The Walt Disney Co. CEO Bob Chapek said one potentially lasting impact of the COVID-19 pandemic is shorter theatrical windows for movies, as consumer expectations have been heightened by the greater availability of theatrical product at home during the global health crisis.
"The consumer is probably more impatient than they've ever been before, particularly since now they've had the luxury of an entire year of getting titles at home pretty much when they want them," Chapek told analysts during a March 1 industry conference. "I'm not sure there's going back, but we certainly don't want to do anything like cut the legs off a theatrical exhibition run."
Chapek noted that Disney generated $11 billion in gross movie revenue during 2019, and the theatrical window will continue to be an important part of its business going forward. He did not discuss any specific time frames for theatrical runs.
For now, Disney will continue to deploy a tri-pronged approach to commercializing film content: placing a film in theaters, followed by typical windowing; setting a premier at-home access day alongside theatrical exhibition; and releasing product direct to its Disney+ streaming service.
"I don't think [consumers] have much of a tolerance for a title, say, being out of theatrical for months" without an additional distribution channel, Chapek said.
Disney is about to make its new computer-animated film "Raya and the Last Dragon" available through premier access March 5, through which Disney+ subscribers can pay a fee to gain early access to the film. Disney deployed a similar strategy for its live-action "Mulan" release in 2020.
Chapek said that with theater availability remaining limited and consumers being reluctant to visit movie houses, the premier access play "certainly makes a lot of sense right now in a COVID world." As to the future, "we're going to gain a lot of experience and a lot of data points," he added.
Discussing Disney+ enhanced subscriber targets that are now forecast to reach between 230 million and 260 million by the end of its fiscal year 2024, Chapek said the company earlier underestimated the service's international appeal among households without children, noting that 50% of the subscriber base does not have kids.
"What we didn't realize was the non-family appeal that a service like Disney+ would have," Chapek said. "That is the big difference."
Another key international driver is localized content, he said, pointing out that Star, the non-U.S. general entertainment service that began its rollout last week, will have 50 original series by the company's fiscal 2024.
In the U.S., Chapek said the company's updated guidance of 20 million to 30 million households for ESPN+ is a function of the service's uptake and is being bundled with Disney+ and Hulu LLC.
Chapek said the company is pursuing mass market penetration for ESPN+, which will be keyed by rights. Disney, he said, will not contemplate agreements going forward that do not envision ESPN+ being a major player in the use of rights.
"We're making sure that ESPN+ is going to be a really big part of that in terms of our flexibility because as the consumer flexes, once again, we want to be able to flex with them," he said.
That game plan could be put to the test as the NFL is expected to finalize a new round of rights negotiations shortly.
