‘Flexibility’ Is Key to Disney’s 3-Pronged Film Release Strategy: Chapek

Disney “called it exactly right” when it shifted during the COVID-19 pandemic last year to the three-pronged strategy of releasing some feature films direct to theaters, others exclusively through Disney+, and still others as a hybrid Premier Access option through theaters and on Disney+ streaming, CEO Bob Chapek told the Goldman Sachs Communacopia Conference virtually Tuesday. Amid the market's "vast uncertainties," deciding which film goes to which channel is akin to working a stick shift, he said: "We’re making the right calls at the right time”

What Disney has “locked in” to the three-pronged distribution approach is “flexibility,” said Chapek. “We love theatrical exhibition. We’ve seen the power of that the last several decades.” But direct-to-consumer streaming is “strategically the most important thing our company is doing,” he said. “You’ve got a combination where it’s not all of one or all of the other.”

The studio has a slate of upcoming movies conducive to “very short” theatrical exhibition “windows,” said Chapek, citing as one example Encanto, the animated musical fantasy comedy debuting Nov. 24 in theaters and 30 days later on Disney+. Its “relatively short theatrical window” will capture “99.9% of the viewers that would go see that movie anyway,” and create a buzz for those who want to watch it a month later on Disney+, he said. Having Encanto in theaters for Thanksgiving and on Disney+ for Christmas is “a win-win-win here for everybody involved throughout the value chain,” he said.

Disney undertook a “very ambitious launch” of Star+ in Latin America when it debuted the service Aug. 31 in 18 markets through eight distribution partners, across seven currencies and on six different platforms, said Chapek. “We’ve really not had any technical issues despite the complexities of that launch,” he said.

The experience of launching Star+ in Latin America “was almost identical” to that of the November 2019 U.S. launch of Disney+, said Chapek. Disney had a “slower ramp-up of Disney+ than we might have expected,” he said. “But very quickly, we caught up and really hit an inflection point, and I think we’re seeing pretty much the same thing” with Star+ in Latin America, he said.

Star+ has been “a little slow going in the beginning as we get our partners sort of mobilized and outreaching to their consumers,” said Chapek. “But at the same time, I think our trajectory is going to change very quickly, just like it did with Disney+. We’re very encouraged with the opportunity that we see in Latin America.”

Chapek sidestepped questions about reports that Disney is seeking to license the ESPN brand to sports-betting companies. There’s a “long way” between embedding sports betting into the ESPN “business model and licensing out,” he said. “Let’s just say that our fans are really interested in sports betting, Let’s say that our partners with the leagues are interested in sports betting. So we’re interested in sports betting.”

In-game wagering is “definitely a place we want to be,” said Chapek. “It’s not something we would do necessarily solo in the gambling area, but we believe that our brands have the degrees of freedom to enable us to expand our presence there, and I think you’re starting to see us take some pretty big steps along that way.”