Walt Disney's (NYSE:DIS) short-term results will no doubt feel the impact of the coronavirus pandemic. The company touches so many different areas, including networks, theme parks, and movies. But with so many places and sports shut down, people can't go to its theme parks, watch live sports, or go to theaters to see its movies. ESPN is airing old games, for instance, but it's not the same.
I firmly believe the company will muddle through and wind up just fine due to its quality content and brand experience, however. And now, management has taken a clever step toward keeping its content relevant and in consumers' minds until movie theaters open for business again.
Making content available
After a disappointing box office showing for Disney's Onward, which was made by its Pixar Animation Studios, the company announced it would release it to streaming services early. The film was released in theaters in early March -- unfortunate timing, given the coronavirus' spread and subsequent steps taken to control it, including shuttering theaters.
It is available to purchase on certain platforms, such as Movies Anywhere, but starting April 3, the movie will be available to subscribers of Disney+, its streaming service that was launched last November. That means these people will not have to shell out additional funds.
This should benefit Disney in a number of ways. Putting it on a paid service allows Disney to recoup some of the movie's costs, and keeping the movie content fresh in people's minds allows Disney to profit in other ways down the road. This includes potentially driving people to its theme parks, stores, and merchandise.
Over the longer term, the quicker release to Disney+ may provide a side benefit, since the pandemic's social-distancing imperative brings more attention and potential subscribers to its streaming service. Less than two months after launching the streaming service, there were 26.5 million subscribers at the end of its fiscal first quarter, which grew to 28.6 million at the start of February.
In an effort to continue beefing up content, the company even signed a real-life princess, Meghan Markle, to do voice-over work. In January, it was reported that her first project is narrating a documentary about elephants that is scheduled for release next month.
The streaming service is an important platform for the company since it provides a lot of strong content from its Disney, Marvel, and Star Wars franchises. This is beneficial to its customers, obviously. For the company, it provides another outlet for its previous content and newly created programs, too.
This service meshes nicely with the rest of the business, strengthening the Disney brand. As then-CEO Bob Iger said on the first-quarter earnings call, "The other thing I wanted to say is that the brand studies that we've seen or brand research that we've seen in the United States suggests that interest in affinity in the Disney brand has actually risen nicely thanks to Disney+, particularly among young people."
Waiting it out
There is the goodwill associated with providing the movie free to streaming subscribers, too. In these tough times, no one wants to be remembered as the company that put profits above the health of its workers and customers.
These new initiatives will be a feather in Disney's cap. While the stock has fallen by about 18% over the past month, its strong content will win the day.