The Walt Disney Company, founded in 1923 as the Disney Brothers Cartoon Studio, has weathered almost a century–persisting through major wars and crises. The Walt Disney Company’s ability to adapt to situations and engage with its audience during crises has allowed it to persevere.
The Company has often taken positive action to help during times of hardship such as during World War II when the Company had almost 90% of its animators producing war-time propaganda. So the company has shown its ability to engage with situations, though that example is a dated one.
They have also shown their ability to adapt, for in the face of the death of Walt Disney, a man so important to the company they had a life insurance policy on him for investors, the company was able to find a new creative groove. Now The Walt Disney Company, under new management after the recent departure of CEO Bob Iger, faces a new challenge; a world on lockdown while the deadly coronavirus pandemic grows.
Can The Walt Disney Company persevere through this new terrifying moment in history?
Disneyland and Disney World
On March 12th 2020, The Walt Disney Company announced the closure of the Disneyland and Disney World theme parks due to spreading fears of the Coronavirus Pandemic in the United States. The precedents for the closure of the Disneyland park in Anaheim are the day of mourning after the assassination of JFK on November 25th, 1963 and September 11th, 2001 due to fears that the parks could be targeted.
The closure of the parks is a reflection of just how bad this crisis has become, for as the barometer of the precedent shows, the moments in history when the parks have closed have been truly monumental. Points in time that have irreversible altered the world that we live in. The world was never been the same since the assassination of JFK, and it has most definitely been made unrecognizable after the attacks on September 11th.
Today the parks stand empty until further notice, and according to the New York Times the Disney Company has already lost $175 million due to the closure of its China parks–though they are starting to reopen–and is set to lose a great deal more with the temporary closures of parks, cruise lines, and stores in the United States.
Though Disney will be taking a major hit to their financials in the coming months, they were willing to take the necessary steps to comply with Governor Gavin Newsom’s orders in the State of California when he asked for no gatherings over 250 people back on March 12th. While some companies have resisted closures, like GameStop–claiming themselves as essential businesses–Disney has not resisted and has closed down stores across the country. While it is simply them following requirements, it is still more than some companies have done.
Similar to GameStop’s resistance, Knott’s Berry Farm–another Southern California theme park–resisted Newsom’s orders and took four days longer to close its doors than Disneyland. This period of time, though short, put not only the public, but Knott’s Berry Farm workers, at risk. Disney has shown willingness to simply do the right thing in comparison with other companies.
Current Film Productions and Upcoming Releases
Beyond the parks, Disney productions have ceased work across the world. The Last Duel, Home Alone, Shang-Chi and the Legend of the Ten Rings, and The Little Mermaid have all stopped shooting, as well as all the upcoming Disney Plus Marvel television shows. Not only has production halted, but films completed and slated for the summer months like Mulan (2020) and Artemis Fowl have been pushed back or cut from the schedule entirely.
These productions shutting down mean that thousands of people are out of work: entertainment workers who now have an inability to find new opportunities while they wait out this crisis. However, closing down production will protect these workers from risking their health. Disney once again was forced to close down and suffer the consequences of financial loss in order to do the right thing by their workers.
Alternatively Warner Brothers committed to maintaining its production schedule and begin shooting their big projects like the third Fantastic Beasts film on March 16th. Again, four days after Disney shut down production, Warner Brothers decided to shut down as well. It seems that Disney has been leading the pack of entertainment companies when it comes to fighting the coronavirus pandemic.
Shelter-in-place Impact
With more people staying home, and movie theaters closed, Disney has also postponed all of its upcoming films. Disney warned in an SEC filing, a report for Wall Street, that the shelter in place orders could have a major impact if the prolonged shutdown changes the way we interact with their products. The report stated that, “our businesses could also be impacted should the disruptions from COVID-19 lead to changes in consumer behavior.”
Our businesses could also be impacted should the disruptions from COVID-19 lead to changes in consumer behavior.
The Walt Disney Company SEC Form 8-K, Mar. 19, 2020
These changes being that consumers, once the shutdown is over, begin to interact with Disney products in a way they did not before. Maybe people are less willing to go to parks with the fear of disease and health risks burned into the public’s mind in the aftermath of this pandemic. Maybe people never really return to movie theaters after they reopen, and big Hollywood productions are forced to release streaming services. We are living in a moment where everything is in flux, and the future of Disney is very much at risk.
Under New Management
At this incredibly unstable time, a management shift has also thrust Disney into a position of greater instability. CEO Robert Iger stepped down from the position on February 26th. Iger, who served as CEO for 15 years, came from ABC and guided Disney in their acquisitions of Pixar (2006), Marvel (2009), Lucasfilm (2012), and 20th Century Fox (2019). He also oversaw the creation of Disney Plus. As he steps down he will remain at the company as Executive Chairman, but Bob Chapek is now the CEO of the company.
Bob Chapek is most famous for his implementation of the vault system at Disney. The vault system, which has met with major criticism from Disney fans, is a system of releasing and holding back animated feature productions; so that they can sell VHS versions, DVD versions, and Blu-ray versions of films while maintaining a demand for the product. Bob Chapek will most likely shift the company away from acquisitions of other content to withholding and reselling the product that already exists.
Chapek’s strategy of the vault system will not benefit Disney currently as they push for Disney Plus. The only strategy that can work is to provide all their back catalogue as a base library on their new streaming platform, and work with the vast amount of IP they have amassed through acquisitions to create new easily recognizable and appealing content.
So while the changes that result in the consumer behavior from this pandemic and shelter-in-place could negatively affect Disney in the short run, Disney is poised–with Disney Plus–in a better position than most media companies to adapt to the changing consumer behavior. If people are quarantined in their homes they will be moving to the digital space and not the theaters.
Services like HBO Max and Peacock are too late, but Disney has an opportunity to bring in a huge amount of members to their service while people are stuck in their homes.
The Future and Disney Plus
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Disney has just released two of its biggest films of the year–Star Wars: The Rise of Skywalker (2019) and Frozen II (2019)–for purchase on digital platforms like iTunes and scheduled early releases for them on Disney Plus. This feels as though Disney is testing the waters for possible releases of major films on the Disney Plus platform. If people come to the platform for Frozen, maybe they will come for Mulan (2020). While Mulan (2020) would not recoup its budget being released on Disney Plus, it would benefit from membership increase in the long run for the platform.
Right now is the time for Disney to be pushing their streaming platform, and that means taking risks on major film releases on the platform. It is time for Disney to adapt to the crisis; Disney’s audience is trapped at home, so the only way to reach them is through Disney Plus. While we may not be getting out of this lockdown anytime soon, Disney should buckle down and take major risks on their streaming service. If Disney wants to succeed in the future they need to embrace that future.
Stay safe and healthy.
https://www.nytimes.com/2020/03/12/business/disneyland-coronavirus.html
https://www.latimes.com/entertainment-arts/business/story/2020-03-13/disney-studios-halts-production-coronavirus-mermaid
https://thewaltdisneycompany.com/leaders/robert-a-iger/
https://www.theverge.com/2019/11/13/20963172/disney-plus-subscribers-10-million-star-wars-marvel-pixar-launch
http://wcsa.world/news/world-almanac-event-academy/wcsa-on-this-day-october-16-2018-disney-brothers-cartoon-studio-founded-in-1923
Great post! I love how in depth this was! It is interesting to see how Disney has reacted to all of this being such huge company. I am curious to see how they proceed given the current state of the world. I hope they choose to do what would be best for their fanbase instead of trying to just get as much money as they can out of people.
I was actually in Disneyland with my mom and sister a couple days before it closed. When Disney closed its parks a few days later, I finally had the thought of “oh, this is actually really bad.” Disney is certainly one of the biggest companies there is, so it was really good that they decided to take initiative and close down the parks, encouraging other parks to close. Honestly, I’ve been pretty impressed with how they have been handling the situation, with releasing movies to Disney Plus and digital purchase sooner than they initially planned.
I am shocked too to hear that Disney closed their parks because it really puts the whole situation in perspective. I didn’t realize how severe it was until normal establishments that are open all the time, such as Disney, have to close because of health warnings. It is also pretty sad that companies such as Gamestop are still open for the public. Even though I like playing video games it is a bit of a stretch to call themselves essential. Because most video games are online and digital copies are a common thing, it is not that necessary to have physical locations open. It puts the employees at risk when they should be at home quarantined. Good job to Disney for how they have handled the situation.
Awesome post Nathan! Super informative! Disney is a very large company with a lot of power, prestige, and influence so it is very important and beneficial that they closed down their parks to demonstrate to the larger public how serious this virus is and how we must all self isolate. It’s very interesting and reassuring that the company is caring more about the population’s health and safety, rather than the companies income. Great job!
Very well researched and thorough exploration of their reaction. I agree, I found it very interesting and cool that they did not resist shut down, but perhaps it is to also avoid the measels outbreak they had which was made much worse and spread at disney in the 80’s? I also agree it is very interesting that the management change is happening now and musing about what that means for the future of streaming and behaviour from disney about its IPs.
Super well done, loved the comparison to other companies like Knottsberry to show how quick Disney really was to implement to protocol. Though I am really wondering if they will release Mulan on Disney + I feel like that was a remake set up to be really successful and gain a lot of profit the last I heard was that they were going to push back the release date but I wonder if they only do a theatrical release would it be less successful following the wake of quarantine? Lots to think about and very thought provoking information packed blog post, great work!
I really hope we get to go back to movie theaters because the upcoming remakes like The Little Mermaid and Mulan deserve attention for their inclusion of a more diverse cast… The box office is where the culture is influenced! Not behind a computer screen. Anyway, I wonder when Disney will reopen its gates. We knew the pandemic was bad when they closed their parks and similarly, I feel like we will know when things are better when their gates are open again. But I wonder if they’re going to cut programs and fireworks and parades in order to recover financially? Or how are they going to clean up the park or enforce social distancing? It seems to me like Disney couldn’t gradually reopen. Its either all or nothing.
Super in-depth and informative! Disney has had a pretty good handle on the situation so far, although I wonder if they should have closed the parks much earlier. Either way it’s good that they’re moving on with Disney+ releases and going online as opposed to trying to argue that they are an essential business.
Really well-structured and in depth post. I find it admirable that Disney is complying with safety regulations, and not trying to bully the system with their massive power. However, I don’t really have any pity for them when it comes to the money they are losing as they are one of the biggest companies in the world and will likely come out of this with little damage.
The amount of information you provided here really allowed me to think over Disney’s impact on the entertainment industry today. I am thankful that Disney took early actions to address the pandemic because it set a model for other public gathering sites and encouraged social distancing to a greater extent.