The Streaming Death Spiral Must End

Former Disney CEO Bob Iger is back at a time when the company desperately needs a new direction.

Bob Iger standing in front of a Disney castle
Qilai Shen / Panos Pictures / Redu​x

Last week, Disney released a long-awaited sequel featuring a six-time Oscar-nominated star, lavish sets, CGI creatures, and full-blown musical numbers—though you might’ve missed it. That’s because Disenchanted, the follow-up to 2007’s hit Enchanted, dropped exclusively on Disney+. Since the pandemic began, it’s the latest in a long line of major family titles to largely skip theaters and go directly to TV. Disney has given the same lackluster treatment to Hocus Pocus 2, a Pinocchio remake, and excellent Pixar films such as Luca and Turning Red. Currently, the only major family film in theaters, the feverish-looking Lyle, Lyle, Crocodile, has been chugging along for nearly two months with no other competition.

This doubling down on exclusive streaming releases appears to have had a cost: Disney+ lost $1.5 billion over the past quarter, more than double what it had lost the year before, according to a recent earnings announcement. Reported revenue and earnings per share were also both below analysts’ expectations, practically unheard-of for the company. The news was enough of a disaster that less than two weeks later, the Disney CEO Bob Chapek was removed from his post effective immediately and replaced by his predecessor, Bob Iger. During Iger’s stewardship of Disney from 2005 to 2020, the company grew its animation studio, acquired core brands such as Star Wars and Marvel, and launched Disney+ to a massive subscriber base.

Chapek’s tenure was tempestuous and almost entirely dominated by the pandemic, although it featured several unforced errors, including a public spat with the Marvel star Scarlett Johansson, backlash over Disney’s muddled response to Florida’s “Don’t Say Gay” bill, and rising costs at the company’s theme parks. But to me, he is the latest casualty of entertainment conglomerates’ insistence on massive deficit spending to fund their streaming services. Disney+ has many subscribers and outwardly looks like a raging success, which is why the extent of the earnings losses was so shocking.

Iger’s plans upon his return to the company are not yet clear, but what defined his successful run as CEO before was foresight. He snapped up brand names for a fraction of what they’d eventually be worth, reestablished the essentially defunct Disney animated brand until it started pumping out smash hits such as Frozen and Moana, and largely avoided the kind of internal turbulence that had defined others in his position, such as Michael Eisner. His rumored unhappiness with how Chapek handled the release of Black Widow, which debuted on Disney+ and in theaters simultaneously, suggests that he understands theatrical prestige is difficult for a straight-to-streaming movie to replicate. (Chapek denied that the two were at odds.)

The pivot to streaming, which accelerated early in the pandemic before the availability of vaccines, was understandable, but now a lot of good money is being thrown after bad. Disenchanted felt like a particularly pungent example just because of its wide-screen presentation—old-fashioned musicals work so much better on a big screen, so why didn’t it receive a nominal run in theaters before debuting it on Disney+? Over and over again, studios are leaving money that could be earned theatrically on the table, just so their streamers can have an “exclusive” launch. Disenchanted could’ve pulled in tens of millions of dollars at the box office before debuting on Disney+ just a few weeks later.

After Iger’s return was announced, Disney’s stock rose 6 percent; his mandate as leader, according to a statement from the company, will be “to set the strategic direction for renewed growth and to work closely with the Board in developing a successor to lead the Company at the completion of his term.” Essentially, his purpose is to right the ship—to give Disney a clearer understanding of its priorities going forward. Iger will have many strategies to set out, including what to do with ESPN (amid rumors that it could be spun off) and its other streaming service, Hulu (which has been geared more toward grown-up content), plus a concerted future for big brands.

But the change in leadership gives Iger the opportunity to swerve away from Chapek’s fixation on Disney+. A similar redirection occurred this year at Warner Bros., where the CEO, Jason Kilar, who pushed the studio’s 2021 films to streaming, was replaced by David Zaslav, who has worked to rebuild a relationship with theater chains. Releasing films in cinemas makes them feel like the events they’re supposed to be, helps the company bottom line, and does nothing to disrupt the movies’ eventual exclusivity on Disney+. Hopefully that’s a concept Iger will embrace going forward.