Disney’s Disastrous Second Quarter Is Over… Now What?

Disney 18+ appears to be launching in April 2021. This could put Disney+ on equal footing with Netflix and HBO Max.

Entering into the pandemic, The Walt Disney Company seemed to be in a difficult position. With nearly every business segment in the company paralyzed, only the brand-new streaming service Disney+ offered a glimmer of hope for the company to sustain itself through 2020 and 2021. Yet through the luck of having Jon Favreau and Dave Filoni working on the miraculously popular Mandalorian series, the service blazed past subscription expectations. Of course there were other factors, but for much of the start of Disney+, the main draw of new content was the Star Wars episodic that returned to the style of George Lucas.

Because of the incredible growth of Disney+, the Disney stock was saved despite being in a horrendous situation in every other way. Investors simply assumed that Disney would restore itself to normal once they weathered the storm, and the potentiality of Disney+ raised Disney to an all-time high of nearly $202 per share on March 8th, 2021. More was expected in the second quarter earnings call on May 13th, and while it surprised Wall Street, it did not surprise any of our readers.

Lest anyone consider Pirates and Princesses a curmudgeonly bunch, just consider that back in December and January we were praising The Walt Disney Company for having righted the ship with Disney+ and Star Wars. The heroic return of Luke Skywalker saw The Mandalorian overtake The Office for views on a streaming platform — the first time Disney had managed to dethrone Netflix’s then-juggernaut. This was astounding good news for Disney, for Lucasfilm, and for the Disney+ platform.

Luke Skywalker Overtakes The Office

However, within a very short period of time, Disney began to sabotage itself and its profitability. Behind the scenes, we now know via recorded video that former CEO, Bob Iger, was pushing for the politicization of The Walt Disney Company on his way out. We also know that Disney had formed several Diversity and Inclusion programs during 2020, which would later result in major controversy for the company. Just prior to the Q2 Report, Disney was busy scrubbing their publicly-accessible pages of anything associated with “Reimagining Tomorrow“.

And while other issues, such as overhauling the imminently popular Splash Mountain, were weighing down the company with unnecessary sociopolitical baggage, it’s now alleged their intent was to increase lagging African American streaming subscribers. But the company’s adoption of leftward political movements in the US created a PR chasm with their attempts at placating the Chinese Communist Party in order to continue reaping the rewards of the Chinese market. Ultimately, this meant that Disney neither captured the African American demographic they coveted, nor were successful in appearing earnest in their political positioning.

Much of this was fully symbolized in the firing of Gina Carano from The Mandalorian series. Whether it was due to Lucasfilm’s incompetence or Bob Iger’s attempts at earning political capital with the Biden Administration, the company had jettisoned a popular actress from their most powerful property driving Disney+ adoptions.

From that point, and through additional controversies, Disney has seen their unforced blunders result in where we are today. As of writing, Disney’s stock has dropped below the $170 mark, and could head lower as investors tangle with the idea that Disney has slowed its own Disney+ growth. The company is likely to spin this as a result of COVID in India, or a result of people enjoying the outdoors for the summer. While these are fine for public spin, the company should be very careful of believing them — should they do so, they risk the damage being done to Disney+ spreading to their other businesses.

Take a look at the following graph using internet searches to determine domestic interest. We’ve used this graph successfully over the past month to chart Disney’s trouble (in spite of some readers criticizing us for such rudimentary research).

Blue – Mandalorian
Red – Wandavision
Yellow – The Falcon and The Winter Soldier
Green – The Bad Batch
Purple – Loki

Anybody with any semblance of vision can see that Disney has a real problem. Since The Mandalorian’s final episode, Disney has been on a steady, downward trend of people caring less and less about their tentpole series content. In fact, it’s so bad that each new series is seeming to draw about half the interest as the series before it. And while we think that Loki may reverse that pattern if only because of the popularity of the character, it’s not a certainty at this point.

Robert Iger has left Bob Chapek an awful mess at this point. While the parks will be okay, Chapek will need to fund the repair of Epcot, which looks like a construction zone at this point, and has for years. Many formerly grandiose visions are being scaled back around all the parks… Tomorrowland in Magic Kingdom, Avenger’s Campus at Disneyland, etc. But more of the issue is that Iger has allowed Disney itself to become a political company, whether that is at studios such as Lucasfilm and Pixar, or in its cold capitalist approach at courting China without regard to ethics. If Disney is to reposition itself into a more profitable model, it will need to stop alienating large demographics of potential customers who are appalled at its behavior.

So what can Disney do?

Well, for starters they should probably part ways with Kathleen Kennedy at Lucasfilm. There’s no reason that Star Wars has been so chaotic, disrupted, and poorly managed over the past years. Efforts should likewise be made to clean up the environment at Pixar that is resulting in public spats with the company over distribution plans, as well as potential landmines the studio is setting up for the future with ideological insertions. It also does not seem wise to continue with one-sided, partisan consultation panels like the “Story Matters” initiative. And there’s little upside to spending capex funds on revamping current mega-popular attractions at the Disney Parks when that funding could go to new and capacity-increasing endeavors.

As a company, Chapek should steer the company away from diluting ethical positions in order to curry favor with the Chinese government. In the short term, it may seem wise in order to protect their investments in Shanghai and Hong Kong, but long term it could darken the Disney image for the entire rest of the world. While it was Iger’s horrendous mistake to invest massive real estate ventures in China, where their properties can be stripped from the company arbitrarily, in an instant, without recourse… the solution is not bending the knee to genocidal communists.

Finally, in light of Disney’s current policies resulting in Q2 failure, Disney could take proactive steps that would gain mutual applause from all political spectrums. Declaring that they will no longer use any products that are obtained through forced labor, child labor, slavery, or unjust working conditions would be a strong start. Gaining control of their social media platforms and applying strict messaging guidelines so that they’re not constantly making faux pas among their various studios would also be wise. And given that politics in sports is resulting in cratering ratings, get ESPN out of the political and social movement arena.

Bob Chapek can steer Disney back into a fully profitable, high-growth model. If he does so, he will reap vast rewards for his company and his shareholders. If he continues down the current path we have seen since January, however, Paramount+ and HBO Max will soon be breathing down his neck.

Pirates & Princesses (PNP) is an independent, opinionated fan-powered news blog that covers Disney and Universal Theme Parks, Themed Entertainment and related Pop Culture from a consumer's point of view. Opinions expressed by our contributors do not necessarily reflect the views of PNP, its editors, affiliates, sponsors or advertisers. PNP is an unofficial news source and has no connection to The Walt Disney Company, NBCUniversal or any other company that we may cover.

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