Daniel Loeb wants Disney Plus to dominate the world of streaming and while they aren’t yet, he has a number of ideas to help the company hopefully overtake streaming giant Netflix. Loeb believes that Disney should not only release major tentpole films on Disney Plus instead of continuing to delay them until theaters reopen he also wants to streamline Disney’s streaming services.
In a letter to Disney CEO Bob Chapek, Loeb argues that Disney should be doubling the amount of money put into producing and acquiring content for the three streaming services. Loeb has also pointed out that Disney Plus, Hulu, and ESPN+ should be streamlined into a single platform namely Disney Plus.
Daniel Loeb runs Third Point hedge fund which began buying Disney shares this spring when the stock was initially being effected by concerns over theme park closures due to coronavirus. Loeb, known for being an active investor, is using Third Point’s position to push the company to invest in streaming.
“The good news about Disney versus Netflix is this is not Yahoo versus Google, where Google had an insurmountable gain and a network effect where Yahoo was never going to catch up,” said Loeb in an interview with Variety. “Given the relationship that Disney has with the entertainment consuming public thanks to franchises like Marvel and Star Wars and Pixar, they can leverage all of those to increase their subscriber base.”
WHY LOEB THINKS BLACK WIDOW SHOULD BE RELEASED ON DISNEY PLUS
Loeb wants to bolster the number of subscribers to Disney Plus by expanding the streaming platform’s premium content, notably through the release of major Disney blockbusters that are on hold due to the coronavirus. This would include Marvel’s Black Widow originally scheduled for release in May 2020, before being pushed to November 2020, and now the Phase 4 Marvel film has been pushed to May 2021. This is largely connected to the rise in Disney Plus subscriptions that occurred in the summer following the release of Lin Manuel Miranda’s award-winning Broadway musical Hamilton and Beyonce’s Black Is King.
“My understanding is that the old-line executives don’t want to go over the top with their big tentpole movies, which is why they announced they were pushing ‘Black Widow” and other movies to 2021,” Loeb said. “I don’t think they appreciate the tiger they have by the tail, which is to say the value they can drive by moving into a subscription model, which has been adopted by everyone from Microsoft to Amazon. It’s so value accretive.”
Loeb believes that adding to the streaming services premium content with tentpole films will help to catch up to streaming giant Netflix. Disney Plus has gained over 60 million subscribers reaching the 5-year goal in less than a year. Even with the rise of subscribers, Loeb points out that Disney should be continuing to add content that will bring in new subscribers and retain current subscribers. “Disney isn’t there yet, but they need to get there as quickly as possible. If they don’t get critical mass in their subscriber base, they will be permanently disadvantaged versus Netflix.”
And while everyone hopes to see major films be released in movie theaters, that has not been a viable option for months and there is no way of knowing when theaters will be able to open to full capacity again. With theaters in major markets like Los Angeles and New York City still closed, studios have continuously delayed most major films. Because of this, movie theaters are in major trouble with many facing financial hardships that could lead to bankruptcy as soon as next year. Cineworld has temporarily closed their US Regal Cinemas and UK theaters earlier this month.
Loeb explained, “I don’t think theaters will go away overnight, but it will be much more of a novelty experience in order to really distribute things. I think the world’s going to go largely toward online distribution.”
Disney’s theatrical releases have not been the only part of the company effected by the ongoing pandemic. Disney’s theme parks have been hugely impacted by the coronavirus with parks like Disneyland still remaining closed and others like Disney World only allowing a limited capacity into the parks. Disney World has seen a major decline in attendance and the financial impact is expected to affect the company for years to come, but with that said Loeb believes this loss of revenue is temporary.
“The theme parks, the travel, all the unique experiences that highlight Disney’s brands are integral to how Disney can differentiate itself from Netflix,” he said. “There’s also a tremendous opportunity for them to mine the data that they get. Let’s say you’re a family that goes to the parks that likes the Star Wars rides and buys Star Wars merchandise, that’s really valuable information.”
Loeb made it clear that he was trying to help advise on how the company could bring in revenue not antagonize. “I wanted to be constructive and supportive, but also really clear about the direction we think that Disney should go in,” he said.
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Disney has already moved a number of their theatrical releases to their streaming platform due to the ongoing pandemic and continued theater closures. With Mulan released with a $30 premium access fee. Pixar’s Soul will be premiering on Disney Plus this Christmas, but without the premium fee. Many films like Frozen II and Onward were released earlier than expected onto the platform when theaters were initially closed in the spring. Most major tentpole films from major studios including Black Widow have been delayed more than once and are now set to be released next year at the earliest.
Do you think Black Widow and other major tentpole films should be released on Disney Plus? Do you want Hulu and ESPN+ to become part of Disney Plus? Leave your thoughts in the comments below or on social media.