Walt Disney decides a big overhaul to strengthen direct-to-consumer business

Popular streaming service provider Disney+ has so far found tremendous success in its direct-to-consumer (DTC) business and to further accelerate its DTC strategy, The Walt Disney Company has decided a strategic reorganization of its media and entertainment businesses.

So, what we have heard is that this action was taken by Disney as investors urged the company to invest more heavily in the direct-to-consumer business because more and more viewers gravitated towards streaming services since the global lockdown.

It is believed that under this shake-up, Disney is planning a split and layoffs.

Its studios, general entertainment, and sports business will now fall under one division, while distribution and commercialization will be separate.

The press note by the company says that under the new structure, Disney’s creative engines will focus on developing and producing original content for the company’s streaming services, as well as for legacy platforms, while distribution and commercialization activities will be centralized into a single, global Media and Entertainment Distribution organization.

The new Media and Entertainment Distribution group will be responsible for all monetization of content — both distribution and ad sales — and will oversee operations of the company’s streaming services. It will also have sole P&L accountability for Disney’s media and entertainment businesses.

The creation of content will be managed in three distinct groups—Studios, General Entertainment, and Sports—headed by current leaders Alan F. Horn and Alan Bergman, Peter Rice, and James Pitaro.

The Media and Entertainment Distribution group will be headed by Kareem Daniel, formerly President, Consumer Products, Games, and Publishing.

All five leaders will report directly to Bob Chapek, Chief Executive Officer, The Walt Disney Company.

Disney Parks, Experiences, and Products will continue to operate under its existing structure, led by Josh D’Amaro, Chairman, Disney Parks, Experiences and Products, who continues to report to Chapek.

Rebecca Campbell will serve as Chairman, International Operations and Direct-to-Consumer. Bob Iger, in his role as Executive Chairman, will continue to direct the Company’s creative endeavors.

The new structure is effective immediately, and the company says it expects to transition to financial reporting under this structure in the first quarter of fiscal 2021.

Disney will hold a virtual Investor Day on December 10, where it will present further details of its direct-to-consumer strategies.

“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,” Chapek 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.”

Under the new structure, the company’s three content groups will be responsible and accountable for producing and delivering content for theatrical, linear, and streaming, with the primary focus being the Company’s streaming services:

• STUDIOS: Messrs. Horn and Bergman will serve as Chairmen, Studios Content, which will focus on creating branded theatrical and episodic content based on the Company’s powerhouse franchises for theatrical exhibition, Disney+ and the Company’s other streaming services. The group will include the content engines of The Walt Disney Studios, including Disney live action and Walt Disney Animation Studios, Pixar Animation Studios, Marvel Studios, Lucasfilm, 20th Century Studios and Searchlight Pictures.
• GENERAL ENTERTAINMENT:  Rice will serve as Chairman, General Entertainment Content, which will focus on creating general entertainment episodic and original long-form content for the Company’s streaming platforms and its cable and broadcast networks. The group will include the content engines of 20th Television, ABC Signature and Touchstone Television; ABC News; Disney Channels; Freeform; FX; and National Geographic.
• SPORTS:  Pitaro will serve as Chairman, ESPN and Sports Content, which will focus on ESPN’s live sports programming, as well as sports news and original and non-scripted sports-related content, for the cable channels, ESPN+, and ABC.

The Media and Entertainment Distribution group, led by  Daniel, will be responsible for the P&L management and all distribution, operations, sales, advertising, data, and technology functions worldwide for all of the Company’s content engines, and it will also manage operations of the Company’s streaming services and domestic television networks. The group will work in close collaboration with the content creation teams on programming and marketing.