Disney enshrines streaming as 'primary focus' amid broad media reorganization

Dive Brief:

The Walt Disney Company announced a strategic reorganization Monday that looks to capitalize on the entertainment giant's momentum in streaming media, including through Disney+, and direct-to-consumer (DTC) services.
A new Media and Entertainment Distribution arm will oversee the monetization strategy, including distribution and ad sales, of all of Disney's streaming properties, which are broken out into three categories: Studios, General Entertainment and Sports. Kareem Daniel, a 14-year company veteran who most recently led consumer products, games and publishing, will spearhead the group, managing distribution, operations, sales, advertising and data and technology.
While the reorganization doesn't affect Disney's parks, products and experience business, it does key into where the company sees the biggest opportunities for growth as the coronavirus pandemic wears on and potentially permanently alters consumer habits.

Dive Insight:

Disney's restructuring, effective immediately, shows the entertainment giant moving quickly to put an organizational focus on aspects of its business that are surging during the pandemic — and providing a lifeline while other categories, including parks and cruises, continue to weather serious headwinds. The company behind brands like ESPN, ABC and Freeform is making a concentrated effort to streamline its operations with an eye toward streaming and DTC, while more clearly distinguishing between its creative and distribution pipelines.

The changes carry significant implications for marketers that advertise on ad-supported Disney streaming services like Hulu and ESPN+, which will now have a centralized global distribution team dedicated to developing new ways to monetize platform content. They also enshrine streaming as Disney's preferred format, usurping theatrical releases and linear channels. The company's Studio, General Entertainment and Sports divisions will all put a "primary focus" on streaming moving forward, per the announcement.

Disney's Studio arm, led by Alan F. Horn and Alan Bergman, oversees live action films, Walt Disney Animation Studios, Pixar Animation Studios, Marvel Studios, Lucasfilm and 20th Century Studios and Searchlight Pictures; General Entertainment, led by Peter Rice, covers 20th Television, ABC, Disney Channel, Freeform, FX and National Geographic; and Sports, led by James Pitaro, controls ESPN. Each of those leaders, along with Daniel, will report to Disney chief Bob Chapek under the new structure.

While traditional media formats aren't going away, they are imperiled with the impact of COVID-19, and other moves by Disney don't offer much of a reprieve. In Europe, theater owners are outraged by Disney's decision this week to debut the upcoming Pixar film "Soul" on Disney+, The Guardian reported. Cinemas, typically a pillar of Disney's studio release strategy, are increasingly starved for new releases, and Disney's continued shift to put its films on streaming first — including last month's live-action remake of "Mulan" — offers a gloomy signal for exhibitioners as they head into the crucial holiday months.

Similarly, linear TV is suffering from a serious impact to advertising revenue and viewership that it may not recover from. New TV programming, which typically pours in around the fall, is sparse with current production challenges, while live sports are on shakier ground. Major advertisers, including PepsiCo, are quickly shifting their media investments away from traditional and toward digital and streaming platforms as a result.

Meanwhile, streaming has offered a rare bright spot for embattled media owners like Disney. The company reported revenue of $11.78 billion in the third quarter, below analyst expectations that accounted for the blow delivered by COVID-19, per Fortune. But Disney+, which debuted last November, crossed the 100 million paid subscriber mark during the period, setting it up to be a serious contender in a crowded streaming field that includes players like Netflix, Amazon and a bevy of offerings from rival network owners including CBS, NBCUniversal and WarnerMedia.