Disney CEO Bob Chapek ‘Very Pleased’ With ‘Mulan’ PVOD Release; Says More Coming

Disney’s first foray into premium VOD distribution of new-release movies into consumer homes rather than theaters proved successful, according to CEO Bob Chapek.  Speaking on the Nov. 12 fiscal call, Chapek said the Sept. 4 availability of live-action movie Mulan to Disney+ subscribers for $29.99 was a success. He didn’t disclose actual unit sales, saying Disney would reveal PVOD data on the virtual Investor Day on Dec. 10.

“From a studio content standpoint, we were very pleased with the results of Mulan as a premier access title,” Chapek said. The title met with adverse publicity (“mostly in the U.S.,” said Chapek) regarding filming locations in China and human rights issues with local ethnic Muslims, but not before Disney was able to determine the value of PVOD.

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Bob Chapek

“We saw enough very positive results before that controversy started to know that we’ve got something here in terms of Premier Access strategy,” Chapek said. “We’ll talk a little bit more that at the investor conference.”

He said offering the movie Soul first to Disney+ subs on Christmas Day reflects the company’s strategy of upping the content pipeline to the SVOD service.

“We thought it was a really nice gesture to our subscribers during the holiday period and provide that as  part of the service,” Chapek said. “I think what we’ve learned with Mulan is that there’s going to be a role for [PVOD] strategically with our portfolio of offerings.”


Disney+ Tops 73 Million Subs on First Anniversary; 25% Come From India

Disney’s high-profile subscription streaming video service Disney+ ended the fourth quarter and fiscal year with 73.7 million subscribers — 12 months to the day after launching.

Separately, ESPN+ added 6.8 million subs to end the quarter/year with 10.3 million. Hulu added 6.9 million subs to reach 32.5 million subs — up 27% from the previous-year period. Online TV service Hulu with Live TV added 1.2 million subs to end the period with 4.1 million subs. Disney ended the period with 120.6 million combined subs.

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“The real bright spot has been our direct-to-consumer business, which is key to the future of our company,” CEO Bob Chapek said in a statement, adding that Disney+ is “far surpassing our expectations in just its first year.”

Disney+ will roll out in Latin America beginning on Nov. 17. Disney bowed Disney+ Hotstar on April 3 and Sept. 5 in India, respectively. India/Indonesia now account for 25% of all Disney+ subscribers. International expansion, in addition to growth of Hulu and ESPN+, have ratcheted up expenses in Disney’s Direct-to-Consumer and International business unit.

Segment revenue for the quarter increased 41% to $4.9 billion and segment operating loss decreased from $751 million to $580 million. The decrease in operating loss was primarily due to improved results at Hulu and ESPN+, partially offset by higher costs at Disney+, driven by the ongoing rollout and a decrease at international TV channels.

The improvement at Hulu was due to subscriber growth and increased advertising revenue driven by higher impressions, partially offset by an increase in programming and production costs due to higher subscriber-based fees for programming the live television service. Higher results at ESPN+ were driven by subscriber growth and higher income from Ultimate Fighting Championship pay-per-view events.

The decrease at international channels was due to lower affiliate and advertising revenue, partially offset by a decrease in costs driven by lower general and administrative expenses and bad debt recoveries.

Disney Reorganizes With Focus on Streaming Video

With much of its business units idled due to the coronavirus pandemic, Disney CEO Bob Chapek Oct. 12 announced internal restructuring that puts the focus on what is working: streaming video.

Kareem Daniel

Disney is combining ad sales with distribution into a new Media and Entertainment Distribution group led by Kareem Daniel, who has served as president of consumer products, games and publishing. The media giant said the move is to put a “focus on developing and producing original content for the company’s streaming services.”

The new group will be responsible for all monetization of content — both distribution and ad sales — and will oversee operations of the Company’s streaming services. It will also have sole P&L accountability for Disney’s media and entertainment businesses.

This means that while Alan Horn and Alan Bergman, Peter Rice, and James Pitaro will continue to lead Disney’s studios, general entertainment and amusement parks, respectively, they will do so separate from streaming video.

Rebecca Campbell

Rebecca Campbell, who headed direct-to-consumer operations, which includes Disney+, ESPN+, Hulu, and pending Disney+ Hotstar, was upped to chairman of international operations and direct-to-consumer. All five executives report directly to Chapek, with Campbell reporting directly to Daniel.

“Given the incredible success of Disney+ and our plans to accelerate our direct-to-consumer business, we are strategically positioning our Company to more effectively support our growth strategy and increase shareholder value,” Chapek said.

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The CEO said separating content creation from distribution would allow Disney to be more effective in making the content consumers want most, delivered in the ways they prefer it, i.e. over-the-top video, transactional VOD and PVOD.

Indeed, Disney+ had more than 60 million subscribers in August. The bundle of Disney+ with Hulu and ESPN+ has 105 million.

“Our creative teams will concentrate on what they do best–making world-class, franchise-based content — while our newly centralized global distribution team will focus on delivering and monetizing that content in the most optimal way across all platforms, including the coming Star international streaming service,” Chapek said.

“It’s a tremendous privilege to work with the talented and dedicated teams that will comprise this group, and I look forward to a close collaboration with the outstanding and incredibly successful team of creative content leaders at the company, as together we build on the success we’ve already achieved in our DTC and legacy distribution business,” Daniel said in a statement.

A 14-year Disney veteran, Daniel has held leadership positions across a variety of businesses, including consumer products, games and interactive experiences, publishing, studio distribution, and Walt Disney Imagineering. Prior to that, Daniel was VP of Distribution Strategy at Walt Disney Studios, where he worked closely with the leadership in developing the company’s film content distribution strategy across multiple platforms and played a key role in the commercialization of the studio’s films.

“As we now look to rapidly grow our direct-to-consumer business, a key focus will be delivering and monetizing our great content in the most optimal way possible, and I can think of no one better suited to lead this effort than Kareem,” Chapek said. “His wealth of experience will enable him to effectively bring together the company’s distribution, advertising, marketing and sales functions, thereby creating a distribution powerhouse that will serve all of Disney’s media and entertainment businesses.”

Disney reports fourth-quarter (ended Sept. 30) fiscal earnings Nov. 5.

Disney’s ‘Mulan’ PVOD Experiment Goes Live

The Walt Disney Co.’s much-publicized toe-dipping into premium video-on-demand waters began Sept. 4 with the availability of the live-action Mulan remake on subscription streaming service Disney+. The movie, which costs a one-time $29.99 “Premier Access” fee in addition to the $6.99 monthly Disney+ subscription, will stream for free to subs on Dec. 4.

The movie is available via the Disney+ app on Google Play, Roku and Apple TV platforms. The title is also available through the app on Amazon Fire TV, the e-commerce behemoth confirmed Sept. 4. Once purchased, access to Mulan remains eternal “as as long as you are an active Disney Plus subscriber,” according to Disney.

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Disney, a longtime supporter of the traditional theatrical release window, opted for PVOD distribution for the reported $200 million Mulan production after repeated theatrical delays due to the coronavirus pandemic. In making the announcement, Disney CEO Bob Chapek reiterated the company’s support for the box office going forward.

The movie will have limited theatrical distribution in regions without Disney+ access, including China.

“We’re looking at Mulan as a one-off, as opposed to saying there’s some new business windowing model that we’re looking at,” Chapek said last month on the company’s fiscal call.

Mulan, about a young female warrior (Yifei Liu) who disguises herself as a man in the Imperial Army in place of her ailing father, has received positive reviews, including 81% approval on Rotten Tomatoes.

Bob Chapek Uses Home Entertainment Resumé to Push Disney Across PVOD Line in the Sand

NEWS ANALYSIS — With its live-action feature film Mulan delayed three times at the box office due to the ongoing coronavirus pandemic, and theaters not slated to re-open (maybe) until later this month, Disney had to act.

CEO Bob Chapek reached back to his home entertainment roots and went where former CEO Bob Iger never ventured: premium VOD. Chapek, former president of Walt Disney Studios Home Entertainment, announced Aug. 4 that Disney+ subscribers would be afforded exclusive in-home access to Mulan on Sept. 4 for $29.99. The movie will be released simultaneously in theaters in regions internationally that do not have access to Disney+.

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In crossing the PVOD line in the sand with theaters, Chapek dealt a major short-term blow to exhibitors that have come to count on Disney movies to drive attendance and concession sales. It was just over a year ago that Disney’s market share of the domestic movie theaters reached 35% ($1.88 billion) — surpassing the next two studios combined.

With Avengers: Endgame, Aladdin, Toy Story 4, The Lion King and Sony Pictures’ Spider-Man: Far From Home (produced by Disney’s Marvel Studios), Disney reigned supreme at the box office. Previous attempts at jumpstarting PVOD had largely failed because Disney refused to join. The studio ended 2019 with seven movies each generating more than $1 billion at the global box office — a fiscal tally replicated in 2018.

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“We have a studio that is doing extremely well and a [90-day release window] formula that is serving us really well in terms of its bottom line,” Iger said last November.

How times have changed. And for Chapek, upending traditional distribution business models is part of his legacy. As home video boss, Chapek championed the shrewd “Disney Vault” release strategy for its legacy animation titles. The studio would take specific DVD/Blu-ray Disc movies out of retail circulation and put them into the “vault” for months, thereby allowing the studio to re-sell the movies to starved hardcore fans, families and general consumers.

For Mulan, which reportedly has upwards of $300 million in production and marketing costs, going straight to home entertainment allows Chapek to test the PVOD waters while leaving the door open to theatrical.

“In order to meet the needs of consumers during this unpredictable period, we thought it was important to find alternative ways to bring this exceptional family-friendly film to them in a timely manner,” Chapek said. “We see this as an opportunity to bring this incredible film to a broad audience currently unable to go to movie theaters, while also further enhancing the value and attractiveness of a Disney+ subscription.”

Chapek said the Mulan PVOD release would be (for now) a one-off experiment, and Wedbush Securities media analyst Michael Pachter believes him.

“It really is that they can’t afford to do nothing and wait for theaters to re-open,” Pachter said. “It will be more problematic for Marvel stuff down the road.”

Disney SVOD Services Total 100 Million Paid Subs

Disney’s aggressive marketing of a branded direct-to-consumer (DTC) video package featuring Disney+, ESPN+ and Hulu has resulted to a subscriber base topping 100 million, CEO Bob Chapek Aug. 4 disclosed on the media giant’s third-quarter (ended June 27) earnings report.

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Disney ended the period with 57.5 million Disney+ subs, 8.5 million ESPN+ subs, 32.1 million Hulu subs and 3.4 million Hulu with Live TV subs. The data would suggest sub growth at Disney+ has cooled since attracting 54.5 million subs by May 4.

Disney attributed ESPN+ subscriber growth and higher income from Ultimate Fighting Championship pay-per-view events. The platform, together with Hulu and Disney+, has been bundled for $12.99 monthly and less.

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“[This is] a significant milestone and a reaffirmation of our DTC strategy, which we view as key to the future growth of our company,” Chapek said in a statement.

The milestone comes as DTC revenue topped $3.9 billion, up 2% from revenue of $3.8 billion in the previous-year period. Through nine months of the fiscal year, DTC revenue tops $12.1 billion compared with $5.9 billion in the prior-year period, and before the launch of Disney+ on Nov. 12, 2019.

While revenue increases in DTC, so do costs, at the expense of operating income. The segment reported a loss of $706 million, up 25% from an operating loss of $562 million in the previous-year period. Through nine months of the fiscal year, DTC operating losses have topped $2.2 billion, from $1 billion a year ago.

“Despite the ongoing challenges of the pandemic, we’ve continued to build on the incredible success of Disney+ as we grow our global direct-to-consumer businesses,” Chapek said.

Disney Names Rebecca Campbell Chairman of Direct-to-Consumer & International

With the departure of Kevin Mayer to TikTok, Disney CEO Bob Chapek has named longtime colleague Rebecca Campbell chairman of the media giant’s Direct-to-Consumer & International business unit. Separately, Josh D’Amaro has been named chairman of Disney Parks, Experiences and Products.

In her new role, Campbell will help launch flagship subscription streaming platform Disney+ in Japan, with further bows planned in Latin America and Eastern Europe.

Josh D’Amaro

“Our company is very fortunate to have a deep bench of talent and we’re extremely pleased to welcome these two exceptionally qualified Disney veterans to our senior management team,” Chapek said in a statement. “Both Josh and Rebecca have more than two decades of leadership experience with the company, a keen understanding of our brands and businesses, and a shared passion and vision for delivering extraordinary entertainment and one-of-a-kind experiences.”

A 23-year Disney executive, Campbell since 2017 has worked closely with Chapek as president of Disney Resort, including Disneyland and Disney California Adventure. Before that, Campbell led the Magical Kingdom’s European, Middle East and Africa operations.

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Since launching last November, Disney+ has generated more than 54 million subscriptions.

D’Amaro, who most recently served as president of Walt Disney World Resort, succeeds Chapek as chairman, Disney Parks, Experiences and Products. In his new role, D’Amaro will attempt to jumpstart Disney’s shuttered travel and leisure businesses, which include six theme park-resort destinations in the United States, Europe and Asia; a cruise line; a vacation ownership program; and a guided family adventure business.

Walt Disney World Orlando is re-opening retail center Disney Springs on May 21 — 10 days after the re-opening of Shanghai Disneyland and Disneytown in China.

Disney Streaming Boss Kevin Mayer Jumps to China’s TikTok as CEO

In a surprise move, Kevin Mayer, chairman of Disney’s direct-to-consumer & International unit, is leaving to become COO of the corporate parent of Chinese-owned social media platform TikTok, effective June 1.

Mayer, who has spent 25 years at Disney, will report directly to Yiming Zhang, founder/CEO of ByteDance. He will be charged with driving the global development at ByteDance, as well as overseeing corporate functions, including corporate development, sales, marketing, public affairs, security, moderation, and legal.

In his role as COO, Mayer will lead music, gaming, Helo, emerging businesses, and will also serve as CEO of TikTok, leading the rapidly growing platform as it continues to build its global community of creators, users, and brands.

“Kevin’s wealth of experience building successful global businesses makes him an outstanding fit for our mission of inspiring creativity for users globally,” Zhang said in a statement.

As chairman of Disney’s revamped home entertainment unit, consumer products and international business, Mayer oversaw rollout of Disney+, the company’s flagship subscription streaming video service. Additionally, Mayer led the company’s other direct-to-consumer businesses, including Hulu, ESPN+, and India’s Hotstar, as well as overseeing Disney’s international operations, global ad sales, and global content sales.

“Like everyone else, I’ve been impressed watching [ByteDance] build something incredibly rare in TikTok — a creative, positive online global community,” Mayer said.

The executive said he is grateful to Bob Iger for his visionary leadership and mentorship over many years, and Bob Chapek, whom Mayer said he greatly admires.

Alex Zhu, the current president of TikTok, will transition to ByteDance VP of product and strategy, where he will focus on his primary passion overseeing strategy and product design.

Kelly Zhang and Lidong Zhang will continue to lead the business as CEO and Chairman of ByteDance China, respectively, reporting to Yiming Zhang, as ByteDance’s global CEO. They manage a range of products, including Douyin, Toutiao, and Xigua, in addition to their duties leading the business and operational teams in China.

In the management restructuring, TikTok said its national and regional management leaders would remain in their roles with their current responsibilities, reporting to Mayer.

Chapek: Disney Sticking with Theatrical Window — For Now

Walt Disney Studios plans to stick with the traditional 90-day theatrical window for all major movie releases, CEO Bob Chapek said from his home on the company’s May 5 fiscal call.

With Universal Pictures causing a maelstrom of controversy last month when it announced it would opt for concurrent theatrical and premium video-on-demand distribution for new move releases after generating $100 million from animated feature Trolls World Tour, Chapek said the results awakened Disney to the reality of alternative distribution — especially during the pandemic and unusual market conditions.

He said any changes to Disney’s theatrical distribution would be done on film-by-film basis going forward, including transitioning Artemis Fowl from the box office to Disney+ on June 12.

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“With changes involving consumer dynamics or certain situations like COVID-19, we may have to make some changes to that [90-day theatrical] strategy just because theaters aren’t open or aren’t opened to the extent that [they’re] financially viable,” Chapek said.

He said that with other major Disney box office releases re-scheduled later in the year or into 2021, the studio “very much so” believes in the 90-day window for major movies.

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Universal’s decision to include PVOD caused major exhibitors such as AMC Theatres and Regal Cinema to warn they would not screen any title being concurrently made available on digital platforms.

Chapek reiterated that Disney has dominated the global box office in recent years with its Marvel, Pixar and Star Wars movies. The studio generated about $13 billion in worldwide box office in 2019, including a record seven $1 billion releases, including latest Lucasfilm release Star Wars: The Rise of Skywalker.

Shanghai Disney Re-Opening on May 11 — With Restrictions

The Walt Disney Co. is planning to re-open theme park Disney Shanghai on May 11, CEO Bob Chapek said on the company’s May 5 fiscal call. Park attendees and workers will be subjected to temperature checks and required to wear masks.

Chapek said the re-opening decision was made after consulting with government officials, underscored by the fact the region has reported no new COVID-19 infections over the past two weeks. The country has reported 82,881 virus infections and 4,633 deaths.

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The signature theme market in China was forced to shut down in March as the coronavirus ravaged the erstwhile Communist country. The closure resulted in Disney shuttering its remaining theme parks and cruise ship operations. CFO Christine McCarthy said the closures cost Disney $1 billion in lost revenue.

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