Walt Disney Reforms the Entertainment Business, Focuses on Developing Streaming

Walt Disney Co plans to restructure its media and entertainment business to accelerate the growth of its Disney + business and other streaming service

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 Walt Disney Reforms the Entertainment Business, Focuses on Developing Streaming


Walt Disney Co plans to restructure its media and entertainment business to accelerate the growth of its Disney + business and other streaming services. This was done by the company because it assessed that consumers were increasingly interested in digital displays.


Under reorganization, Disney will separate program development and production from distribution, to make it more responsive to consumer demand, according to Reuters, Tuesday (13/10/2020).


The move comes days after activist investor Daniel Loeb of hedge fund Third Point urged Disney to cancel dividend payments to shareholders and double its programming investment in streaming.


Disney shares rose nearly 5% in yesterday's trading to US $ 130.76. The media and theme park company launched its Disney + streaming service in November 2019. It has surpassed the company's target by attracting more than 100 million streaming subscribers worldwide to Disney +, Hulu and ESPN +.


Streaming pioneer Netflix Inc itself currently has 193 million subscribers, but that's achieved after 13 years of operation. Meanwhile Disney + reached 100 million subscribers in just 1 year.


Loeb argues that Disney needs to cut its dividend share to increase spending on new TV shows and movies to get new customers faster.


Disney Chief Executive Bob Chapek, in an interview with CNBC, said the company planned to increase investment in content but he did not say whether it was ready to cut dividends to fund the strategy.


"Managing content creation as distinct from distribution will allow us to be more effective and agile at creating the content that consumers want most," Chapek said.


In a statement on Monday, Loeb welcomed the changes to Disney's media and entertainment structure.


"We are delighted to see Disney focusing on the same opportunities that have made us enthusiastic shareholders of investing heavily in business, positioning Disney for the next age of entertainment," said Loeb.


Under the change, Disney's studio, general entertainment and sports businesses would be under one division, while distribution and commercialization would be under separate global units.


Disney says its creative team will develop and produce programs for streaming and traditional platforms, and the distribution group will decide where customers will see it.

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