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Disney Disrupts the Movie Theater Industry
From:
Richard Gottlieb -- Toy Industry Expert Richard Gottlieb -- Toy Industry Expert
For Immediate Release:
Dateline: New York , NY
Tuesday, October 13, 2020

 
Disruptive innovation Independent leadership concept and individuality as a group of acrobatic jets with one individual jet going in the opposite direction as a business symbol for new thinking and attitude as a different nonconformist maverick.

The movie theater industry has been rocked this year by closed theaters and a lack of movies to show even if they were open for business, all thanks to COVID. Now it has something else to worry about; The Walt Disney Company is betting big on streaming video.

According to a Wall Street Journal article by Joe Flint, “Disney Elevates Streaming Business in Major Reorganization,” The Walt Disney company will “give priority to its streaming-video services and ensure they get a steady flow of the company’s best content. What struck me, however, was this statement: “It is also forming a distribution arm to determine the best platform for any given content, whether that is a streaming service, a TV network or movie theaters.”

In the past, movies defaulted to theater distribution, a pattern dating back to the  industry’s beginnings. Now, Disney will determine which vertical best fits for a particular piece of entertainment at a specific moment in time.

Theater owners this week received a very real sense of what that means when Disney decided to release a movie originally destined for theater release, “Soul”, to streaming video. “Soul” is an animated movie about a singer who has lost, well, his Soul. Instead of theaters, it will now debut on Disney+.

How did theaters react to the announcement? This Guardian headline says it all: “Cinemas ‘shocked and dismayed’ by Disney decision to launch Soul on streaming.”

All of this comes on top of two major events: 1) the Regal theater chain, America’s second-largest, announced it was closing all of its theaters, and furloughing 40,000 employees. (2) AMC, the world’s biggest movie theater chain, says it will run out of money by year’s end (Hollywood Reporter).

As I have said in the past, I do not believe that streaming video can provide the excitement and family passion that theater premiers offer. As I wrote in an earlier article, “Big Changes for the Movie Industry: The Impact on Toys:”

When a family goes to the movies, they are making a much larger financial investment (multiple tickets, snacks, parking, gasoline, and more than likely dinner out). It is also a time investment as it is typically an evening or afternoon wholly focused around the movie. When families invest that heavily they typically also invest in toys or other memorabilia. When you watch a movie at home, not so much.

The movie theater industry, as we know it, is facing, if not extinction, a steep decline in the number of theaters and their impact on the broader economy. Can streaming videos provide the kind of numbers that licensees are seeking? I think, no. Will the licensors have to reduce royalty and guarantee demands? I think, yes.

Richard Gottlieb

Global Toy Experts / Global Toy News

646 675 3019

richard@globaltoyexperts.com

 

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Dateline: New York, NY United States
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