(Photo Credit: Ringo Chiu, Los Angeles Business Journal)
By Michael Briggin
Walt Disney Studios these days has an identity problem and it’s not clear what it’s brand to everyone means.
With Walt Disney Studios CEO Bob Iger recently being replaced by Bob Chapek after 15 years at the helm, announcing that he would resign, new Disney CEO Bob Chapek comes in to take the helm after Iger’s 15 years running the company. For a tenure like this, change can be a good thing to ensure new ideas and energy.
While Chapek is a fresh new face, he isn’t exactly an outsider CEO like Dara Khosrowshani was when he was hired from Expedia to replace Travis Kalanick as Uber’s new CEO. Chapek started working for Disney back in 1993 as the marketing director for Buena Vista Pictures and led the way for the company to move away from the era of VHS to laserdiscs and eventually DVDs. He has worked his way up in management to become Chairman of Disney Parks, Experiences and Products, position he held since 2015.
So far, in a recent Disney Board of Directors meeting, Chapek had this to say:
“Now we have a distribution system so to be able to take that content and take it directly to all of you without necessarily having to go through a third party that somewhat limits what we can do. I have never been more excited.”
In referencing Disney+, which both Chapek and Iger have seen significant growth since it has been introduced. According to Q4 and 4th Year Earnings for Fiscal 2020, Disney+ has more than 73 million subscribers. Months prior to 2020, Disney+ had significantly less subscribers.
However, with Disney’s history has been the Hollywood film studio known for innovating off of new ideas, Disney+ isn’t so much a new idea but more of the same: Adapting to the times to profit. In the past few decades, Disney Studios Management and the Board of Directors have made a progressive shift away from focusing strictly on innovation and more about strictly being profitable because the challenging times have forced them to do so.
Here’s a timeline of significant decisions made by the company to become more of a media empire than the traditional Disney of the past:
- August 1995 – Disney acquires ABC News.
- January 2006 – Disney acquires Pixar Studios.
- August 2009 – Disney acquires Marvel Enterprises, the comic entertainment production studio started by Marvel Entertainment Group, incorporated 1986 and which has featured many comic book films.
- December 2012 – Disney acquires George Lucas’ empire, including Lucasfilm but ends up laying off the entire LucasArts staff and outsources computer and video game production to Electronic Arts.
- February 2014 – Disney launches its own startup accelerator, the Disney Accelerator.
- March 2018 – Disney announces a strategic reorganization of the company’s direct-to-consumer services, technology and international media operations into a single, worldwide business to capitalize on growth opportunities.
- March 2019 – Disney acquires 20th Century Fox and this includes the independent film distributor Fox Searchlight Pictures which is now renamed Searchlight Pictures.
Additionally, you will notice that Disney Studios the last several decades has produced quite a number of live-action remakes of animated films like Dumbo and the Jungle Book as well as plenty of direct-to-video sequels to films like Aladdin, Cinderella and the Lion King. Even Pixar Studios has produced sequels to films like Cars and Toy Story.
Why is it important to note this? Not including Pixar films, the last real blockbuster animated film Disney was the Lion King back in 1994, grossing $312+ million domestically to date at the box office on a $45 million budget. Star Wars films financed and distributed by Disney have resulted in a mixed success. Marvel Enterprise comic book films, although far more profitable than the Star Wars sequel and spinoff films, are based off the Marvel brand, not Disney’s own.
While there’s the increasing influence of the digital economy on the traditional film and TV exhibition models which as a result of the rise of Amazon, Netflix, Redbox as well as YouTube is causing the once dependable consumer to flip in a different direction, not all divisions of Disney have been profitable enough. It is true Disney has seen its revenue surge to a whopping 69.57 billion in 2019 but that doesn’t mean staying the course will assure the company it will be able to sustain revenue like this in the long-term beyond 5-10 years.
Additionally, the underlying problem remains: What does the Disney brand name mean to those who grew up with the traditional Disney films, Disneyland, game changing Pixar animated films, etc? There’s no consistency here as far as success, especially considering Disney’s long history with the Star Wars brand starting with Star Tours. With the mergers and acquisitions that have been going on for the company for decades since the 1990’s, they are the primary focus followed by the secondary focus of adapting to the times with streaming technology like Disney+.
While any publicly traded company shouldn’t rule out these types of avenues for profitability, there’s a risk of too much saturation in the process. When Walt Disney himself founded Disney Studios, under his leadership as CEO, there were no mergers or acquisitions. The primary focus was on innovation and ideas from within the company, not outside. The Disney brand name we’ve all come to know started with Walt Disney and his vision, not with CEOs like Bob Iger, Michael Eisner and Bob Chapek.
What does this mean for you if you are running your organization? If you have a choice, innovate more, acquire less. There’s no reason not to involve stakeholders but if you are unable to innovate out of your own ideas, what’s holding you back?
We can’t predict what Disney will do in the years to come but we can however point out that it doesn’t hurt to let the innovators be the deciders of the fate of Disney once in a while. When was the last time anyone at the company’s executive management and the Board of Directors actually had hands-on experience in making an animated film?