Mega-transformation: Disney Moves Boldly Into Digital-first Business

The aftershocks of COVID 19 may prove to be worse than the initial attack. Understanding the pandemic is not only a question of science but of business as well. 

The impact of the virus on 97 year-old media and entertainment giant Disney Co. was divestating and their transition to a digital-first strategy just as transformative.

Last week, Disney announced a major restructuring, as it drastically reduced its focus from theme parks, cruises, movies, and cable TV to Disney +, its streaming service. In a statement, Bob Chapek, Disney's new CEO, said "Given the incredible success of Disney+ and our plans to accelerate our direct-to-consumer business, we are strategically re-positioning our company."

Disney+, launched last year, has been a huge success with over 60 million subscribers. On the flip-side, COVID 19 destroyed Disney's cruise, theme park, cable TV, live-sports, cinema, and retail businesses - losing  $4.7billion in second quarter.

A Very Bold & Quick Pivot

For a company of its size and culture, Disney's pivot to digital was astounding. Pre-pandemic, Disney held the top-spot in global entertainment so deciding to reinvent itself around a digital strategy is very telling and points to management's belief that the virus's impact will be longer and deeper than once thought. Making the 'wait-it-out' option a non-starter. 

The shifting to digital is not specific to companies like Disney. Re-positioning your business model and brand to accommodate access to customers in a more economical and direct way is vital. 

Trying To Outrun The Virus

 Studios Run To Push Tentpoles Into 2021 and Beyond

As the months have rolled-by we have seen one after another blockbuster kicked down the road - as again and again the studios re-scheduled release dates. Setting of a domino effect the rescheduling has caused havoc. 

When the Bond sequel was moved to 2021 that triggered 'Wonder Woman' to move to Christmas and caused 'Batman' to be bumped into 2022! After the poor gate for 'Tenet' the studios really became gun-shy. There is also the looming problem with production - there isn't any going on!  To play it safe and have some marquee headliners for 2011/22 the studios are playing it safe and holding tentpoles in reserve. 

At the moment there seems to be reluctance on the part of moviegoers to 'go to the movies'. One because of the virus and two, there are no great movies to watch. Both the U.S. and Europe, as well as, Asia face the same dilemma. When these movies will appear on screen is anybody's guess. 

When the cinema returns to normal is anybody's guess. However, finding the perfect release date for a $150m film is not in the cards at the moment, as the pandemic isn't going to just disappear on Jan. 1st.

For movie theaters the release delays has literally killed their enthusiasm as the welcome mat for patrons have been removed time-after-time.  Without tentpoles to screen and without the NYC, LA, and San Fran markets closed it is unlikely the studios will premier a blockbuster before Christmas.

There is only so much cinemas (particularly independents)  can take before they cave under financial strain with no product to screen, and those are the ones that can open.

 

Europeans Step-up With $$$ For Cinema, Where is U.S.?

 The British government has authorized "lifeline funding" for independent cinema of $1.9b. "This is the first wave of emergency funding to help dozens of independent cinemas across the country, preserving their unique character and history for future generations," stated Oliver Dowden, U.K. Culture Secretary. 

Independents Across England to Receive Emergency Funding

The same assistance is occurring throughout Europe, via the European Union's Culture Recovery Fund. The same should be happening in the U.S. and it's NOT!  Funding for independent cinemas should be specific as these represent lifelines not only for the cinemas but for the hundreds of small communities across the country.

The National Assoc. of Theater Owners (NATO), the Directors Guild of America, the Motion Picture Assoc. of America, and over 70 film directors and producers signed a letter that was sent to Congressional leaders in the House and Senate to redirect unallocated funds from the CARES Act to assist independent movie exhibitors.

The virus visited a devastating blow to cinemas. 93% of U.S. movie theaters reported operating losses in the first half of 2020. It is estimated that if the status quo continues 70% of small and mid-sized movie theaters will go bankrupt or close permanently. This represents thousands of lost jobs for primarily young workers.

Many cinemas are still 'dark' because of the virus

We need to take a page out of the British cultural playbook. "The U.K.'s cinemas are a key part of our culture - they provide many jobs and entertain the nation", says British Chancellor of the Exchequer, Rishi Sunak.

The movie industry is a child of America and we must preserve this art form at all costs. It is a huge part of our culture and it must remain so. We all need to step-up and support the independent cinema.