Disney Shakes Up Streaming Organization, Puts Paull in Charge

The Walt Disney Co. on Jan. 19 announced a major shakeup of its streaming business, promoting Michael Paull to the new role of president, Disney Streaming, with oversight of  Disney+, Hulu, ESPN+ and Star+.

Michael Paull

Paull, previously head of Disney+, reports to Disney Media & Entertainment Distribution (DMED) chairman Kareem Daniel.

Joe Earley, previously EVP of marketing and operations for Disney+, has been appointed president of Hulu and reports to Paull. Earley replaces Kelly Campbell, who late last year left Hulu to take the reins of NBCUniversal’s Peacock streaming service.

A successor to Paull will be named at a later date.

Disney says the moves are being made to support the expansion of its direct-to-consumer business around the world.

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Rebecca Campbell (Photo courtesy of ABC/Bob D’Amico)

The company also has established a new hub for international content creation that will be overseen by Rebecca Campbell.

Campbell’s focus, as chair of the International Content and Operations group, will be on local and regional content production for Disney’s family of streaming services. She remains in charge of Disney’s international media teams and reports directly to Disney CEO Bob Chapek.

The International Content and Operations group is Disney’s fourth content creation group and will operate alongside the Studios Content, General Entertainment Content and Sports Content groups.
 
“Disney’s direct-to-consumer efforts have progressed at a tremendous pace in just a few short years, and our organization has continued to grow and evolve in support of our ambitious global streaming strategy,” Chapek said in a statement. “Rebecca has played a vital role in orchestrating our global platform expansion, and I’m excited that she will be leading our new International Content group, bringing her expertise and talent to oversee the growing pipeline of original local and regional content for our streaming services while continuing to lead our international operations. Likewise, with a relentless focus on serving consumers, Kareem has developed an industry-leading team of seasoned executives who are uniquely equipped to take our streaming business into Disney’s next century.”

Paull came to Disney in 2017 from Amazon, where he headed Amazon Channels.

Horacio Gutierrez Hired as New Walt Disney General Counsel

Disney CEO Bob Chapek Dec. 22 announced the hiring of Horacio Gutierrez as the media giant’s new senior EVP, general counsel and secretary.

Gutierrez, who joins Disney from Spotify, where he served as head of global affairs and chief legal officer, replaces Alan Braverman, who announced in July he would be retiring after nearly two decades as general counsel. Gutierrez begins his new position on Feb. 1, 2022, reporting directly to Chapek.

Horacio Gutierrez

“Horacio is an incredibly skilled attorney and dynamic leader who comes to Disney with 35 years of legal experience in markets around the globe,” Chapek said in a statement. “Having spent more than two decades working for premier technology companies, he has an extensive understanding of the complex legal questions that come with technological disruption and rapid industry change”

Gutierrez will oversee Disney’s team of attorneys responsible for all aspects of the company’s legal affairs globally and acting as a strategic advisor to executive leadership and the board of directors. His areas of accountability will include litigation, compliance, transactional law, securities law, regulatory matters, privacy protection, global ethics, and patent, copyright and trademark issues, among others.

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Prior to joining Spotify, Gutierrez was VP and general counsel for Microsoft, overseeing the company’s legal affairs, including support of the complete lifecycle of Microsoft’s products and services, from research and development to business development activities, M&A, litigation, legal compliance and cybercrime prevention.

Gutierrez holds a master of laws degree from Harvard Law School; a Juris Doctor degree from the University of Miami School of Law; and a bachelor of laws degree and post-graduate diploma in corporate and commercial law from Universidad Católica Andrés Bello in Caracas, Venezuela.

Disney Extends CFO Christine McCarthy’s Employment Contract Into 2024

The Walt Disney Co. Dec. 21 announced it has extended CFO Christine McCarthy’s contract through June 30, 2024. McCarthy is a 22-year veteran of the company and has served as CFO since 2015.

“Christine’s leadership has been indispensable during this time of disruption and transformation, and her impact reaches well beyond our balance sheet,” CEO Bob Chapek said in a statement. “She has been instrumental to Disney’s growth and helped us navigate the most difficult days of the pandemic.”

As CFO, McCarthy oversees Disney’s worldwide finance organization, which includes brand and franchise management, corporate alliances and partnerships, corporate real estate, corporate strategy and business development, enterprise controllership, enterprise technology, financial planning and analysis, global product and labor standards, investor relations, risk management, tax and treasury.

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McCarthy joined Disney in 2000, and prior to becoming CFO she was EVP of corporate real estate, alliances and treasurer. She currently serves on the board of directors of The Procter & Gamble Company and FM Global, and is a trustee of Carnegie Institution for Science. She has received numerous awards and has been named multiple times to Treasury & Risk’s “100 Most Influential People in Finance,” the Top 100 Irish American Business Leaders, and Business Insider’s “The 15 Most Influential Women in Finance.” In 2015, she was the recipient of Treasury Today’s Adam Smith “Woman of the Year” award. In 2016, she received Los Angeles Business Journal’s “Executive of the Year” award and was honored as one of the Entertainment Diversity Council’s “Top 50 Most Powerful Women in Entertainment.”

Despite Stumble, Disney+ is the Top-Growing Streaming Service, JustWatch Says

While the fourth-quarter (ended Oct. 2) subscriber growth slowdown at Disney+ made headlines, the 2-year-old SVOD service remains the top-growing platform — ahead of competitors HBO Max, NBCUniversal’s Peacock, Paramount+, Hulu, Amazon Prime Video and Netflix.

New data from JustWatch, which tracks more than 20 million users per month across 54 countries, found that Disney+ was No. 1 in subscriber growth across the majority of its 64 operating markets. The platform ended the quarter with 118.1 million subs, up 60% from the previous-year period, but still trailing SVOD leader Netflix’s 214 million subs across 190 countries.

Indeed, Disney’s addition of 4.4 million subs in the most-recent fiscal period rivaled Netflix. But the streamer’s Indian asset, Hotstar, lost 2.4 million subs, largely due to the process of initiating subscriber renewals and the timing of the Indian Premier League cricket season. India accounts for 37% of Disney+ total subscribers.

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With Disney+ celebrating its two-year anniversary Nov. 12 in a companywide media event, CEO Bob Chapek is hardly worrying about the Q4 slowdown, reiterating the company is not focused on quarter-by-quarter subscriber results.

Instead, Chapek reminded that the service is now available throughout Japan and launching tomorrow in South Korea and Taiwan, with Hong Kong bowing on Nov. 16. In 2022, Disney+ will expand across more than 50 additional countries, including in Central and Eastern Europe, the Middle East and South Africa.

“Our goal is to more than double the number of countries we are currently in to over 160 by fiscal-year ’23,” Chapek said. “We are enormously proud of all that we’ve accomplished with the service in just the first 2 years. It has exceeded our wildest expectations, and we are so excited for what’s to come.”

CEO Chapek: Disney to Remain Flexible on Theatrical/PVOD Window

With the theatrical market slowly emerging from the pandemic era, Disney remains unconvinced about a return to the theatrical-first distribution model for original movies.

Speaking Nov. 10 on the company’s fiscal call, CEO Bob Chapek said that while the pandemic appears to be slowing, consumer attitudes toward the consumption of movies has changed. In the fiscal year, Disney released two theatrical titles, Black Widow and Jungle Cruise, concurrently on its $19.99 Premier Access premium VOD platform. That compared with Mulan, Disney’s first PVOD release, in the previous-year period. Widow generated $60 million in PVOD revenue in the movie’s opening weekend, the only film for which Disney has publicly disclosed PVOD sales.

“We had a number of titles released going to theatrical that will eventually go to Disney+, [and] what we’re seeing is some recovery of the theatrical exhibition market, which is a good thing,” Chapek said.

At the same time, the executive said the company is watching “very, very carefully” different types of movies, including family films, to see how different age demos react to theatrical releases and come back to theaters.

Of the top 12 movies at the domestic box office this year thus far, five are Disney titles, including No. 1 in ticket sales: Shang-Chi and the Legend of the Ten Rings, with $224 million in revenue ($430 million globally). The movie was not released concurrently on PVOD.

“We’re sticking with our plan of flexibility,” Chapek said. “We’re still unsure how the market place is going to react when family films come back with a theatrical-first window.”

He said theatrical movies released this have had a “fairly short” theatrical window in regards to the legacy window period.

“We’re doing that so we can get our films quicker to Disney+, but at the same time see if the theatrical market can kick back into full gear as we prime the pump with [new releases],” Chapek said, adding the studio would announce distribution on a title-by-title basis.

“We’re in kind of a flux and change, still,” he said. “While COVID will be in the rearview mirror, God willing, I think change in consumer behavior is going to be more permanent. So, we’re reading that on a weekly basis.”

Whether that “reading” includes more Premier Access releases and shorter windows from the already abbreviated 45-day exclusive exhibition period will depend on market conditions. The days of coddling exhibitors would appear over at Disney.

“We’re going to do what’s best for our shareholders, ultimately,” Chapek said.

Disney Streaming Subscriber Growth in the Crosshairs

NEWS ANALYSIS — With Disney’s branded subscription streaming video-on-demand service, Disney+, the companywide focus since launching two years ago, all eyes Nov. 10 (after the market closes) will be on whether the platform sustained subscriber growth through the fiscal fourth quarter, which ended Sept. 30.

Disney+ ended the third quarter of this year with 116 million subscribers, an impressive tally for a service less than 2 years old. But as previously reported, one-third of those subs hail from India through Disney’s acquisition of the Hotstar streaming platform from Fox.

But in September, CEO Bob Chapek told an investor event that Disney+ could see challenges to its prolific sub growth due to ongoing issues in India, including timing of the professional cricket season coinciding with a rollover of existing Disney+ subs.

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Unlike in the United States, where Disney+ subscriber memberships automatically roll over on a monthly basis, in India Disney signed millions of subs to annual contracts that are not allowed to automatically renew in accordance with federal law. As a result, streaming memberships have to be renewed on an individual basis.

“Every time you lose that [sub], you have to get that [sub] back,” Chapek said at the Goldman Sachs event, adding that with the reboot of the Indian Premier League (cricket), there would lots of incentive among subs to renew.

Chapek cautioned Disney+ subscriber growth in India could fall to low double-digits or below.

“You have to take a step back before you can take a step forward in terms of those [Indian] renewals,” he said. “It’s a claw-back if you will.”

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Meanwhile, Disney+ continues to operate on all cylinders. The platform had 288.7 million unique visitors across all media devices, according to Morgan Stanley, which was up almost 75% from a year ago, and almost 5% from the previous quarter. Unique page views increased by 81.4% from January to September 2021, compared with the same period last year.

“We see Disney on the short list of global streaming majors,” the research firm wrote in a note. “Despite significant continued upward earnings revisions, shares have lagged as net [sub] add expectations ran ahead of content deliveries. As the content pipeline builds into 2022 and 2023, core net [sub] adds should accelerate.”

Bob Chapek: Disney+ Eyeing Subscriber Headwinds in Q4

Disney+ has been an industry success since launching in November 2019, driving exponential subscriber growth past 116 million — surpassing SVOD sub growth market leader Netflix in the process. That ride is about to get bumpy in the fourth quarter (October to December), according to CEO Bob Chapek.

Speaking Sept. 21 at the virtual Goldman Sachs Communacopia Conference, Chapek said the explosive Disney+ subscriber growth has been driven in large part by Disney’s acquisition of the Hotstar streaming platform through its $71.3 billion 20th Century Fox purchase. A large segment of Hotstar subs follow professional cricket, specifically the Indian Premier League, to which the platform has exclusive streaming rights.

Disney also launched general content platform Star+ in Latin America, in addition to the Disney+ Hotstar rebranding in India. The Star+ rollout has seen its challenges with the platform having to adapt to 18 different markets, eight separate pay-TV distribution agreements in seven different currencies, across six different platforms, according to Chapek.

“That was quite ambitious,” he said. “It was a little slow going in the beginning as our partners mobilized. But at the same time, our trajectory is going to change very quickly, just like it did with Disney+.”

Separately, Chapek said the Sept. 19 re-launch of the the IPL underscores a shift in the league’s schedule and coincides with the annual expiration of many Disney+ subscriptions. Unlike in the U.S. and other markets, annual streaming subscriptions do not automatically renew. As a result, Disney has to re-engage millions of its streaming subs.

“Every time you lose that [sub], you have to get that [sub] back,” he said, adding that with the reboot of the IPL, there will lots of incentive among subs to renew.

“But you have to take a step back before you can take a step forward in terms of those [Indian] renewals,” Chapek said. “It’s a claw-back if you will.”

The executive used the subscriber situation in India to underscore what he contends is a significant “non-alignment” with Wall Street thinking on Disney+ SVOD subscriber growth. Chapek said growth is not linear quarter-to-quarter. He said Disney’s previous growth prediction of 230 million to 260 million subs led many analysts to project a required quarterly sub growth trajectory. Chapek said that thinking doesn’t reflect global reality.

“These [subscriber] numbers tend to be a lot noisier,” he said. “They are not a straight line relationship quarter-to-quarter.”

As a result, Chapek warned that Q4 sub growth would see a “low single-digit” increase compared with Q3. He added that the core sub market growth would increase both domestically and internationally.

“But we hit some headwinds,” he said, alluding to ongoing production shutdowns due to the pandemic. “This is a kink in the supply chain of new content coming onto the service. But this is very short-term.”

Indeed, Disney currently has 61 movies in production, in addition to 17 episodic shows earmarked for streaming, according to Chapek.

“We’re only in the first year-and-a-half of this wonderful experience of our direct-to-consumer business,” Chapek said. “We’re in inning one, and we have a lot to learn, but we’re really pleased how it’s gone [thus far].”

Disney CEO Bob Chapek Defends Hybrid Theatrical/Streaming Release Strategy

Facing litigation and scrutiny over the hybrid theatrical and Disney+ Premier Access release strategy around Marvel Studios’ Black Widow and other movies, Disney CEO Bob Chapek reiterated that the media giant would continue pursuing distribution channels dependent upon each movie’s market potential, among other factors.

Speaking Aug. 12 on the fiscal call, Chapek said the alternative release strategy — whose planning he said involved analyzing global market conditions and consumer behavior, and consulting with creative personnel, senior management, and even executive chairman Bob Iger — was prompted by the unprecedented impact of the pandemic on the traditional theatrical window.

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Bob Chapek

“We needed to find alternatives to provide movies to consumers while theaters were closed,” Chapek said, adding that once theaters began to re-open, moviegoers still remained home, reluctant to return without a vaccination and other assurances.

“So we adopted a three-pronged strategy that consisted of theatrical releases direct to Disney+, and a hybrid of theatrical and Premier Access premium VOD as we did with Cruella, Jungle Cruise and Black Widow — the top performing film for the domestic box office since the start of the pandemic,” Chapek said, adding that distribution of individual films is based on reaching the widest-possible audience.

The result has resulted in strong PVOD revenue from Black Widow and Jungle Cruise, in addition to topping opening box office ticket sales. It also produced a breach of contract lawsuit filed by Black widow headliner Scarlett Johansson, who claims Disney pushed the movie on Premier Access to undercut her theatrical take.

Disney denies the allegations, publicly announcing Johansson has already been compensated $20 million for Black Widow. The movie has generated $175.3 million at the domestic box office; $360.7 million worldwide.

Exhibitor trade group the National Association of Theatre Owners contends Disney has undercut its movies’ box office potential, including downstream home entertainment retail and rental revenue potential with Premier Access.

It claims Disney hasn’t found a new revenue stream with PVOD, but instead, has sabotaged existing ones.

“The many questions raised by Disney’s limited release of streaming data  opening weekend are being rapidly answered by Black Widow’s disappointing and anomalous performance,” NATO wrote in late July. “The most important answer is that simultaneous release is a pandemic-era  artifact that should be left to history with the pandemic itself.”

Chapek says Disney remains a strong believer in theatrical distribution.

“We will always do what we believe is in the best interest of the film and the best interests of our constituents,” he said.

Indeed, Chapek said the upcoming Sept. 3 release of Marvel Studios’ Shang-Chi and the Legend of the Ten Rings would stick with an exclusive theatrical release for a 45-day period, followed by distribution on Disney+.

“On Shang-Chi, we think it’s going to be an interesting experiment,” Chapek said. “The prospect of taking a Marvel title after just 45 days [in theaters] would be an interesting data point.”

Disney CEO Bob Chapek Cites Home Entertainment Success as Key to Getting Closer to Consumers

For Bob Chapek, what’s old is new again.

Before Chapek become CEO of The Walt Disney Co., he was president of Walt Disney Home Entertainment and driver of a successful packaged-media marketing program that created demand for select Disney classic titles by keeping them temporarily unavailable via the “Disney Vault.”

Flash-forward to the present and Chapek has been focused in part on expediting Disney’s direct-to-consumer retail and streaming access. Speaking June 14 on the virtual Credit Suisse 23rd Annual Communications Conference, Chapek said the DTC business strategy — similarly to home video and transactional VOD in the past — is about getting closer to the consumer.

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Disney’s DTC unit includes streaming video services Disney+; Disney + Hotstar; ESPN+; Hulu; and Star+. The segment had more than 103 million combined subscribers, and posted revenue of $3.5 billion in the fiscal first quarter, up 73% from the previous-year period.

“It’s about having a granular understanding of what the consumption patterns are, and then speaking to the consumers in a way that’s going to be relevant to the content that they want specifically for themselves,” Chapek said. “And by doing so, we’ll drive engagement and consumption.”

Disney+ has taken baby steps into premium VOD, dubbed “Premier Access,” enabling Disney+ subscribers early access to select movies priced at $29.99 purchase-only price. Subsequent retail channels include transactional VOD, electronic sellthrough, DVD and Blu-ray Disc.

“In terms of the relationship that we have with our distribution partners, the key is having a strong symbiotic relationship, and that’s what we’ve got, as they really want Disney content and we bring that value to their platform,” Chapek said.

“So as long as we have a symbiotic relationship, where we bring something they need, we get something that we need. It’s a healthy relationship. And with the wide variety of content that we have in our machine, I think we’ll continue to have that very positive, very productive, very symbiotic relationship.”

When asked whether Disney might separate select Disney brands such as Marvel and Star Wars into standalone streaming platforms, Chapek said the aggregated business model, including combining Disney+, ESPN+ and Hulu into a specially-priced combo offering, is working.

“There is sort of a large overlap between people that like Marvel versus people that like Star Wars and people that like Disney,” he said.

“We won’t say no to anything in the future, but right now we’re really happy with our more highly aggregated model that we have, both from a cost standpoint and from a market opportunity standpoint. But again, who knows it could evolve over time as we learn more and more in different regions across the world.”

Bob Chapek: Pandemic Brought Flexibility to Disney Content Distribution

As Hollywood puts the pandemic in the rear-view mirror, Disney, like other studios, has revisited its distribution strategy of original movies and TV shows. Speaking May 24 on the virtual JPMorgan 49th Annual Global Technology, Media and Communications Conference, CEO Bob Chapek said the pandemic put renewed focus on how consumers want to access content, rather than traditional norms revolving around the 90-day theatrical window.

“One of the things we learned is flexibility is good because there’s two dynamics going on: One is people’s willingness to return to theaters and theaters’ ability to return in a meaningful way,” Chapek said. “And then the second is the change in consumer behavior that’s happening naturally, with COVID probably acting as a bit of a catalyst, but was going to happen anyway.”

Disney is returning to the movie theater in late summer with exclusive (and curtailed) 45-day windows for 20th Century Studios’ Free Guy and Marvel Studios’ Shang-Chi and the Legend of the Ten Rings. Free Guy launches on Aug. 13 and Shang-Chi on Sept. 3. The films mark Disney’s first exclusive theatrical releases since the Aug. 28 release of The New Mutants.

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Other theatrical titles Cruella (May 28), Black Widow (July 9) and Jungle Cruise (July 30) will debut in cineplexes and on $29.99 Premier Access via Disney+ simultaneously.

“We’re trying to offer consumers more choice as they gain confidence in how they want to go ahead and return to theaters,” Chapek said, adding that consumer return to the box office has been stronger in select international markets.

“We’re seeing some hesitancy to return [to movie theaters] in a way that would look anything like normal back in 2019,” he said. “And as such, during this sort of interim period, it’s really nice to be able to give consumers some flexibility.”

Marvel Studios’ Black Widow

When asked why a theatrical tentpole title like Black Widow would get concurrent purchase access on Disney+, Chapek said the Marvel Universe movie, starring Scarlett Johansson, had been delayed twice — and a third delay was not an option.

“At the same time, we always knew that there was a risk that exhibition wasn’t going to be fully developed or that consumers wouldn’t want to go back and sit in the theater,” he said. “We realized we had to sort of ‘prime the pump’ and give theatrical exhibition a chance, but we couldn’t put all our eggs in the exhibition basket, because we knew that in the weeks leading up to the decision, the domestic market was not coming back and is still fairly weak. We’re really confident we made the right call there.”

Pixar Animation’s Luca

The June 18 release of Pixar Animation’s Luca direct to Disney+ without a $29.99 purchase fee, and bypassing theatrical surprised some observers. Chapek said the decision revolved around keeping Disney’s evolving distribution channels stocked.

“We’ve increased our investment in creative content to ensure that all channels have a full complement of offerings to sort of keep everybody happy,” he said. “We want to make sure, given the importance of Disney+ in the marketplace and our shareholders, that we keep feeding that machine.”

Indeed, Disney’s Christmas Day release of Pixar’s Soul was topped only by Warner’s same-day release of Wonder Woman 1984 on HBO Max.

“We believe that Luca will get a lot of eyeballs,” Chapek said.