Disney Investor Day Preview: What to Expect From Disney Plus, Theatrical Windows, Theme Parks

Thirteen months ago, Walt Disney shook up the entertainment world with the launch of Disney Plus, its heavyweight entrant into the subscription-video-on-demand arena: The turn into 2020, after all, was supposed to lead to the Year of the Streaming Wars. Little did anyone know that the months ahead would knock Hollywood — and just about every other industry — back on its heels as a frightening pandemic swallowed everyone’s best-laid plans.

The mighty Mouse has proven itself strong enough to suffer through the blows delivered to its many different divisions. Its businesses in theme parks, film and television production, media networks, live sports and digital entertainment mean that Disney’s balance sheet has been pummeled from nearly every direction — but that diversification also translates to a certain imperviousness to total destruction, should any single column fall.

Disney’s investor day on Thursday should offer insight into what its executives anticipate for 2021, and how the conglomerate intends to shield itself from further financial pain in the new year. Here’s a breakdown of what to expect.

Film: Will Disney Pull a Warner Bros. and Smash Theatrical Windows?

After Warner Bros. last week dropped the bombshell announcement that its entire 2021 slate —17 movies, including potential blockbusters like “Dune,” “Matrix 4” and Lin-Manuel Miranda’s “In the Heights” — would debut simultaneously on HBO Max and in any open theaters, all eyes are on Disney.

The company, per usual, is playing its cards close to the vest. But Disney largely isn’t expected to send next year’s box office entries to Disney Plus. For one, it doesn’t have the same urgency as HBO Max to build up subscribers; Disney’s streaming service already boasts 73.3 million paying subscribers, exceeding most analysts’ wildest expectations.

There have been mutterings that several films — including “101 Dalmatians” spinoff “Cruella” and the “Pinocchio” remake — will land on the streamer. If that’s the case, those titles will likely take the same route as “Soul,” the upcoming Pixar film that is skipping the big screen and debuting on Disney Plus this Christmas for no extra charge. Should a bigger offering — such as Marvel’s “Black Widow” with Scarlett Johansson — forgo a traditional theatrical release for a streaming premiere, it would likely see a rollout similar to that of “Mulan,” which was made available to Disney Plus subscribers for an initial additional fee before later being folded into the service’s core library.

With most U.S. cinemas shut down amid the pandemic, Universal and Warner Bros. have already hacked away at the standard 90-day period that films exclusively play in theaters. Universal, suddenly seeming much more generous in the eyes of theater owners in light of Warner Bros.’ decision, is making new releases available on demand after at least 17 days on the big screen.

The possibility that Disney could also bring films more quickly to Disney Plus would be the greatest blow yet to cinema operators. Disney’s theatrical offerings are regularly among the biggest ticket sellers of the year. (Seven of the studio’s movies in 2019, including “Captain Marvel,” “Avengers: Endgame” and “Frozen 2,” sailed past the $1 billion milestone.) Film exhibitors rely on Disney’s buzziest properties not just to fill seats, but to sell enough popcorn to justify keeping the lights on. If Disney makes a similar move, theater owners worry it could have an irreversible impact.

But at a Bank of America conference in September, Disney CFO Christine McCarthy noted that “The King’s Man” and Marvel’s “The Eternals” are still slated for theatrical release in February, with the caveat that “things could change.”

“When you look at our box office numbers over the last couple of years, we drive a lot of people into theaters to see the Disney films,” said McCarthy. “These tentpole films become kind of part of the zeitgeist of culture, whether it’s Marvel, whether it’s a ‘Black Panther’ – that was a couple of years ago – but these are movies that people like to see in theaters and talk to their friends about. So, once again, we hope the theaters stay healthy and can rebound from this COVID world we’re living in now.”

McCarthy did indicate that some of Searchlight’s films, for example, could go the premiere video-on-demand route, and acknowledged that Disney was using this time to “do things we’ve never done before… and see if there’s better ways of doing things than we had previously done.” But people “shouldn’t read anything into what we did with ‘Mulan.’”

Television and Streaming: Disney Plus Has HOW Many Subscribers Now?

Spurred by CEO Bob Chapek’s move in October to broadly restructure its media and entertainment business and focus on direct-to-consumer services, Disney’s television arm has undergone a sizable shakeup in recent months. Consolidated are its studio and programming operations (farewell to the briefly renamed, then scrapped, Touchstone Television), with the business side split off from the creative in a newly formed distribution and monetization arm under Kareem Daniel. That resulted in a number of layoffs of longtime studio and network executives, including several who had only joined a year or so ago.

This is all in service of streaming ambitions. Look for commentary on how the reshaping of Disney’s TV business has been faring, as well as its plans for ESPN Plus, Hulu and Disney Plus.

At its last investor day in April 2019, McCarthy said operating losses for Disney Plus were expected to peak between 2020 and 2022. The service’s first 11 months on the market did gangbusters, and Chapek has said that at investor day, he will offer a full-year update on the latest sub figures. Given that the platform has reached its target range of 60 million to 90 million subscribers a full four years ahead of schedule, the Wall Street crowd is no doubt curious if its previous profitability milestone of 2024 has been moved up — if it is, Disney’s stock is likely to see a nice bump in Friday’s trading session.

ESPN Plus also appears to be ahead of internal forecasts. The sports streamer, launched as a complement to ESPN’s linear networks, has 10.3 million total subscribers as of October; the company’s 2019 investor day revealed forecasts for 8 million to 12 million U.S. subscribers by 2024. (ESPN Plus is only available in the U.S. so far.) Meanwhile, Hulu is on track with 36.6 million subs at last count; internal goals for 2024 are in the 40 million to 60 million range domestically.

When it comes to what’s actually on these services, fans might want to look out for premiere dates for hotly anticipated Disney Plus series such as “The Falcon and the Winter Soldier.” Given that we’re in the homestretch of the holiday shopping season and millions are cooped up at home, Disney is likely aware of the gifting potential of its streamers.

Also look for updates on content spending, and how that fits into its plans to drive revenue. Chapek said on Disney’s most recent earnings call that “when we talk to everybody on Dec. 10, I think you’re going to see that we’re going to put a lot of wind in the sails of our Disney Plus business and heavily invest in it.”

“We are going to continue to ramp up our investment in [direct-to-consumer],” he added. “And we will be heavily tilting the scale from linear networks over to our DTC business.”s

Theme Parks: When Will the Happiest Places on Earth Reopen?

It’s been a brutal year for Disney’s theme parks and resorts, a traditionally reliable moneymaker. In fiscal 2020, the parks, experiences and products division saw a greater year-over-year revenue decline than any other segment, with a $6.9 billion negative impact this year because of the pandemic. Disneyland in Anaheim, Calif., has been closed for nearly nine months. Florida’s Walt Disney World reopened in July at limited capacity. Hong Kong Disneyland closed for the third time since the start of the pandemic.

There’s nothing Disney can do about its California flagship theme park, as its home state experiences another surge in coronavirus cases and regional lockdown orders mandate that Southern California residents stay at home as much as possible — through Christmas! — until at least Dec. 28. Disney hasn’t been shy about criticizing California Gov. Gavin Newsom over his decisions, and it’s possible some of that frustration may take to the stage at investor day.

The company is already planning 32,000 in total layoffs across its parks and resorts business — a figure it quietly increased by 4,000 the evening before Thanksgiving. It’s unlikely that Disney execs will use their time in the spotlight to disclose any further bad news, but watch for any indications of its plans to keep theme parks afloat next year as a vaccine slowly rolls out among the general public and people begin to fathom making cruise and vacation plans once again.

Disney’s Stock Performance: Will Investors Like What They See?

Shares of Disney have held up remarkably well this year, all things considered, up over 6% since the start of the calendar year and trading back at pre-pandemic levels, as of Tuesday’s close. It remains outpaced by the S&P 500’s 14% gain thus far in 2020, and unmatched by Netflix’s astronomical 55% stay-at-home spike, but markedly better off than, say, ViacomCBS or Lionsgate shares, which have both seen a pullback.

As Chapek told analysts on the recent Q4 call last month, “As we toggle that balance between the legacy old media businesses to the new media businesses, we’ll do it aggressively, but we will watch it from a cash standpoint in the meantime.”

By Friday morning, we’ll learn if Wall Street and Hollywood both feel as bullish about Disney’s streaming-first future as the company’s executives do.

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