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Bob Iger faces tough decisions at Disney. This one will be the hardest

Bob Iger is back as House of Mouse’s big cheese. One of his first tasks: defining Disney’s streaming strategy.

disney officials announced Sunday night that Iger, who stepped down as the company’s chief executive in early 2020 after a distinguished 16-year career, would immediately return and replace his hand-picked successor, Bob Chapek, as CEO. Shakespearian machinations following three tumultuous years for Chapek, who never quite stepped out of Iger’s shadow and presided over a dramatic drop in the company’s share price. Disney shares, which were down 41% year-to-date through Friday, were up 6% by midday Monday.

Announcing the move, Disney President Susan Arnold refused to throw Chapek under the bus for the media empire’s dwindling finances. But she pointedly noted that Disney is entering “an increasingly complex period of industry transformation”, for which Iger is “uniquely situated” to lead the company.

For Disney and Iger, the department undergoing the biggest makeover is video streaming.

Disney has been making massive bets on the future of streaming, pouring tens of billions of dollars a year into Disney+, Hulu, and ESPN+. And so far, it’s a clear loser. Earlier this month, Disney released broadcast losses of $1.5 billion in the fourth quarterbringing total losses for the year to $4 billion.

Disney executives knew streaming would take time to turn a profit. As part of a strategy initially implemented by Iger, Disney planned to spend tons of money on high-quality content – ​​much of it related to intellectual property it had acquired – and offer its service streaming at a great price for several years. Disney hoped this approach would lead to gaining a critical mass of subscribers, who would later bear further price increases.

Everything was going mostly to plan under Chapek, who predicted that Disney would achieve streaming profitability by 2024. But the scale of Disney’s streaming losses and some less-than-encouraging trends over the past quarter, namely a slight decline in average revenue per Disney+ Subscriber in the United States and Canada—put Wall Street on edge.

Iger will no doubt arrive with a mandate to put streaming on a firmer footing. But there are few easy solutions at hand.

The sexiest move involves a flashy acquisition by the executive who shrewdly snapped up Marvel, Lucasfilm, Pixar and much of the 21st century Fox. Yet even in an industry ripe for consolidation, no one except netflixmake money streaming – there are few clear options.

Netflix makes sense, and Disney is one of the few companies with the bandwidth to absorb it, but antitrust regulators would pounce on such a purchase. Amazon, HBO Max Parent Discovery of Warner Bros.and Apple are unlikely to sell their streaming properties. Neither Paramount+ nor Comcast-owned Peacock really moves the needle or fits perfectly with Disney’s IP-based content strategy.

Alternatively, Iger could take Disney back to its roots, making it a family- and franchise-focused platform while cutting costs for other content. disney should spend over $30 billion next year on streaming content – an amount roughly double that of Netflix, despite both companies boasting similar subscriber totals.

Two leading analysts have reported their preference for this approach in customer notes following Iger’s announcement, according to the Hollywood journalist. MoffettNathanson analyst Michael Nathanson wrote that he hopes Iger will “refocus (Disney’s) investment on areas of franchise strength and move away from broader general entertainment content.” Wells Fargo Analyst Steven Cahill added that he expects Iger’s arrival “could reopen the discussion about whether Disney+ should be a franchise IP content hub or a platform for wider entertainment”.

Again, Iger could exit the current strategy.

Disney officials believe streaming losses have finally peaked ahead of two big moments set for next month. The cost of Disney+, Hulu, and ESPN+ is everything is ready to go between $2 and $3 per month in December (although the price to bundle all three remains the same). Meanwhile, Disney+ will launch an ad-supported level at $7.99 per month, the current price of the ad-free service. If Disney can avoid significant amounts of subscriber churn and significantly increase revenue, profitability isn’t out of the question.

Whichever path Iger chooses, it will be one of the most important choices in his second stint at Disney. After three years away, investors will have to hope that Iger still has some Disney magic in the tank.

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NEW

A bunch of IOUs. Cryptocurrency exchange FTX owes $3.1 billion to its 50 largest creditors, according to new documents filed in bankruptcy court that detail the company’s difficult financial situation, Bloomberg reported on Sunday. Records show FTX has two creditors who owe more than $200 million and eight creditors with claims between $100 million and $200 million. FTX attorneys did not disclose the names of the top 50 creditors, who account for a significant portion of the company’s more than $10 billion in liabilities.

Are you preparing for even worse? Cryptocurrency values ​​fell Sunday night amid growing fears of contagion effects of FTXcollapses. Bitcoin prices fell 3% in the past 24 hours, briefly dropping below $16,000, while Ethereum was down 5% over the same period. The sale came as the trading arm of a major crypto venture fund DCG withdrawals halted and questions raised over the financial stability of the crypto lender Genesis Trade.

No restraint. TikTok is still planning to add approximately 3,000 additional engineers around the world as part of a three-year hiring spree, bucking the layoff trend in the tech industry, the the wall street journal reported Saturday. The ByteDanceThe company-owned platform plans to build on its 1,000 engineers in its US hub, in part by recruiting workers recently laid off by Meta and Twitter. TikTok recently lowered its ad revenue target for 2022 from $12 billion to $10 billion, due to a drop in ad spending by companies.

Draw the line. Twitter Owner Elon Musk said on Sunday that he does not plan to reinstate the account of Information wars provocative Alex Joneseven after allowing donald trump back on the platform over the weekend. In a late-night tweet about the possibility of Jones’ reinstatement, Musk said he had “no mercy for anyone who uses the deaths of children for profit, politics or fame.” A jury this month ordered Jones to pay $1.5 billion in damages to the families of children killed in the 2012 Sandy Hook Elementary School massacre, which Jones had repeatedly called a hoax .

FOOD FOR THOUGHT

A possible heavyweight fight? Elon Musk enjoys a good feud, but he could soon face his most powerful corporate enemy yet. As Bloomberg reported on Sunday, Twitter’s new owner could face a backlash from the two global titans of mobile app stores, Apple and Google, regarding its content moderation plans on the platform. Apple and Google have previously removed apps from their stores over content moderation policies they deemed too lax, an issue that could arise if Musk keeps his promises to censor fewer posts on Twitter. Musk’s desire to make Twitter a subscription-based platform could also clash with Apple and Google, which are taking a 15% to 30% cut of all revenue from mobile apps downloaded through their app stores. .

From article:

If Twitter fails to get its content moderation house in order, Apple and Google could step in as gatekeepers. After all, they previously removed social media, including Parler, from their platforms for this reason. In Parler’s case, the app was eventually restored to both app stores after the social network went through a series of steps to ensure it was moderating content.

So there are two potential scenarios in which app stores block Twitter: if it tries to circumvent in-app purchases, and if it doesn’t police its content to Apple and Google’s satisfaction. That means the road to Musk building a successful subscription service is through these two tech giants.

IN CASE YOU MISSED IT

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Ex-Twitter Employees Horrified By Elon Musk Reinstating Donald Trump’s Account: ‘Incredibly Upsetting’by Chris Stokel Walker

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FTX’s Collapse Validates “Anything Centralized Is Suspicious By Default,” Says Ethereum’s Vitalik Buterinby Joanna Ossinger and Bloomberg

TikTok is a ‘massive surveillance’ tool for China, senators warn as Biden admin weighs proposal to spare US ban enforcementby Ian Fisher and Bloomberg

Donald Trump responds to Elon Musk by letting him tweet again saying Twitter ‘may not be successful’by Alex Veiga and The Associated Press

BEFORE YOU LEAVE

End of an era. The “leap second” is officially suspended. Members of an international treaty governing global measurement standards voted on Friday to remove the leap second in 2035, ending a decades-long puzzle for computer systems rattled by occasional adjustments in time, the New York Times reported. First instituted in 1972, leap seconds are an occasional pause in time on the international atomic clock, which ticks fractionally faster than the Earth’s rotation. Although the average human being doesn’t care much about these shutdowns, they are enough to wreak havoc on computer networks that rely on second-to-second precision. Scientists around the world debated for more than 20 years whether to abandon the leap second, finally reaching a consensus at a meeting in France.

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