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Walt Disney announces reorganization to focus on streaming

Disney is going all-in on streaming media. 

On Monday, the company announced a massive reorganization of its media and entertainment business that will focus on developing productions that will debut on its streaming and broadcast services. And Disney’s media businesses, ads and distribution, and Disney+, will now operate under the same business unit, the company said.

Its major reorganization comes just days after activist investor Dan Loeb, a major investor in the company through his Third Point Capital hedge fund, called on Disney to cancel its dividend and redirect more investments into streaming.

Wall Street has already given its seal of approval to Disney’s new move, sending shares up nearly 6% in after-hours trading.

Disney’s announcement follows a significant reorganization of its release schedule to address new realities, including a collapsing theatrical release business; production issues; and the runaway success of its streaming service — all caused or accelerated by the national failure to effectively address the COVID-19 pandemic.

Planned theatrical releases of would-be tentpole films like “Black Widow” have been rescheduled, while other films, including “Mulan” and the upcoming Pixar film “Soul,” are seeing their first runs on Disney’s streaming service, Disney+.

“This reorganization will accelerate our growth in the dynamic direct-to-consumer space, which is key to the future of our Company. The new organizational structure, with content creation distinct from distribution, will enable us to be more effective and nimble in creating what consumers want most, and delivering it in the way they prefer to consume it,” wrote Bob Chapek, Disney’s chief executive officer, in an internal memo announcing the reorganization, seen by TechCrunch. “Under this new structure, our Company’s world-class creative engines will be able to focus wholly on developing and producing great original content.”

Production of new material for Disney’s many provinces of intellectual property will fall under three groups — Studios, General Entertainment and Sports. Leadership of these groups won’t change, with Alan F. Horn and Alan Bergman, Peter Rice and James Pitaro maintaining their respective positions within the organization, the company said.

Overseeing operations for this singularly large new operational structure will be Kareem Daniel, who previously helmed the company’s consumer products, games and publishing operations.

All of the men will report to Chapek.

“Given the incredible success of Disney+ and our plans to accelerate our direct-to-consumer business, we are strategically positioning our Company to more effectively support our growth strategy and increase shareholder value,” Chapek said in a statement. “Managing content creation distinct from distribution will allow us to be more effective and nimble in making the content consumers want most, delivered in the way they prefer to consume it. Our creative teams will concentrate on what they do best—making world-class, franchise-based content—while our newly centralized global distribution team will focus on delivering and monetizing that content in the most optimal way across all platforms, including Disney+, Hulu, ESPN+ and the coming Star international streaming service.”

Studios will run all of the company’s development activities for live action and animated productions coming from Walt Disney Animation Studios, Pixar Animation Studios, Marvel Studios, Lucasfilm, 20th Century Studios and Searchlight Pictures.

General Entertainment will serve the same function for the company’s 20th Television and ABC Signature and Touchstone Television productions, along with its news divisions, Disney channels, Freeform, FX and National Geographic.

Sports will focus on ESPN and sports productions, including live events and original, and non-scripted sports-related material for cable channels, ESPN+ and ABC, the company said.

Overseeing the monetization, distribution, operations, sales, advertising and data and technology infrastructure for all of those groups will be Daniel. A longtime Disney executive, he formerly served as the head of the company’s Imagineering Operations, taking intellectual property and turning it into entertainment for the vast empire of Disney resorts and theme parks, before taking over the consumer products, games and publishing operations at the company.

“Kareem is an exceptionally talented, innovative and forward-looking leader, with a strong track record for developing and implementing successful global content distribution and commercialization strategies,” said Chapek. “As we now look to rapidly grow our direct-to-consumer business, a key focus will be delivering and monetizing our great content in the most optimal way possible, and I can think of no one better suited to lead this effort than Kareem. His wealth of experience will enable him to effectively bring together the Company’s distribution, advertising, marketing and sales functions, thereby creating a distribution powerhouse that will serve all of Disney’s media and entertainment businesses.”

The new structure is effective immediately, the company said, and expects to transition to financial reporting under this structure in the first quarter of fiscal 2021.

The company plans to hold an investor day on December 10th to unveil more of its direct to consumer strategies.

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Verizon adds free Hulu and ESPN+ to some unlimited wireless plans

Verizon and Disney announced this morning that they’re extending and expanding a partnership that gives some Verizon Wireless subscribers access to Disney’s streaming services at no addition charge.

The companies announced last fall that Verizon (which owns TechCrunch) would be offering free Disney+ to unlimited wireless customers, and on an earnings call in February, Disney’s then-CEO Bob Iger said that around 20% of Disney+ subscribers came from Verizon.

More recently, the entertainment giant said that Disney+ had more than 60.5 million subscribers as of August 3. In comparison, Hulu had 35.5 million subscribers at the end of its most recent quarter (June 26), while ESPN+ had 8.5 million subscribers.

With today’s announcement, subscribers to Verizon’s Play More and Get More Unlimited wireless plans will get free access to not just Disney+, but also Hulu and ESPN+. (Plus, Apple Music.) Disney normally charges $12.99 when these three streaming services are purchased together as The Disney Bundle.

“The addition of The Disney Bundle to our agreement with Verizon reinforces our commitment to providing their subscribers with access to high-quality entertainment from Disney+, Hulu and ESPN+,” said Disney’s executive vice president of platform distribution Sean Breen in a statement. “We are always looking for the most advantageous ways for consumers to experience our content and we are pleased to work with Verizon so that they can provide their customers with these appealing new offers.”

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Disney+ grows to more than 60.5M subscribers

Disney+ had more than 60.5 million paying subscribers as of yesterday, according to The Walt Disney Company’s CEO Bob Chapek.

Chapek shared the number during a call to discuss the company’s latest earnings report, which covered the company’s most recent quarter ending on June 27. He was essentially offering an update on the 57.5 million paid subscriber figure included in the report, and he said the growth is “far exceeding our initial projections for the service.”

Disney+ launched in November of last year. The company previously announced in April that the service had passed 50 million subscribers. (Those numbers include subscribers acquired through bundling with Hotstar in India, as well as free subscribers through a promotion with TechCrunch’s parent company Verizon.)

The coronavirus pandemic has accelerated growth for some streaming services. Most notably, Netflix added more than 10 million new subscribers in its most recent quarter, bringing its global total to nearly 193 million. As for Disney’s other streaming services, ESPN+ has grown more than 100% year-over-year to 8.5 million subscribers (as of June 26), while Hulu grew 27% to 35.5 million subscribers (3.4 million of them are paying for both video on demand and live TV).

And Disney+ may have gotten an additional bump, thanks to the release of “Hamilton” over the July 4 weekend.

Overall, Disney said revenue for its direct-to-consumer and international division increased 2% year-over-year, to $4.0 billion, while the unit’s operating loss grew from $562 million to $706 million.

Still, streaming likely counts as a relative bright spot compared to many of Disney’s other businesses that have either slowed or paused entirely due to the pandemic. (Parks are gradually reopening, for example.) The company’s total revenue fell 42% YOY to $11.8 billion, and earnings per share for the quarter showed a loss of $2.61.

Update: During the call, Chapek also announced that “Mulan” will be released on Disney+ on September 4, as a “premiere access” title that costs an additional $29.99.

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Hulu interruption impacted small number of users, now resolved

Some Hulu customers found that the video streaming service was no longer working on their Apple devices, beginning in the early morning hours on Tuesday. According to tweets and other social media posts from customers, as well as from websites like DownDetector, Hulu began experiencing issues in the early AM Pacific Time in the U.S., with a larger spike occurring around 5 AM PT.

Hulu confirmed with TechCrunch the issues only impacted a small percentage of its user base on Apple devices like Apple TV and iPhone. It says the issue has been resolved.

The company’s customer service Twitter account has also been replying to individual users to note that Hulu’s developers have put in changes to mitigate the service interruption and users who had issues should also reboot their devices to begin streaming.

Despite what appears to be a limited outage, losing access to video streaming during the coronavirus quarantine caused a number of users to immediately turn to Twitter to post their complaints. In fact, the hashtag #HuluDown is even still trending as of the time of writing.

But even though video services are facing record usage due to the large numbers of stay-at-home users under quarantine and government lockdowns, Hulu, Netflix, Prime Video and others haven’t seen long-term outages during these past few weeks — something that speaks to the relative stability of their services. There have been a few issues here and there of course — Netflix went down for an hour, or Twitch saw crashes, for example. And now this brief blip from Hulu.

DownDetector only showed some ~3,400 incident reports, and the Twitter hashtag accumulated just over 3,000 tweets before the problems were resolved.

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Original Content podcast: ‘Devs’ asks unsettling questions about free will

We discussed our initial impressions of “Devs” on an episode of the Original Content podcast a few weeks ago, shortly after the show launched on FX/Hulu. At the time, we observed that even the show made time for bits of Silicon Valley satire, the mood was mostly one of mystery and dread.

Now that we know the full story, it seemed like a good time to revisit our discussion. If anything, the dread increases over the course of the show’s first and only season, becoming oppressive and overwhelming as writer-director Alex Garland lays out the full implications of a mysterious quantum computing project known as Devs.

Our reactions to the story’s heady philosophical atmosphere varied — Jordan found the whole thing a bit ponderous, while Anthony and Darrell were completely happy to follow Garland into arguments about determinism versus free will, and to debate the implications of the show’s final episode.

At the very least, we all agreed that there’s nothing on television quite like it. Plus, the show features strong performances from Nick Offerman as a tormented tech CEO and Alison Pill as the Devs project’s steely leader.

You can listen to our review in the player below, subscribe using Apple Podcasts or find us in your podcast player of choice. If you like the show, please let us know by leaving a review on Apple. You can also send us feedback directly. (Or suggest shows and movies for us to review!)

And if you’d like to skip ahead, here’s how the episode breaks down:
0:00 Intro
0:18 “Devs” full season review
7:25 “Devs” spoiler discussion

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Original Content podcast: ‘Devs’ is a strange and delightful technothriller

Given its name, you might expect “Devs” — which launched earlier this month on the new FX on Hulu — to be a “Silicon Valley”-style sitcom about the tech industry. And there are indeed some delightful moments where “Ex Machina” writer-director Alex Garland pokes fun at San Francisco and tech culture.

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Daily Crunch: Hulu CEO steps down

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

1. Hulu restructures under Disney, CEO Randy Freer departs

Hulu CEO Randy Freer is stepping down from his role as part of a major restructuring of Disney’s streaming business. The move signals Disney’s plans to streamline its direct-to-consumer operations, which also include Disney+ and ESPN+.

Disney took control of Hulu last year following its acquisition of 21st Century Fox and a subsequent deal with the service’s other owner, NBCUniversal. However, the company had largely left Hulu alone to operate as usual — until now.

2. BlackBerry and TCL will end their handset partnership in August 2020

BlackBerry and TCL announced that they would end their four-year brand licensing and tech support partnership in August 2020, with TCL ceasing to make new models of BlackBerry handsets after that point.

3. Launch startup Skyrora successfully tests 3D-printed rocket engines powered by plastic waste

Skyrora’s rocket engines are novel not only in their use of 3D printing, but also because the fuel that powers them is developed from plastic waste — a new type of fuel called “Ecosene” the startup says makes its launch vehicles greener and more ecologically sound than the competition.

4. Apple News adds coverage of 2020 US presidential election, including guides to candidates, issues & news literacy

The coverage includes curated news, information and election data from ABC News, CBS News, CNN, FiveThirtyEight, Fox News, NBC News, ProPublica, Reuters, The Los Angeles Times, The New York Times, The Wall Street Journal, The Washington Post, TIME, USA Today and others. The Apple News editorial team has also put together a series of curated guides, special features and other resources for readers from both sides of the political spectrum.

5. Nigeria is becoming Africa’s unofficial tech capital

Nigeria has become a magnet for venture capital, a hotbed for startup formation and a strategic entry point for Silicon Valley. Still, Jake Bright acknowledges that as a frontier market, there is volatility to the country’s political and economic trajectory. (Extra Crunch membership required.)

6. Watch this year’s tech-themed Super Bowl ads from Amazon, Google and more

Some of these ads come from tech giants like Amazon and Facebook, which have hired big stars to promote their products. Meanwhile, Dashlane found a fun way to remind viewers of the nightmare of life without a password manager, while Squarespace enlisted Winona Ryder to build a website on the platform.

7. This week’s TechCrunch podcasts

The latest full episode of Equity features a discussion of why Kleiner Perkins is investing its latest fund of $600 million at a rapid pace, while the Monday news roundup looks at the global market’s response to coronavirus fears. And over at Original Content, we review the Netflix cheerleading documentary “Cheer.”

Source: TechCrunch

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Hulu to debut new ad formats in 2020 focused on letting users make choices, transact with advertisers

Hulu is preparing to roll out new forms of advertising this year — one which will allow viewers to have more say in the ads that plays, and another that lets the viewer engage with the brand in question, either by getting information sent directly to their mobile phone or by using QR codes. In later months, Hulu is also considering digital product insertion to enhance the ad opportunities within its own original programming.

The new ad formats are the latest to join an already innovative lineup of ad experiences for Hulu, where the company hasn’t been hesitant about trying out new ideas to make ads more user-friendly. For example, Hulu last year introduced pause ads that pop up only when viewers take a break from streaming. And last month, it rolled out new ‘binge watch ads‘ that allow brands to sponsor ad-free episodes when Hulu detects that a viewer is binge-watching their way through a series.

The goal with these ad experiences is to find a way to make advertising less disruptive to the viewer. In 2020, Hulu is also focused on making its ads more engaging.

In the case of the forthcoming choice-based ads — a sort of ‘choose-your-own-adventure’ for advertising — viewers will be able to select which ads from a brand they want to see. For example, users could choose to see ads about ski vacations from a travel company’s ad, or they could watch an ad about beach getaways. They could even pick which option they wanted with their remote.

In addition, Hulu is planning to roll out new transactional ads to help viewers engage with brands of interest. While 80% of viewing today takes place on the TV screen, most people don’t want to transact on the big screen — they’d rather use a computer or a mobile device. In this case, if the viewer wants more information from the advertiser, Hulu will be able to push that to their phone. This could be done by using the mobile phone number or email attached to a Hulu user’s account (given permission, of course), or viewers could hold up their phone to scan a QR code on the ad itself to take more immediate action.

The information the advertiser shares could include a link that takes the viewer right to a website — like a retailer’s shopping site, for example.

“This goes back to that viewer-first advertising promise: less disruptive, more engaging, and more functional. And it will really allow us to improve both the viewer experience and the advertiser’s ROI,” says Jeremy Helfand, VP and Head of Advertising Platforms at Hulu, in a conversation last week at CES.

The new ad formats will round four main themes Hulu is developing for its advertising experiences — situational, which is based on user behavior, as with pause and binge ads; choice-based, which allows the viewer to make a selection; transactional, where the viewer engages with the brand; and integrated storytelling, which is focused on integration sponsorships to blend the brand and content into a more seamless experience.

While Hulu has already dipped its toes into integrated storytelling with several ad experiences, the company is now thinking about the next steps for these ads, Helfand notes.

“We do think that there is a future where we’re able to fuse brands into the content, post-production,” he says. That is, Hulu could digitally insert product placements into its own programming.

“We’re excited about what’s coming up with cooking content on Hulu Kitchen. Theoretically, we could take a KitchenAid mixer and put it on the table even though it’s not there,” he adds, referring to Hulu’s plans for new original food series, including shows from Chrissy Teigen, David Chang, and Eater.

The technology to do this sort of digital ad insertion exists, but Hulu doesn’t know if it plans to develop its own in-house or acquire or partner with a company that already works in this space.

“You have to be able to read the metadata underneath the content as well as visually scan the content,” Helfand explains. “We’ve got a lot of content recognition work that’s already going on inside of Hulu which we use for lots of different reasons, not just for advertising. But there’s also a number of third parties — there’s a whole ad technology industry that’s emerging about being about to do things like that — and we’re looking at partners, as well,” he says.

One area that’s not being prioritized are the ad-supported downloads Hulu once promised. Instead of working out how to deliver offline viewing with ads included, Hulu is thinking about other models — like sponsored downloads, perhaps. But its focus for the near-term is on these newer forms of advertising, not on ad-supported downloads.

“We’re always thinking about the viewer experience and how do we deliver the very best viewer experience. And that obsession with the viewer extends to advertising. Consumers have a choice…They have a choice whether they want an ad-free experience or they want an ad-supported experience. And if they choose an ad-supported search experience, we want to make sure that that experience is just as good as an ad-free one,” says Helfand.

Source: TechCrunch