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Disney CEO Bob Chapek spoke Monday about the company’s reorganization to prioritize the creation and distribution of content for streaming, and shared some detail regarding upfront sales.
“Despite how profound that change was for us, relative to how we operated and particularly how the industry operated, it really has got strong buy-in by our execs,” Chapek told the Credit Suisse Annual Communications Conference during a virtual appearance.
Under the new structure, unveiled in October 2020, Walt Disney created a Media and Entertainment Distribution group responsible for both the dissemination and ad sales for all of its content, including across streaming services like Disney+.
“Everyone appreciates the fact that they have more time to do what they do best, given the increase in output we have,” Chapek added. Walt Disney has been feeding the Media and Entertainment Distribution group with programming from its film studios, general entertainment television studios and the sports group.
Those divisions — Studios, General Entertainment and Sports — produce for theatrical, linear and streaming distribution with a focus on the company’s direct-to-consumer outlets, which include Disney+. Chapek said the real test of success for the reorganized Disney as it accelerates its direct-to-consumer business will how the studio’s current five-year plan plays out.
And he added that managing content creation distinct from distribution has allowed creative teams across the studio to be more innovative and adventurous. An example is Marvel Studios, led by Kevin Feige, going beyond movie-making to creating a slew of TV shows for Disney+, including Secret Invasion starring Samuel L. Jackson and Ben Mendelsohn, and Armor Wars, with War Machine actor Don Cheadle, appealing to Iron Man fans, Chapek added.
He also pointed to the film side, where Feige and his team are planning a new feature to mine The Fantastic Four franchise.
“As you increase output, and go deeper and deeper into mining the Marvel mythology, it doesn’t have to tap itself out. We’ve got great stories to tell, and we’re telling great stories,” Chapek told the investor conference.
The Walt Disney boss, while touting the recent launch of Disney+ globally, also said the studio did not envision an ad-supported version of its flagship streaming platform. “We have no such plans to do that. We’re happy with the model we got,” he insisted.
That said, the company’s digital ad business is strong regardless. Per Chapek, over 40 percent of the company’s upfront sales were committed to streaming and digital, a new high watermark as the company continues to shift from its traditional linear businesses to streaming and direct-to-consumer.
“I think it speaks to the nature of how this business is rapidly changing,” Chapek said. “We are really happy with the upfront, our sales team did an extraordinary job.”
Consumer packaged goods, financial services, and media and entertainment were among the categories committing the most during the upfront. Chapek said that CPMs were up double digits, and a Disney source added that live sports were a key differentiator in the upfront negotiations. The company also secured diversity, equity and inclusion commitments from the holding companies it works with, per a source.
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