Notify the next of kin and have the priest perform the last rites. A sky blue casket is purchased, the eulogy is being written, and funeral services are being coordinated. Pallbearers have been named, the perfect funeral flowers have been selected, and a compassionate, hand-written, condolence card is being passed around for all to sign. In a situation like this, what words of sympathy can we offer an industry experiencing a catastrophic financial loss?
Over the years, we have watched the slow death of an obsolete industry. The years have not been kind to what once was a grand, vibrant industry were people dressed up to attend and tuxedo clad ushers directed patrons to their seats. The industry has aged into a dirty, overpriced, and violent experience where customers refuse to conform to social norms. Unfortunately, death is just around the corner. The unexpected, family friendly John Wick like assassin is Disney Plus. The date of death is estimated to be November 12, 2019. The date Disney launched their own streaming service called Disney Plus for all of its content.
A Reel Cinema @ Home has been predicting the death of the retail movie industry since the launch of Netflix. Who are we to make such a prediction? In the world of importance we are just mother and daughter movie review critics and home theater vloggers who love all things movies and great television shows. We especially love all things home theater but in the big scheme of things we are considered “nobody.” Our opinions really don’t matter to the movie industry or the streaming industry, but we give our opinions anyway via this website. However, there is someone whos opinion matters. He is the Chief Executive Officer of The Walt Disney Company – Mr. Bob Iger. When Mr. Iger speaks the world of entertainment listens.
CEO Bob Iger unveiled the strategy and details on the new Disney streaming service in a discussion with CNBC’s David Fiber. Mr. Fiber asked Mr. Iger:
“You clearly are pointing in a different direction for this company in terms of the way it goes about distributing the amazing content that you create here at Disney. Why is that something you feel necessary to do and necessary to do in such a significant way as you detailed today?”
Mr. Iger replied:
“Well, I think you have to look at not only the way the world is going, but we had to assess what the biggest opportunity was for the company to grow over the long term. Clearly consumers are enjoying a different form of entertainment in the home. One that is over the top and not necessarily connected to a traditional satellite or cable distributor or distribution model. One that has a significant amount of choice that enables the consumer to customize or to have personalized experiences. One that can be watched seamlessly on multiple devices. So it was clear that given the company’s ability to create content that people love. Why not give people content that they love but on platforms that they’ve become – that are becoming more and more interesting to them. More, more compelling to them.”
So if you missed the big picture given by Mr. Fiber and Mr. Iger, Disney is clearly pointing its vast movie and television content distribution in a different direction and in a significant way. Disney is adjusting and adapting to the fact that a new generation of consumers prefer and enjoy entertainment AT HOME that is not connected to a cable provider or third-party distributor. Entertainment that can be watched seamlessly on multiple devices on platforms (i.e., streaming services) that are more compelling to them. Disney is moving away from traditional distribution including movie theaters in favor of its own online distribution platform. Mr. Iger estimates 60 to 90 million subscribed to its new distribution service.
Here is how you know Disney’s new direction is moving away from third-party content providers. Disney is willingly foregoing billions of dollars in licensing fees. Mr. Iger followed up with this statement:
“There are platform economics that trump license fees to third parties. We can start with the affinity that people have to the brand. They want to be connected to it. But obviously, the ability to have a direct relationship with the consumer gives us – I think – an opportunity in having that relationship with them to monetize much more effectively. Knowing your consumer gives you the ability to (for instance) gives them a more compelling experience and have a connection.
If you look at the Disney consumer, they’re going to movies in movie theaters. They’re renting or downloading movies in their homes. They are buying our consumer products, visiting our parks, they are sailing on our cruise ships. It is true with Marvel, Pixar, and Star Wars across multiple businesses. If suddenly, your customer relationship is much tighter. If the PROXIMITY between you and the customer is better, then you are gonna serve them a lot better across platforms and monetize that broader, deeper relationship.
If you look at this company over the years where we have been distributing movies through movie theaters. The movie theaters have the relationship with the customer even though our product is touching the hearts and basically becoming a part of a deep and happy memory. The cable or the satellite channels are distributed through providers and the customer relationship is theirs. The consumer products are usually sold by big-box retailers and the customer relationship is theirs. We have a customer relationship with consumers through third parties. Other than our theme parks (who we have a direct relationship with) we don’t know who these customers are. In knowing who they are I think we have an opportunity that is extraordinary from a bottom line prospective.”
Boom…You heard that! That was the kill shot that inflicted a fatal wound. That is 60 to 90 million people who now have another reason to stay home and watch streaming content already paid for. That is 60 to 90 million people that Disney wants a direct relationship with to eliminate the third party. Mr. Iger specifically mentions movie theaters as one of those third parties. It’s not if Disney will stop depending on theaters and release their movies on their own platform for an additional fee but when. By removing the third-party middleman Disney could make more money by receiving their profits directly from the customer through a subscription service and charging a fee for the latest movie releases.
Right now the commercial movie theater is in a coma and on life support. The commercial movie theater industry has stuck with a failing business model because of stupid reasons “it has always been done that way” and “nothing beats the feeling when the lights go down in the theater.” Movie theaters do not own any of the content shown. They are simply third-party middlemen.
Watching movies in a theater requires a schedule with limited options in the discomfort of a potentially violent environment. Theater owners failed to share same day releases in theaters and on platforms that are compelling to consumers. The National Association of Theater Owners organized a boycott to prevent same day releases in theaters and via streaming. Because movie theater owners failed to adapt and adjust, they have lost their stronghold which was exclusive content. Nothing can stop their slow death.
Movies are now going to 4K / Bluray / DVD in record time. Future movies movies will bypass retail theaters and go straight to streaming services. Nothing can save the current business model – not giant IMAX screens, not price reductions, not 4DX, or mediocre dine-in options. Movie fans do not want the “Communal experience of everyone sharing the emotion of the movie with you at the same time” or any other bullshit saying theater owners love to romanticize about the moviegoing experience. Future generations will pronounce the time of death as 12:01 a.m. on Thursday, November 12, 2019.
Don’t think for one second Disney’s move to control how its movie and television content is distributed won’t have a ripple effect. The Walt Disney Company is a behemoth of video content, movies, television channels, cable channels, and streaming services. Disney controls and owns more content on different platforms than any other studio production company in Hollywood. The Disney company owns ABC, ESPN, FX, Fox Searchlight, The Walt Disney Studios, Disney Television Studios, Disney Channel, Pixar, Marvel Studios, National Geographic, Lucas Film, 20th Century Fox, and Hulu. Disney Plus will be available on iOs, Google Chromecast, Android, Android TV, PlayStation 4, Roku, and Xbox One.
Disney in all its power, glory, and wonderful entertainment value has given movie and television fans another reason to STAY HOME and enjoy new and old content at an affordable price. Again, our opinion doesn’t matter. We are considered “nobody” in the movie industry business. However, we are somebody consumers and are huge Disney fans. We represent the category of movie and television content consumers, Bog Iger speaks of. A Reel Cinema @ Home is over-the-moon-happy with our Disney Plus subscription. We are hoping Disney launches new blockbuster movie sequels like Star Wars, Marvel, Pixar, and Disney films (Frozen 3) exclusively on the new Disney Plus platform.
We are excited to witness the technological birth of Disney Plus. One day parents will tell their children about the wonders and fond memories of going to the movies and watching with strangers. It will be similar to how we tell children today about the home telephone. Nostalgic stories about how as kids our homes only had one phone located in the kitchen. To make a call, we stuck our finger in the phone and turned the dial one number at a time.
The full interview can be watched below:
Who knew Warner Media | HBO Max would come out swinging. To read about the next “kill shot” to retail movie theaters. Click the picture below:
