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Will Strategic Reorganization Help Disney Take On Netflix?

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Disney to streamline its operations

The Walt Disney Company (DIS) is streamlining its operations and reorganizing its business into four segments to enhance its business model. The company now wants to focus on new growth opportunities in the media sector, and it’s revamped its divisions to keep in view the transformations in the media environment.

Accordingly, the company has combined its Media Networks and Studio Entertainment segments, whereas it has combined Parks, Experiences, and Consumer Products into another unit. The company has also formed another division called the Direct-to-Consumer and International segment.

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Parks, Experiences, and Consumer Products

By combining its Consumer Products and Parks & Resorts divisions, the company will be able to better allocate its resources. Disney’s theme parks have been doing very well and have generated significant revenue, with products such as Mickey Mouse ears, princess dresses, and Star Wars lightsabers remaining attractions.

Focus on Direct-to-Consumer and International 

The Direct-to-Consumer and International segment will include Disney’s international media businesses, direct-to-consumer business, and Hulu streaming service. The segment will also include global advertising sales for ABC, ESPN, Freeform, and the Disney Channels, which were previously part of the Media Networks segment.

Disney looks to produce high-quality content and is, therefore, working toward the release of its own streaming services—one for Disney and Pixar and another for ESPN sports lovers. While ESPN sports streaming services will be launched in mid-2018, the Disney-branded direct-to-consumer streaming service is expected to launch in late 2019.

The launch of Disney’s video streaming service will mean that the company will no longer stream its content to Netflix (NFLX) starting in 2019. Further, Disney’s recent deal to acquire certain assets from 21st Century Fox (FOXA) should enable it to offer more content to subscribers. However, the deal was recently complicated by Comcast’s (CMCSA) surprise bid for Britain’s Sky.

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