Disney: Is This Entertainment Giant Too Big to Fail?
Disney is a cultural icon, hosting well loved historical and contemporary products that hold an important place in our cultural zeitgeist. From the animated Disney classics to their modern live action reimaginings, Disney is cemented in popular culture from an early age. Now with recent acquisitions of Lucas Films, Marvel and 21st Century Fox, Disney has added some of the most popular franchises of the day to their collection. Finally, with Disney+, Disney is hoping to enter into the competitive online streaming market to compete with giants like Netflix.
Even as a cultural and commercial giant, Disney still faces risks that need to be mitigated as it enters into new markets, navigates challenges due to COVID-19, and interacts with audiences who have changing tastes in the media they consume.
Identifying Problems
Netflix was the first major player on the scene of on-demand video streaming, offering a comparatively good deal on movie rentals and a large selection of offerings compared to brick and mortar video rental services. Netflix commands a large slice of the market share, and the remaining availability is already being fought over by other platforms like Hulu, Crave and Amazon Prime. Disney is showing up late to the party with Disney+, and many consumers are already loyal to their current video streaming platforms. With Disney+, Disney is primarily betting on consumers valuing them as the exclusive offerer of their existing vault of classic content, which includes both historical Disney classics and the recent offerings of all of the Disney acquisitions (such as from Marvel, Lucas Films and 21st Century Fox). While there is certainly a market for this content, a major driver for consumers is access to new exclusive content.
Disney+ has already released The Mandalorian, and has plans for television entries into the Marvel universe, but are these projects enough to keep up with other streaming platforms? With current and recently announced offerings, Disney+ either hosts content that viewers have seen before, or at least content that takes place with familiar characters in familiar places, told through familiar voices targeting familiar demographics. At the end of the day, Disney+ may be offering content that is new, it doesn’t seem to be offering content that is novel.
One successful recent acquisition by Disney is the Marvel Cinematic Universe, which recently released it’s culminating entry in the self defined twenty three movie “Infinity Saga” with Avengers: Endgame. While Avengers: Endgame boasts the top box office sales of any movie ever, the ending of the Infinity Saga presents a risk for Disney and one of their flagship properties. Will consumers accept the ending of the story as told by the existing movies, and not subscribe to future entries? Will the appetite for superhero movies go the way of westerns and kung-fu films, resigned to classic movies and niche audiences? Disney has bet the success of Disney+ partially on Marvel fans looking to continue the stories of familiar characters through TV series like WandaVision, Loki and Falcon and the Winter Soldier, but audiences latching on to these offerings is certainly not a guarantee.
In addition, Disney has struggled with underwhelming public reception of some of its recent productions, such as live action remake of past animated properties and new entries into existing universes. For example, live action remakes of “Dumbo” earned just $116 million in its global debut, which is disappointing considering its massive expenses of a $170 million budget before marketing. Another example is the divisive public reaction to the three most recent entries into the Star Wars franchise, in Episode VIII: The Last Jedi (2017), Solo: a Star Wars Story (2018) and Episode IX: The Rise of Skywalker (2019). While the Episodes remained commercially successful despite their ratings, Solo: a Star Wars story failed to capture audiences critically or commercially.
The commercial success of Star Wars toys, games and other axillary products, as well as Star Wars themed theme parks is a closely guarded secret, but will most likely more than make up for any losses in film, yet the lack of trust between long time fans and Disney in the handling of the recent film entry remains prevalent.
Discussion of Alternatives and Recommendation
COVID-19 took the world by storm causing several interruptions to the entertainment sector in 2020. Importantly, the closing of movie theatres pushed back the release of major films, and social distancing protocols reduced the capacity of theme parks. In addition, high job loss numbers reduced the amount of discretionary spending on toys and games.
One sector that has maintained consistent strength is home streaming, and luckily, Disney released Disney+ just in time to compete for that demand. As such, I anticipate that Disney+ will be Disney’s main source of revenue for 2020, or at least make up a disproportionately significant amount. Disney strategically priced Disney+ to best compete with other video streaming services, especially during the pandemic. By pricing the service at $6.99 per month, compared with Netflix at $12.99 per month, Crave at $9.99 per month, and Amazon Prime at $7.99 per month, Disney+ positioned itself as the best value for consumers who may be especially price conscious due to COVID-19.
The extensive and exclusive offerings from Disney’s wide repertoire is one more reason Disney+ is an alluring offering for consumers. These factors have contributed to initial success for the Disney+ platform as the Disney streaming service reached the 50 million-subscriber level in early April 2020, a milestone Disney predicted it would not hit until 2023. As Disney looks to continue to grow their subscriber base, it should also be conscious of keeping its current subscribers engaged.
A key way to mitigate risk is through diversification. Right now, Disney is heavily invested in existing, familiar content, targeted at consumers who are already engaged with Disney properties. Disney has the advantage of a wide variety of properties with loyal fan bases, but as shown with their recent entries into Star Wars, even loyal fans can show their discontent. To mitigate change in fan preferences, Disney should invest in new, novel content outside its established properties. It should also invest in sharing new (especially diverse and marginalized) voices who create that content.
Netflix, for example, has enjoyed wide commercial success with new, unexpected content such as Stranger Things and Thirteen Reasons Why, and especially properties that have championed diverse and marginalized voices, like Orange is the New Black, Queer Eye and Dear White People. Content that features voices normally excluded or underrepresented in mass media (such as black, indigenous, people of colour, LGBTQ+, women) not only provides a social benefit through content for viewers looking to consume stories more relevant to their personal experiences, but also provides opportunities for commercial and critical success. For example, 16 of the top 100 films of 2018 were directed by black directors.
Now with more discussions of the treatment of racialized people such as through the Black Lives Matter movement, this is the perfect time for Disney to be a leader championing marginalized voices. While there’s no guarantee a new product will bring the same success that an existing product brings, Dumbo and Solo: a Star Wars Story proved that existing products are not always consistent either. If Disney invested in diversifying it’s content, and pushed that content over all it’s platforms, it can mitigate the risks presented from fatigue in its current offerings and convince new audiences to give Disney products a try.
Conclusion
At the end of the day, Disney is one of the worlds most profitable companies in history, continually putting out financially successful and culturally important products. They are also approaching a cultural monopoly, controlling and acquiring many of the biggest products in the entertainment market today. To that end, even something that Disney considers to be unsuccessful or underwhelming would still often be considered a tremendous success to a different creator. When Disney puts out a new entry into one of it’s many successful brands, it almost inevitably saturates pop culture, and a critical mass of consumers feel no choice but to watch it. In that way, many Disney products are reminiscent of being ‘too big to fail.’ They are so culturally overwhelming that even a poorly rated product in a decreasing market will return investment.
But if Disney hopes to push the envelope even further and command more of the market share, they should diversify their offerings by championing underrepresented voices, particularly on their streaming platform. Particularly if COVID-19 changes long term market trends for consumers prioritizing at-home streaming over visiting the theatre or attending theme parks. They should do this quickly, as many people are sampling Disney+ to see what it has to offer, and it’s in Disney’s best interest to retain as many of those consumers as possible.
Justin Draper is a Canadian fiction and non-fiction writer who focuses on themes of politics and culture. He is currently completing his Masters degree in Communication and Technology at the University of Alberta.
Follow Justin on Twitter at @JustinDraperYEG
