In the midst of America quite literally under siege by an extremist mob hellbent on destroying the country’s democratic core — the very thing they’ve belligerently, dangerously, and wrongly accused elected lawmakers of tarnishing for more than four years, all stemming from listening to a tyrant use and abuse any platform available to him — there was a little bit of Disney news.
(I’ll be honest with you: it’s hard to concentrate on anything other than the political chaos taking place, so this week’s Musings on Mouse may not be as fruitful as months past. Still, I want to write a little bit about Disney+ and the most recent executive departure that many people in the industry have theorized or known about for some time. )
On Wednesday, Disney announced that Ricky Strauss, a longtime marketing and content executive, was leaving his post after nine years with the company. Strauss did a number of things, but most recently he oversaw marketing and content on the original Disney+ executive team. Prior to Disney+’s launch in November 2019, Disney made it very clear which executives would report to then CEO Bob Iger and oversee the company’s most important product in decades. The team consisted of Strauss, Agnes Chu, who left a few months ago to become Conde Nast’s Entertainment president, Kevin Mayer, who left to become TikTok’s CEO for less than 100 days, and Michael Paull, who remains in his position as President of Disney+ and ESPN+.
Or, to make it as clear as possible, 75% of the original Disney+ executive team is no longer overseeing Disney+. 75% of the original Disney+ executive team is no longer at Disney.
Someone on Twitter asked why so much of the original team had resigned, including two prominent executives who left their positions before Disney+ turned a year old. Part of this is standard changing of the guards. When Bob Iger announced he was stepping down (stepping up, really) as CEO in order to focus on more creative endeavors in the company as its executive chairman, Bob Chapek, former head of Parks, stepped into the company’s top role.
Since then, he’s established a number of his key players in top company positions. Kareem Daniel moved from consumer products to overseeing Media and Entertainment, including all Disney streaming services; Josh D’Amaro moved from head of Disney World to overseeing all of Parks, Consumer Products, and Experiences; and Rebecca Campbell was promoted from head of Disneyland resorts to chairman of DTCI (direct-to-consumer and international).
Those are just a few. Top executives want to surround themselves with people who they can rely on, whose trust they have. When Iger stepped down and Chapek was appointed, sending shockwaves throughout the industry who thought it was going to be Disney’s prodigal son, Kevin Mayer, one former Disney executive told me he Chapek made perfect sense.
“Chapek cleaned house when he was at Consumer Products, but he did what Bob wanted him to do,” the executive told me then. “He proved he was capable of a) being loyal, b) being effective, and c) not being afraid of making tough decisions.”
The same executive told me at the time to “keep an eye on Kareem Daniel,” pointing to the same type of loyalty between the two that many within the company saw between Iger and Chapek. This is key — it’s why there are a number of Parks and Consumer Products executives now overseeing the most important part of Disney’s business, Disney+. If the biggest growth opportunity at the company remains Disney+, which Well Fargo analyst Steven Cahall thinks it does, exclaiming in a note, “Chuck the [dividend, torch EPS, spend aggressively, All Systems Go on streaming,” having a team of people Chapek knows is vital.
A quick reminder of what Disney+ did for Disney in 2020: as nearly every other department suffered unprecedented annual losses, Disney+ delivered close to 90 million subscribers as of December 10th. By now, it’s fair to assume they’re closing in on 100 million if not surpassed entirely. (We’ll find out for certain by February 11th, when Disney releases its first quarter earnings.) One source told me that Disney+’s growth is key, but it’s also boosting bundle numbers — and therefore, Hulu and ESPN+ subscribers — as an added benefit. Disney is focused on Disney+, yes, but Disney Streaming as a whole is where the company wants to grow.
Disney’s direct-to-consumer and international segments generated $17 billion for Disney in its fiscal 2020 year. Although nearly 30 percent of Disney’s subscriber base is subscribed to the Hotstar Disney+ offering where ARPU (average revenue per user) is much lower, Disney+’s growth is something that neither investors nor executives at competing companies could have predicted. As Disney pumps out new, highly anticipated content that a) keeps churn rates relatively low and b) ensures consistent attention in the face of big competition from Netflix, WarnerMedia, and Amazon, it allows Disney to raise prices, and ARPU will hopefully become less of an issue.
All of which is to say, Disney+ and streaming is important. It’s not something that Chapek and his team can really fuck up, especially as shareholders and people within the company look to it as a core part of their future. That’s why Dan Loeb and other investors are ok with Disney ending or delaying the semi-annual dividend in order to pour those billions of dollars into additional Disney+ content and product updates. By November 12th, on the back of Disney announcing 73 million Disney+ subscribers and following Disney’s chief financial officer, Christine McCarthy’s, announcement that Disney would forego the dividend, Disney stock rose 6%.
To really hit it home: by December 30th, Disney stock reached an all-time high at $183.4, ending the day at $181. This is despite theme parks not generating enough daily customers, pay-TV declines, and its studio division still dependent on movie theaters being far more accessible than they are now.
So how does Chapek, a longtime Parks guy with some Studio and Consumer Products experience, go about ensuring that he and his team don’t fuck up Disney+? The guy who spearheaded a lot of it, Kevin Mayer, was gone. The woman who was publicly in charge of original content on the platform, Agnes Chu, was also long gone. Hulu is part of the Disney family but, talk to just about anyone at Hulu and you’ll know that’s not really the case. Michael Paull, who oversaw BAMTech, the very technology Disney+ is built on, but he’s not focused solely on content. Having Paull around to oversee product developments is crucial, but it doesn’t help with figuring out how best to organize and oversee an onslaught of new original series and films, including determining what makes sense for Disney+, what makes sense for Disney’s TV networks, and what makes sense for theaters.
The easiest solution is often the simplest one. It is also, sometimes, the most painful one. Long before Chapek announced a major Disney reorganization that would effectively split the production arms and distribution units, a source told me over drinks that Chu and Strauss would leave their roles. Changes, the source added, were inevitable. The middle ground wasn’t needed. Disney’s reorganization just reiterated things many of us within the industry had heard.
Who better to determine what original content, TV and film, should appear on Disney+ than the various studio and television executives? Sean Bailey (Walt Disney Studios), Kathleen Kennedy (Lucasfilm), Kevin Feige (Marvel Studios), Jim Morris (Pixar), Jennifer Lee (Disney Animation), and Alan Bergman (Chairman of Disney Studios) alongside Dana Walden and Peter Rice (Disney Television) can determine what to order and where to put it. The reorganization allows for this, in theory, to be more seamless than having an entire original content team overseeing Disney+. While there will always be people working on original content specifically for the streamer, it’s the studio and network heads who will report directly to Kareem Daniel and seemingly slate titles throughout the year. That much is as clear in Strauss’ email to staff about his decision to leave.
“It took much thought and consideration, but with our new structure and the changes to my role, the reorganization does not provide me with the opportunity to do the kind of work I love to do and to continue making the intended impact I have been so fortunate to have achieved at Disney,” Strauss wrote.
When Mayer left, it was likely to pursue opportunities he wouldn’t have at Disney; TikTok was going to give him the CEO title while ByteDance gave him the executive title at a global company he wanted. Chu may have left for more control over an editorial brand, something that seemingly was becoming harder for her to do at Disney. Now Strauss was seeing his work at Disney, and on Disney+ specifically, impacted. Their departures are understandable, and it’ll be interesting to see how the new content and distribution arm structures impact (or if they impact) the type of programming that ends up on Disney+.
This is just my analysis, based on conversations I’ve had with people and my read on the situation, but effectively letting the studios and network heads determine what works, and handing them a number of slots throughout the year for Disney+ content, will likely work better than keeping a middle ground team around to figure out the calendar year. The studio and network heads know what works best for theatrical releases, what needs to be on the cable and broadcast networks, and what should be saved for Disney+, the House of Mouse’s new crown jewel.
Chapek’s reorganization, and watching 75% of the original leadership team leave, seems to signify these changes already happening.
Personally, after watching Disney’s Investor Day conference, where several Star Wars, Marvel, Pixar, and Disney live-action and animated projects were announced by those same studio heads, based on the universes their creative teams have wanted to create for years, I don’t think it’s a bad idea to just let them do what they do.
Thanks for a bit of distraction after last week's horrifying insanity (and with more to come, I fear).
Hack!!! The indoctrination runs deep in this one....