Disney’s difficulties shed light on the changing entertainment industry

Disney has made some major gambles with its streaming service, Disney+.

Disney’s difficulties shed light on the changing entertainment industry
A smartphone with displayed "Disney" logo is seen on the keyboard in this illustration taken March 24, 2020. REUTERS/Dado Ruvic/File Photo

Since the streaming boom took off within the past decade-ish, the traditional cable TV model has changed. Now, we’re seeing cracks showing in the evolving entertainment industry via everyone’s favorite mouse-ical media giant – Disney.

Disney has made some major gambles with its streaming service, Disney+. But, all things considered, the service is doing OK in terms of growth. It’s considered the third-biggest streamer, with a user base of 157.8 million subscribers as of last May. This puts it right behind Netflix (232 million) and Prime Video (over 200 million). Disney owns media properties from Pixar to Marvel to Fox to National Geographic, so there’s no shortage of stuff to watch on the platform. Some of its original programming has been well-received, too – “The Mandalorian,” “WandaVision,” “American Born Chinese” and “The Beatles: Get Back.” But in recent months, the platform has started to lose some subscribers.

We’re also seeing some other problems. With writers and actors striking in Hollywood, we’ve learned that streaming platforms have maybe not been super fair when it comes to how studios write up contracts for their talent and pay residuals for the programming on their sites.

There’s also the fact that, well … Disney+ hasn’t actually turned a profit. It’s relied on investment to develop into a streaming giant, and the ROI hasn’t been great. And Disney still has a lot of traditional TV programming through cable networks, which fewer and fewer people are paying for. Many people don’t see the point in paying for cable programming when they have access to all of this streaming entertainment. This is known as the phenomenon of “cord-cutting.” And recent box office numbers haven’t been kind to the media giant, most recently with “The Haunted Mansion” totally flopping.

So, recently reinstated Disney CEO Bob Iger is looking to see which direction Disney can take to get some sort of return on its investment when it comes to both streaming and traditional TV. He said that the company is thinking about “a variety of strategic options” for its traditional TV assets. That could mean selling off big networks like ABC, National Geographic, FX and Disney Channel. The company also announced a price increase on its streaming services starting in October. Disney’s also considering a partial stake sale in its most successful traditional TV offering, ESPN.

While linear (television) remains highly profitable for Disney today, the trends being fueled by cord-cutting are unmistakable," Iger explained on Wednesday.