In an extension of the company’s previously announced plans for Marvel Studios, Disney CEO Bob Iger has confirmed that the entire House of Mouse will be attempting to improve the quality of their output by cutting back on both “the number of titles we release” and their individual cost.
Iger provided this insight into Disney’s latest attempt to wright their sinking box office during the company’s August 9th Q3 2023 earnings call.
Stepping up to the mic following a brief introduction from Disney Investor Relations Senior VP Alexia Quandrani, the CEO began his time by noting how, ” In the eight months since I returned, we’ve undertaken an unprecedented transformation at Disney, and this quarter’s earnings reflect some of what we have accomplished.”
“First, the company was completely restructured, restoring creativity to the center of our business,” said Iger. “We made important management changes and efficiency improvements to create a more cost-effective, coordinated, and streamlined approach to our operations.”
“We aggressively reduced costs across the enterprise, and we’re on track to exceed our initial goal of $5.5 billion in savings,” he added. “I’m pleased with how much we’ve gotten done in such a short period of time, but I also know we have a lot more to do.”
Using this update as a jumping off point, the Disney boss then turned “to elaborate on the state of our company and the transformative work we are still undertaking.”
“As I’ve said before, our progress will not always be linear,” explained Iger. “But despite near-term headwinds, I’m incredibly confident in Disney’s long-term trajectory because of the work we’ve done, the team we have in place, and because of Disney’s core intellectual property foundation.”
“Moving forward, I believe three businesses will drive the greatest growth and value creation over the next five years,” he asserted. “They are our film studios, our parks business, and streaming, all of which are inextricably linked to our brands and franchises.”
In terms of the company’s film-related efforts, Iger revealed that, across every one of their various studios including Pixar, Lucasfilm, and the aforementioned Marvel Studios, the company’s various studios were “focused on improving the quality of our films and on better economics, not just reducing the number of titles we release but also the cost per title.”
“And we’re maximizing the full impact of our titles by embracing the multiple distribution windows at our disposal, enabling consumers to access their content in multiple ways,” he detailed. “For example, Avatar: The Way of Water, which is now the third highest-grossing film of all time, is also on track to be the biggest-ever electronic home video release for Disney domestically.
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“Certain other titles will be sold in the download-to-own window as well,” Iger continued. “By focusing on big franchises and tentpole films, we’re able to generate interest in our existing library. For example, we’re seeing tremendous engagement on Disney+ with the previous Guardians of the Galaxy films, the original Avatar, and the first four Indiana Jones movies. But the value of our Disney entertainment studios and the reason this will be a key growth business for us extends far beyond our library and new releases.”
Following a brief note that both the Disney Parks and Cruise Lines had shown significant upticks in attendance in recent months, Iger ultimately asserted that “All of this happened while we were still determining the right strategies for pricing, marketing, content, and specific international market investments.”
“However, since my return, we’ve reset the whole business around economics designed to deliver significant, sustained profitability,” said the executive. “We’re prioritizing the strength of our brands and franchises. We’re rationalizing the volume of content we make, what we spend, and what markets we invest in.”
As noted above, Iger’s latest promise to scale back Disney’s output echoes their previously confirmed strategy for saving the Marvel Cinematic Universe from its current death spiral.
Speaking to investors during the company’s Q1 2023 earnings call, Iger asserted that while Disney would be moving forward by seeking to “lean more into our franchises, our core franchises, and our brands,” these franchises would also be undergoing a round of “curation”.
“We have to be better at curating the Disney, and the Pixar, and the Marvel, and the Star Wars of it all,” Iger told attendees. “And, of course, reduce costs on everything that we make. While we are extremely proud of what’s on the screen, it’s gotten to a point where it’s extraordinarily expensive. We want all the quality. We want the quality on the screen, but we have to look at what they cost us,” he added.
Iger would later reiterate the company’s plans during a July interview with CNBC’s David Faber.
Asked by Faber, “Is there a problem though at Disney Animation? Is the loss of John Lasseter years ago been a blow that you haven’t been able to recover from?”, the CEO would reply, “Well, first of all, the studio and its movie assets are number one at the global box office so far. That said we are extremely realistic and I’m very objective about that business.”
“There have been some disappointments,” he would then admit. “We would have liked some of our more recent releases to have performed better. It’s reflective not a problem from a personnel perspective, but I think in our zeal basically grow our content significantly to serve mostly our streaming offerings we ended up taxing our people way beyond, in terms of their time and their focus, way beyond where they had been.
Pointing to Marvel Studios specifically, Iger then posited, “Marvel’s a great example of that. They had not been in the TV business at any significant level. Not only did they increase their movie output, but they ended up making a number of television series. And frankly, it diluted focus and attention. And I think you are seeing that is more the cause than anything else.”
Later asked by Faber if these factors would prompt him to pull back on the amount of Marvel projects being released, Iger bluntly confirmed, “Yes. You pull back not just to focus, but it’s also part of our cost containment initiative, spending less. Spending less on what we make and making less.”
As of writing, it is unknown whether Disney’s ‘scaling back’ will involve the cancellation of any of their previously confirmed projects.
To this end, while it is unlikely that any currently-in-production films – such as Deadpool 3, Thunderbolts, and Captain America: Brave New World – would face the chopping block, it not out of the realm of possibility that those that haven’t yet made it past the drawing board – see practically their entire Star Wars slate – could end up being cancelled as part of this latest initiative.