The mousetrap

Bob Iger has resurfaced. In 2020, he decided to resign from his position as CEO of Disney and live a quiet life. Nonetheless, his plans have been overshadowed by the company’s current difficulties. It may be hard to believe that the all-powerful Disney would face the challenges posed today, but then again, time changes, and the crown has begun to tilt. So, what’s the deal with Disney? The Economist recently detailed the current situation that traditional media companies like Walt Disney are in. As we all know, streaming platforms have supplanted conventional forms of entertainment; going to the movies or looking for a TV show to watch has become a thing of the past. Netflix, Amazon Prime, and Apple TV are just a few newer alternatives to which users have turned their interest. Disney followed suit and launched their streaming service, offering a mix of old and new entertainment to adapt a legacy media company to more recent trends.

Its streaming service, Disney Plus, has required them to make significant financial investments to produce new television shows and motion pictures. And while all that hard work has paid off this year with 22 Oscar nominations, it hasn’t translated into any investment value. Since its all-time high this time last year, its stock price has dropped by almost a third, and the platform has racked up losses of billions of dollars. There are a variety of factors that contribute to this problem. Several industry professionals in a podcast discussed a number of issues that were the source of an Economist article . First, Disney transitioned their business model from “a wholesale” to a “retailer’s” almost overnight. Back in the day, when someone wanted to watch a Disney movie or show, they did not go directly to Disney to purchase a ticket; instead, they went to a movie theater and bought a ticket from the theater itself. Because of this, the company never had to worry about customers complaining about their service; instead, it was the responsibility of their distributors. While other companies like Netflix have focused on getting the streaming service just right, the good old Disney has come by surprise and is taking a while to know the best way to make it lucrative.

The second reason for Disney’s downfall is that it continues to rely on old revenue streams, now in decline. The company is not solely focused on “the mouse,” and they have diversified its offering through various revenue streams. While this was once one of their best attributes, owning a broadcasting TV network is no longer as profitable as it once was. As a result, the company has attempted to capitalize on its classics, such as the Star Wars franchise and the Marvel Series. As a side effect, it appears that every Disney film is now a sequel or part of a saga. But how long can the company reap the benefits of these well-known fantasy stories before exhausting its golden goose? Some are concerned that production will shift from quality over quantity to the exact opposite over time.

Photo by Seif Ak on  Unsplash

Finally, some argue that another major problem affects Disney +, which has a lot to do with children. Children have always been the reason for Disney’s success, but kids these days have changed. Today’s youth are vastly different from those born just a few decades ago. Most children are estimated to be immersed in gaming platforms by age ten, with no interest in Disney princesses or fantasy narratives. As a result, all streaming services find it difficult to keep them entertained.

Nonetheless, the company was aware of the issue and attempted to introduce its in-house gaming platform years ago. Unfortunately, it was not a huge success. So, what should Disney do? First and foremost, the company should give the gaming industry another shot, as it appears that it failed in the first place due to mismanagement. Second, as they have already raised the price of their subscriptions, it would be beneficial to reduce the content spend. Astronomical budgets for content production are eroding the platforms’ financial stability. Thus, these actions could improve their performance.

In contrast to competitors such as Apple and Amazon, whose other revenue streams are growing, Disney, which is primarily a media company (and whose other revenue streams are declining), appears to have a greater sense of urgency regarding all the previously mentioned issues. Iger is probably well aware of this and thus, holds the keys to the future, so hopefully by the end of his two year contract, the re-elected CEO will have turned the tables. In any case he should move quickly, as the level of competition is at an all-time high, and other streaming platform won’t pass up the chance to unseat a media giant like Disney.

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