Despite Some Recent Successes, Disney Is Still Faced with Major Financial Issues

Despite Some Recent Successes, Disney Is Still Faced with Major Financial Issues
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If anyone’s created any animated magic in the West, it’s Disney. The studio has been at the center of animated production for decades, and while it has expanded its library over the decades, it is still mostly associated with animated films and series, which will most likely always remain synonymous with the studio.

However, regardless of the magic and historical importance, Disney has been struggling financially for a while now. Workers have been laid off, projects have been put on hold and their overall number has been reduced, while those that have been released are generally not doing that well at the box office.

Recently, we had written about Disney’s plans to revitalize their finances with sequels, as well as the issues with Disney+, but despite the recent success of Inside Out 2 (which was produced by Pixar, which is owned by Disney), Disney is still struggling and we have been able to identify several important reasons why the company is going so bad financially.

In short, The Walt Disney Company saw a significant decline on Wall Street earlier this year, as its stock price sank to $105; this was a daily drop of more than $10 or 9.04%. Later that same month, the stock price fell even more, ending up at $101. By June, the stock value stopped below $100, which was a major blow for the company. As of yesterday, we can confirm that Disney has finally flatlined, but the $96 mark at which it stands now is a disappointment overall.

We know that Bob Iger returned after Bob Chapek’s firing as CEO, but this was confirmed to be a temporary solution, as Iger came back to solidify the company. Inside Out 2 did well, Deadpool & Wolverine is slated to be a major box office hit, and Iger has all but confirmed both Frozen 3 and 4 are in development. Also, the originally planned Moana series will be turned into a feature-length animated sequel.

All of this points to Disney recovering soon, but the situation is still not great, as investors seemingly don’t have faith in the company at this point. If Disney starts to recover artistically, this will probably lead to a financial recovery as well, but we’re still away from that moment. So, what are the main issues Disney is faced with, and how are they influencing their finances? We have already talked about some of them, but here is a complete overview:

1. The issues with Disney+

As we have reported earlier, Disney+ turned out to be a financial black hole for Disney. The streaming service was a major hit when it launched and it has one of the best libraries of all the services with a lot of original content, but it was never able to become a true competitor for Netflix. Tricked by the good numbers during the pandemic, Disney provided the streaming service with a lot of money for original content, but it was never able to get that money back, so Disney+ turned out to be a mistake… not in the sense that it shouldn’t have been launched, but because some seriously bad business decisions led to it being a major financial problem for the company.

2. ESPN

As far as legacy is concerned, ESPN is one of Disney’s biggest assets. A lot of people watch sports, and if you’re an American, well… ESPN is the most likely place you’ll go. But, while ESPN still brings in a lot of money, it is losing subscribers quickly. In recent years, ESPN lost millions of subscribers, and that – of course – means less money for Disney, which contributes to the overall situation, which is far from great.

3. Internal issues

We’ve already said that Bob Chapek’s tenure was a failure. He succeeded Bob Iger, one of the most successful CEOs in Disney’s history, but he lined up failure after failure and was eventually fired. At the same time, Nelson Peltz attempted to launch a boardroom coup and take over the company, and while the coup ultimately failed (with Peltz selling all of his Disney assets), it reportedly cost Disney around $40 million, which is a lot of many, and resulted in serious reputational issues for the company.

4. Box office failures

This was most likely the biggest issue for the company. In an earlier report, we listed how both Disney’s and Pixar’s new movies flopped at the box office; this was partially because of the bad business decisions related to Disney+ as well, but also because people didn’t like these movies so much. Disney made some bad decisions, and after a while, they realized that their original content needed to be better, which is why they are now focusing on sequels, and based on the recent example of Inside Out 2, it seems that this new policy is paying off. But it will take some time to confirm this.

5. Brand and product issues

Bob Chapek thought that more money would come by spiking prices, but while that is theoretically true, the new prices started to push people away, and – surprise, surprise – instead of more money, it was even less money. This proved to be a bad decision and one of the reasons why Chapek was fired. At the same time, performers and employees also demanded more money, as they are being underpaid, which also cost Disney additional money, all of which contributed to the company’s financial issues.

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And this is, more or less, it. Disney is definitely going to dominate the box office this year with two major hits, and if the sequel policy proves successful, it will be back on track soon. At the same time, it is now obvious that some changes will have to be made, and we hope that Disney will have the wisdom to make them when necessary. Until next time, keep following us for more news and updates!

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