Business

Walt Disney announces major restructuring, puts focus on streaming services

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Disney has just announced restructuring the company’s media and entertainment divisions, shifting the company’s focus to direct-to-consumer entertainment, particularly streaming via Disney Plus.

The company has provided details that to further accelerate its direct-to-consumer strategy it would be centralizing its media businesses into a single organization that will be responsible for content distribution, ad sales, and Disney Plus.

Disney’s announcement effectively addresses the COVID-19 pandemic. Following the news, the company’s stock was up about 5 percent in the after-hours trading.

The move by the company has been announced when the global coronavirus pandemic has crippled its theatrical business and steered more customers toward its streaming options.

This major reorganization also comes just days after activist investor Dan Loeb, a major investor in the company through his Third Point Capital hedge fund, called on Disney to cancel its dividend and redirect more investments into streaming.

Trip Miller, a Disney investor and managing partner at hedge fund Gullane Capital Partners said, “This is further proof that the direct to consumer model is not only well received but more critical than ever to Disney’s future. These changes will not only result in higher quality content, and focused distribution, but allow the company to streamline corporate complexity and hopefully lower expenses.”

Bob Chapek, Disney’s chief executive officer, in an internal memo announcing the reorganization wrote, “This reorganization will accelerate our growth in the dynamic direct-to-consumer space, which is key to the future of our Company. The new organizational structure, with content creation distinct from distribution, will enable the company to be more effective in creating what consumers want the most, and delivering it in the manner that they prefer to consume it. Under this new structure, our Company’s world-class creative team will be able to focus wholly on developing and producing great original content. While our newly centralized global distribution team will be focusing on delivering and monetizing that content in the most optimal manner across all platforms, including Hulu, Disney Plus, ESPN Plus, and Star international streaming service.”

The new restructuring is efficient instantly, and the Company expects to transition to monetary reporting beneath this construction within the first quarter of fiscal 2021.

The Company plans to still maintain a digital Investor Day on December 10, the place it’ll current additional particulars of its direct-to-consumer methods.

The streaming service, which isn’t even a year old yet, now already has more than 60 million subscribers. The company last year had said that it projected Disney Plus would likely have 60 million to 90 million global subscribers by 2024.