- Disney is reorganizing the company to place a greater focus on its streaming services as the pandemic accelerates the industry's shift to digital video.
- Media and entertainment industries will face the same headwinds as Disney, which will cause a massive crop in digital ad spending.
- Insider Intelligence analyzes this industry and several others to provide in-depth analyst reports, proprietary forecasts, customizable charts, and more. Learn more about what we offer.
Disney announced a major corporate reorganization this week that will place greater emphasis on its streaming services, per a company press release. Groups focused on content production will be separated from those focused on distribution. And there will be a single overarching distribution team that will determine which platforms are the best fit for new content, with an emphasis on supporting Disney's streaming services like Disney+, Hulu, and ESPN+.
Major parts of Disney's business have been hurt by the pandemic—its theme parks are closed or at limited capacity, many movie theaters are still shuttered, and TV ad spend is down across its cable and broadcast networks. But Disney's single bright spot has been the growth of its streaming services, most notably Disney+. We expect US Disney+ viewers to reach 72.4 million this year and surpass 100 million by 2023.
Disney is the latest media company to reorient operations toward its streaming services, a shift accelerated by the pandemic. Amid a dramatic increase in cord-cutting in recent quarters, traditional media companies have been driven to make drastic decisions about how they monetize and distribute content from their TV and film studios.
NBCUniversal's CEO Jeff Shell told The Wall Street Journal in September that his company will centralize decision-making around developing programming for its new-to-market streaming service Peacock, while cutting down cable network operations. Likewise, WarnerMedia announced this month its plans to reduce costs by as much as 20%, primarily through layoffs across its cable networks—including HBO, TBS, and TNT—suggesting the company was prioritizing its new streaming service HBO Max.
Media and entertainment digital ad spending will drop substantially this year, with the industries facing the same headwinds Disney is enduring. The US media industry will decrease its digital ad spending by 9.3%, to $6.28 billion in 2020; the US entertainment industry will reduce its digital ad spend by 6.9%, to $7.03 billion, according to our estimates.
The shutdown of TV production and widespread delays in film releases meant drastically reduced promotional advertising, contributing to these contractions. But Disney's shift toward its streaming services could benefit media ad spend, because while the industry's digital ad spending may be down this year, marketing for streaming services is one of the areas that has seen substantial investment during the pandemic—and it could eventually make up a greater share of total digital ad spend in the media industry.
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