need more content, the COVID-19 pandemic hit, greatly impacting things. Since there were only a few things coming through their system at that time, they had to really carefully consider where to place each project.
Chapek noted, “When the theatrical world was shut down because of COVID, it was kind of an easy decision.” They could postpone things, which they did in some cases, but Disney+ subscribers were asking for more content, so they “started diverting content that was originally intended for theaters before Disney+ was even envisioned.”
Soul Statue
Chapek said that at the same time they also started to make a “very methodical plan” to figure out how much content they would need to take advantage of the opportunities in the theatrical world, but also how much content they’d need to “feed the content pipes that were leading into Disney+.”
According to Chapek, “Now that production is back fully and we have a full understanding of what’s needed…we’re in a position to fully program theatrical exhibition, without having to steal content from one place or another, as well as our streaming services.”
Luca Artwork in the Italy pavilion
This is an interesting take, with Chapek seemingly admitting that they had to “steal” from one content pipeline to feed the other for a bit, but that things could change. In the past, Disney has noted that they’ve handled movie releases on a case-by-case basis, determining which platform is best for each item. We’ve seen quite a few Pixar movies released directly on Disney+, but that changed a bit with Lightyear — which did get a theatrical release.
Since Disney now feels like it is in a position where there is potentially enough content to feed both sources (theatrical and streaming) it’ll be interesting to see just what direction movie releases take. In terms of the remainder of 2022, Hocus Pocus 2, Disenchanted, and the Guardians of the Galaxy Holiday Special will ALL be heading to Disney+. While theatrical releases will only really include Black Panther: Wakanda Forever and Avatar 2. Years ago, would more of these have been theatrical releases? During the peak pandemic period, would some of these have ended up on Disney+, perhaps through the Premier Access service? How will these releases change in the future? It’ll be interesting to see what happens.
Click here to read about a deal that could CHANGE movie releases from Disney
Another thing Disney has to consider is whether Disney+ films will be able to be just as iconic or reach the same level of adoration as their theatrical releases. During the interview, the reporter asked whether Chapek thinks a franchise and even something like a park ride could be launched from a movie or series released on Disney+?
Chapek said “absolutely.” What makes him so confident? Well, Chapek pointed to the success some films have had once being released on Disney+. Specifically, Chapek discussed Encanto and how it received “modest success theatrically” but then shot up to No. 1 once released on Disney+.
He shared, “I don’t have to tell you the phenomenon it became from a merchandise standpoint and from a music standpoint and how many more people saw it on Disney+.”
Mirabel in a surprise parade in Disney World
Encanto might be a bit of a strange situation, however, because it did get a theatrical release first and then was released on Disney+. But, other examples of pure Disney+ successes prove they can expand beyond the realm of streaming.
One of those is The Mandalorian. The Mandalorian himself was not a character seen in previous theatrically released films (not this specific Mandalorian, anyway), and yet the series has launched massive amounts of merchandise, several spin-off series, multiple seasons, and will be reaching the parks in the future as Disney has announced that Baby Yoda and The Mandalorian will be making appearances in Disneyland.
Baby Yoda Headband
Other direct-to-Disney+ projects have also seen success beyond the streaming service, like WandaVision (which has resulted in an Agatha Harkness spin-off and the appearance of Agatha in Disneyland’s Oogie Boogie Bash), and even things like MoonKnight (where the main character has made an appearance in Disneyland’s Avengers Campus).
What Disney+ franchises could lead to in-park appearances and maybe even park attractions in the future? We can’t wait to find out.
Click here to see the first trailer for the Mandalorian Season 3 on Disney+
Does all of this mean that theatrical releases are DEAD? Not necessarily. Chapek noted that there are “films where theatrical distribution is essential.” Specifically, he said that with “big blockbusters, there are titles that would be well-advised to be launched theatrically and then go onto Disney+.” But he said he doesn’t think that is “necessary for a franchise to be born.”
Chapek said that they have a lot of flexibility, and that’s a good thing. He pointed out that some people want things to go back to the way they were before the pandemic, but he said that simply won’t happen because “the consumer has moved on.” Many consumers might now prefer to sit at home and watch a movie in their pajamas, rather than head to the theaters. Chapek said, “That doesn’t mean we’re not going to take great Marvel and Star Wars movies, and Avatar, and put them first in theatrical. We will because it’s a wonderful way to experience those films. But that does not mean that everything, for it to be credible or for it to eventually turn into a Disney franchise, has to go through that.”
Pandora: World of Avatar
Despite some reports indicating that Chapek and former Disney CEO Bob Iger don’t see eye-to-eye on some issues, this seems to be a matter they have expressed similar views on. In a recent CNBC interview, Iger similarly noted that the pandemic has left a “permanent scar” on the theatrical side of things. He shared that he doesn’t think “movies ever return, in terms of moviegoing, to the level that they were at pre-pandemic.”
Iger, similar to Chapek, pointed to the consumers as a reason for this. He said that “choice” is the big reason why people haven’t gone back to theaters, noting that people became more familiar with streaming movies at home during the pandemic and like the flexibility of being able to choose when and what to watch.
But Iger similarly doesn’t think that theaters are “dead,” just that the pandemic has exacerbated the change in consumer habits.
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If you’re one that would 100% prefer to watch most movies at home, then this may resonate strongly with you. But it seems like theatrical releases aren’t going away. And they won’t just be limited to “big” Star Wars and Marvel films either. Disney does have a number of films slated to go to theaters in the upcoming years, but, of course, as they determine whether they have enough food to “feed the beast” of Disney+, things could change.
Click here to learn about all of the remakes, reboots, and sequels in the works at Disney
When it comes to investors, Disney+ continues to be a big point of conversation, with many often focused on just how many subscribers Disney+ has. But some Wall Street investors may be starting to fear the “all in on streaming” approach considering the tumbles taken at Netflix, with big DROPS in subscriber numbers on that service.
When it comes to dealing with investors’ thinking on Disney+, Chapek said that they’ve given guidance on two things when it comes to investor updates — (1) subscriber numbers and (2) profitability. Chapek noted that they gave profitability guidance even when profitability wasn’t necessarily a focus for investors.
Disney+ Day Photo
Chapek said, “We knew that the frothiness of the streaming business in the eyes of investors would moderate at some point, we didn’t know when. And profitability would become as important if not more important ultimately than revenue and sub adds.”
He said that they’ve been operating as they normally would, and not reducing the amount of content going to the system or spending.
At the moment, Disney has projected that Disney+ will be “profitable” by 2024. It maintained that guidance during the Q3 earnings call for 2022. Disney+ also expects to gain many more subscribers by 2024, and it continues to gain subscribers each quarter.
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But Disney+ also continues to lose money. Whether Disney+ will be able to reach profitability or its subscriber goals by 2024 remains to be seen. In the meantime, we expect that stock values could largely be impacted by short-term gains and losses in the Disney+ arena, and each Earnings Call will likely bring with it highly anticipated Disney+ financial news.
It will also be interesting to see how Disney’s upcoming price increases and ad-supported tier will impact the entire situation. Only time will tell what that will do to subscriber numbers and Disney+ profitability.
What do you think about Disney+ and where it is headed? Tell us in the comments. We’ll continue to keep an eye out for more Disney+ news and let you know what we find. In the meantime, you can click here to see the price INCREASE announced for Disney+ ad-free streaming, or click here to learn about the price and launch date for Disney+’s ad-supported service.
Click here to get a look at the trailer for the new “The Santa Clauses” series coming to Disney+
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The post “We Dramatically Underestimated the Hungry Beast” — See Disney CEO Bob Chapek’s Comments on Disney+ first appeared on the disney food blog.
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