The dearth of direct-to-consumer content on Disney+ is hurting the company even as Disney holds the #1 position at the box office.

Bob Iger appeared on CNBC’s Squawk in the Box this morning and had lots to say following a contract extension through the end of 2026. Only a portion of his 35-minute interview is available on CNBC’s YouTube channel. Some of Iger’s comments dealt WGA and SAG-AFTRA not being realistic in their demands. He’s wrong about that, of course. Every company wants their streaming service to be profitable but at some point, they have to be willing to offer writers a performers fair compensation in residuals. Good luck opening a movie or launching a TV series without actors being able to promote in the press or social media.

Even though the company is #1 at the box office, make no mistake that their streaming service is hurting their earning potential. When people know that they can wait it out for a film to arrive on streaming, they will. Movie tickets continue to rise and because of streaming, the tentpoles are no longer the blockbuster events that they used to be. Sure, some are making money and that’s great. However, there are other films that should open higher and perform better but unfortunately, they are not. And then you have Pixar. Listen, they had to remove John Lasseter following allegations of misconduct. Lasseter, though, is not the be-all-end-all decider of creative decisions. You have many people over at Pixar but you cannot argue that sending 3 films directly to Disney+ is not hurting the morale.

On Disney+ hurting Marvel and such:

“I think in our zeal to basically grow our content significantly to serve, mostly, our streaming offerings, we ended up taxing our people, in terms of their time and their focus, way beyond where they had been. Marvel is a great example of that. They had not been in the TV business in any significant level. Not only did they increase their movie output but they ended up making a number of television series. And frankly, it diluted focus and attention. I think that is more the cause than anything else.”

On Pixar:

“There were three Pixar releases in a row that went direct to streaming in part because of–mostly because of Covid. I think that may have created an expectation in the audience that they’re eventually going to be on streaming and probably quickly and there wasn’t an urgency. I think there was some–I think you’d have to agree that there was some creative misses as well.”

Iger discussed the history of The Walt Disney Company going back to when the company was founded. There were peaks and valleys. More recently, you have the animated hits of the Disney Renaissance followed by a dip. Iger isn’t suggesting that Disney is in a dip nor is he suggesting that they’re in a peak either. What’s happening now is no different than back then. A key difference is how films making their way to Disney+ is what ends up hurting their box office potential.

Under Bob Iger’s leadership, Marvel and Star Wars are already beginning to pull back the amount of content being produced for Disney+.

“You pull back not just to focus but also a cost-containment.”

The cost-containment is hitting Disney all across the board. Marvel and Pixar might be feeling it the most. Because of the pandemic, audiences didn’t see any Marvel output until 2021 and 2022. The amount of new Marvel series during those two years were honestly ridiculous. That’s not to say anything about their film output during this time but it’s enough to cause Marvel fatigue. Lucasfilm to a lesser extent. There are fewer live-action Star Wars series being released on the streamer. Lucasfilm has definitely been building up Star Wars on the TV side to great success. Unfortunately, there are misses such as the Willow reboot and The Book of Boba Fett.

Prior to forming the streaming service, the studio would license film and television titles to Netflix. It was a different business model and it worked to some extent, it doesn’t work in the same way today. The studio decided to take things in-house rather than people asking: “Why isn’t Disney going into the streaming business?”

Iger is confident that the streamer will turn things around, become profitable, and deliver growth. The direct-to-consumer model is here to stay–there’s no putting it back in the box. Iger acknowledged that the company lacks the personal relationship with their streaming consumers in the same way that they have with the Parks customers but growing such a relationship will be a value to them long-term.

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