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Why is The Walt Disney Co. utilizing a number of different theatrical release strategies over the next few months? Disney CEO Bob Chapek says they are “celebrating flexibility” as the company sees how the world recovers from the novel coronavirus pandemic. Chapek was interviewed as part of JP Morgan’s Technology, Media, and Communications Conference Monday.
Disney is releasing some films directly to its Disney+ streaming platform (like Pixar’s Luca) and others in theaters and Disney+ on the same day (Marvel’s Black Widow); it has also committed to release two movies exclusively in theaters, albeit with significantly shortened windows (Shang Chi and Free Guy).
“As we have seen with the domestic box office, and to some extent the international box office, we are seeing some hesitancy to return that wouldn’t look anything like normal in 2019,” Chapek says, adding that the company ultimately had to make a call.
“We didn’t want to delay Black Widow again but we couldn’t put all our eggs in the theatrical distribution basket,” Chapek said, noting that the company “needed to prime the pump” and help movie theaters by giving them blockbuster films, even if those films were also going to be streaming at the same time.
So why commit to Shang Chi and Free Guy? “That is later in the summer when we hope — we hope, we’re not sure — that the theatrical marketplace will recover more fully, and that type of distribution makes sense,” Chapek said. “At some point, you have to step off the dock and onto the boat … we’ll see how it goes.”
Asked about the pending WarnerMedia-Discovery merger, Chapek demurred, saying that “We are pretty happy with the template that we have, the strategies we have, and we think this, for us, doesn’t change things at all.”
Chapek also addressed the company’s theme parks business, noting that Disneyland Paris will reopen June 17, and that the U.S. parks should ramp up over the summer. Tokyo, he added, is taking longer because the government there is taking aggressive action to curb the spread of a new COVID surge ahead of the Olympics.
Still, he said that once the parks are fully reopened, the company will aggressively move to tie its theme parks business to its streaming business.
“Disney+ has not operated alongside parks,” Chapek said. “For the very first time, we have an opportunity to take our original direct-to-consumer business, our parks business, and bring it together with our newest direct-to-consumer business.”
And Chapek said the company is ready to “step on the gas” to shift its linear businesses like ESPN to a streaming-first model if need be.
“To some extent, our linear businesses are generating a ton of cash flow, they are also funding our DTC investments … that would be pretty tough without the cash flow,” Chapek said. “The pace of that [shift to streaming] could accelerate as we get out of COVID, and as consumers vote with their wallets.”
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