For nearly a century, Disney (DIS 0.42%) has been known for its focus on family values and being kid-friendly. In fact, founder Walt Disney was a deeply spiritual man, who placed family values above all else. That helped shape the company that bears his name, which has become synonymous with wholesome family entertainment, a legacy that remains long after Disney's passing in 1966.

Now, with a recent changing of the guard, the company is considering a move that might well be the biggest risk Disney has taken in its long history and might alienate some of its most valued customers. Is it worth the risk?

Sleeping Beauty Castle at Disneyland decorated for the holidays and lit up at night.

Image source: Photo by author.

Expanding the brand

Disney is entertaining the notion of expanding the catalog of programs shown on its flagship streaming service -- Disney+ -- to include more adult content. The matter is reportedly causing heated debates among top brass at the House of Mouse, with CEO Bob Chapek reportedly pushing for edgier content on the platform while chairman and former CEO Bob Iger believes the company should stick to its time-honored strategy. 

Thus far, there's been a clear delineation between the family-friendly fare on Disney+ and the adult-oriented programming shown on Hulu. Chapek argues that Disney+ needs to expand its library of content to attract a larger, more diverse (read "adult") audience, or risk missing out on future growth and ceding viewers to the likes of Netflix or Amazon Prime Video.

The catalyst

Disney reported its fiscal fourth-quarter results earlier this month, and investors were shocked to find that for the quarter ended Oct. 2, growth at Disney+ had slowed to a crawl. The company's namesake streaming service, which had provided such stellar growth during the pandemic, added just 2.1 million new subscribers during the preceding three months. This revelation sent the stock tumbling, with its price falling nearly 11% since the announcement.

Adding insult to injury, Disney had previously said it would delay three Marvel movies slated for release in 2022 due to pandemic-related production delays. The release of Doctor Strange in the Multiverse of Madness, Thor: Love and Thunder, and Black Panther: Wakanda Forever will each be delayed by at least two months.  

It's worth noting that because of the interconnected nature of Marvel films, a delay in the release of any single film causes a ripple effect, postponing the films that come afterward in the Marvel Cinematic Universe's unified plot. It also means a delay in releasing the new titles to subscribers on Disney+.

There's little question that investor excitement regarding the ongoing potential for its flagship streaming service has been the principal driver of the company's gains in recent years. Between 2016 and 2018, Disney stock was range-bound and was essentially flat for those three years. However, the initial excitement about the potential for a Disney-branded streaming platform and the early success of the service has combined to drive Disney's stock up more than 200% since early 2019. 

A young family sitting on the couch watching TV.

Image source: Getty Images.

The edgier side of Disney

Under the direction of former-CEO Bob Iger, Disney has never strayed far from the family-friendly vision that made the company a household name. Iger embraced the company's heritage with the acquisition of Pixar Studios in 2006. Even after Disney brought the Marvel and Lucasfilm brands under its umbrella in 2009 and 2012, respectively, their blockbuster movies have never garnered a rating beyond PG-13.

It seemed inevitable that this day might come. When Disney acquired some of the assets of Fox, it appeared the writing was on the wall. The movie and television studios that Fox brought to the table were known for producing edgier, dark, and more adult-oriented content and it was evident across Fox's various media properties.

The FX cable network had a fan-favorite hit with American Horror Story -- now in its 10th season. The 20th Century Fox movie studio had scored big box office hits with Marvel stories Deadpool and Logan. Even the company's broadcast network was known for pushing the envelope with irreverent fare such as The Simpsons and Family Guy

A calculated risk

It remains to be seen whether Disney+ and the company itself will stay true to its family-friendly roots or embrace a darker, edgier future. Chapek may be right. Unless the company adds more adult-oriented content to Disney+, it risks losing adult viewers with no children to other platforms where they can get their grown-up streaming fix.

That said, Chapek could be taking the biggest risk in the company's history and risks potentially alienating the very consumers that are Disney's core customers.

The answer likely lies somewhere between. While it's important for Disney to retain its family-friendly image, it's also critical that the company expand and grow with its audience.  Given the company's nearly 100-year history of proven success, there are plenty of reasons to believe Disney will be just fine.