Disney focuses on ’streaming’ and announces major reorganization

Disney is restructuring entertainment divisions, as streaming becomes the most important aspect of the company’s media business.

On Monday, the company told that in order to accelerate direct-to-consumer strategy, it will be centralizing businesses into a single organization that would be responsible for content distribution, ad sales and Disney+.

Shares recorded an increase of 5% after the news came.

As the global coronavirus pandemic has crippled Disney’s theatrical business and increased more customers toward its streaming options. Till August, Disney has 100 million paid subscribers across its streaming business, half of whom are subscribers to Disney+.

“Covid accelerated the rate at which we made this transition, but this transition was going to happen anyway. We are tilting the scale pretty dramatically [toward streaming],” CEO Bob Chapek said on “Closing Bell,” noting that the company is looking at all investments, including dividends, as it thinks to increase its spend on new content. Chapek said the board of directors will have the final say on Disney’s dividend payouts.

″[Consumers] are going to lead us,” Chapek said on “Closing Bell.” “Right now they are voting with their pocketbooks, and they are voting very heavily toward Disney+. We want to make sure that we are going the way the consumers want us to go.” He said.

Chapek said the reorganization could lead reduction of staff, but not likely at the same scale as was seen at the company’s parks division. Disney was forced to lay off around 28,000 workers after it became clear that its Disneyland parks in California would not be reopening soon.

On this reorganization, Disney has promoted Kareem Daniel, the former president of consumer products, games and publishing. He will watch over the new media and entertainment distribution group. He’ll be in charge of profitable streaming vision, as the company continues to invest heavily in its various streaming products.