How the reorganization of the corporate business will affect the development of Disney Plus
Disney Corporation announced a comprehensive business modernization. Special attention is paid to Disney Plus streaming service. The management of the media giant said that this area is a priority, and hopes that investors will support them in their decision to improve the platform.
The new structure from Disney implies that all divisions involved in content production will now create material for Disney+, ESPN+, Hulu services. This concerns not only the film studio, but also the sports segment. Previously, these areas produced films and television programs.
Another change from the corporation – a new direction that is engaged in content distribution. Now it will manage all profits from video materials.
The reason to change the management strategy in the corporation was the results of the report, which was presented last year. Then analysts said that the number of subscribers for all streaming services has reached 100 million people. In just 3 months, paid Disney+ subscriptions increased to 57.5 million, and was at the level of 54.5 million users.
Several months ago one of the investors of the company, founder of Third Point, made a proposal to the management to temporarily freeze the payment of dividends. The businessman owns the largest block of shares. He estimated that this way Disney will save about $3 billion a year, and these funds should be used to expand content for streaming channels.
Experts do not deny that such a step may work and ensure rapid growth in the value of shares, which compensates for the lack of dividends.
It should be noted that Bob Chapek, who was appointed CEO in May last year, has repeatedly stated that the development of the corporation depends on the transformation of its structure, reorganization and optimization of a number of processes. Only after that one can count on stable growth of shares.
Analysts point out that the reorganization alone will have a temporary effect, aimed only at the increase in the price of securities. However, this strategy will allow the experts of the company to follow the development of streaming and what factors influence it. Besides, then it is possible to estimate more accurately the cost of this direction.
In recent years, Disney has been actively investing in video services, trying to compete with the market leaders. One of the important steps was to open paid access for Disney+ users to new film distribution services, bypassing demonstrations in cinemas. The first such experiment was the film Mulan, which could be watched for $30 to subscribers streaming.
Company analysts see great potential in Disney video services, as they offer a huge selection of children’s content and regularly expand the range for adults.