Yesterday Disney made big headlines by announcing the restructuring of their company around streaming. If you’ve been following this site and our articles, you weren’t surprised. We literally announced the day before that Disney was looking at major strategic changes around Disney+ to maximize content creation. Unfortunately, Disney may be abandoning investments in its only other major source of revenue – Walt Disney World – in order to put everything behind Disney+.
After yesterday, the reality of Disney’s desperation to generate revenue is better understood by the masses. As we’ve previously said, the House of Mouse is down to Disney+ and Walt Disney World as major sources of revenue. Merchandising is far below average due to a dearth of new material to drive said merchandise. Disneyland in California isn’t open. God only knows what’s going on with the Chinese parks. Disneyland in Paris has never been a money-maker. Disney Channel is an afterthought. ESPN’s ratings have plunged along with the NBA. ABC is fine, but not exceptional. Marvel, Lucasfilm, Disney Studios, Pixar… they’re all generating exceedingly low revenue.
Although the world is in a pandemic, much of this is Disney’s own fault. At at time when the videogame industry is more lucrative than ever, Disney is dependent on third party developers to drive their intellectual properties in that sphere. Disney essentially killed off all their own production capacity for interactive entertainment years ago. Now that those third party developers aren’t proving highly successful, Disney’s dead in the water on gaming.
When it comes to sports, Disney has a tale of good news and bad news. The bad news is they have been hand-in-hand when it comes to damaging the public opinion of much of the sports industry. Professional sports are increasingly controversial in ways one couldn’t normally conceive for adults playing children’s games. ESPN and ABC Sports have seen massive declines in viewership. In the good news category, Disney’s leverage for working a better deal with the pro leagues on television contracts has never been better. Getting to the contract with enough cash in the chest is Disney’s challenge now.
While the Marvel films were incredibly lucrative for Disney, the fact that we’re essentially all stuck without films for the next year or so… and the fact that movie theaters may be gone next year… all add up to the MCU being critically in danger. When you factor in that Disney has made itself so dependent on sequels and periodic releases of episodic mega-blockbusters, it’s not certain that Disney can quickly change course for their films. Yet episodic mega-blockbusters may not be functionally possible for the next 18 months. It’s to the point, I’ve heard rumors Disney may be looking at an all CGI Howard the Duck film just to get something Marvel out the door.
So what this means is that Disney’s portfolio has significantly contracted due to the pandemic and their own poor business practices prior. We are now at the point where, going forward, Disney looks a lot like Netflix with a major theme park resort. They’re sure to paint a rosy picture soon about how they’ve prepared themselves for this new paradigm shift, but the old paradigm sure did see them with a more robust set of services. With WDW and Disney+ being the primary means by which to gain revenues, and with WDW being cast aside in large part for current investment (previous developments notwithstanding), Disney is in a precarious situation. Not since Walt’s days have they been a one or two pony company.
Disney’s strong point is the enormous amount of popular IPs it can go to. In order to strengthen its market position going forward, it will need them. And frankly, betting against Walt Disney World, even in a pandemic, is likely not a wise position for the company. If the decision is made to put everything into Disney+ with little investment for WDW in 2021, 2022, 2023, and beyond, Disney may spoil one of its two remaining big cards in hand.