Hollywood Reporter; Bob Iger: Disney Will Reduce Costs on Films, TV Shows to Focus on Quality, Not Volume

Story from Hollywood Reporter:

Disney CEO Bob Iger said Thursday that his company is closely examining all aspects of its content business, across film and TV, as it plots the best path forward in a tricky media environment that includes a linear TV business in decline, a theatrical film business with an uncertain future, and a streaming business that is growing but requires a path to profitability.

Speaking at a Morgan Stanley conference, Iger said that the company will specifically be looking at how much it is spending on content, and how many projects it produces going forward.

“I’m really pleased that the support that I’m getting from the content creators of the company is significant and real, and it comes in the form of reducing the expense per content, whether it’s a TV series or a film, where costs have just skyrocketed in a huge way and not a supportable way in my opinion. They all agree to that,” Iger said, adding that it was also about “understanding how much volume we need, reducing how much we make. So it’s how much we spend on what we make and how much we make.”

However, Iger left open the potential for making content that the company could sell elsewhere.

“And as we look to reduce the content that we’re creating for our own platforms, there probably are opportunities to license to third parties,” Iger said. “For a while that was verboten or something we couldn’t possibly do, because we were so favoring our own streaming platforms. But if we get to a point where we need less content for those platforms, and we still have the capability of producing that content, why not use it to grow revenue? And that’s what we would likely do.”

He added that the core franchise content (Marvel, Star Wars, Frozen, etc.) would remain exclusive to Disney’s owned platforms.

“Disney is very strong, the most powerful brand certainly in family entertainment,” Iger said, adding that when consumers see the live-action Little Mermaid in May, “It’ll remind you just how strong the brand is.”

But he also had frank and interesting comments about Marvel and Star Wars, suggesting that the company is carefully thinking about its approach to those brands moving forward.

“What we have to look at at Marvel is not necessarily the volume of Marvel storytelling, but how many times we go back to the well on certain characters,” Iger said. “Sequels typically work well for us, but do you need a third or a fourth, for instance? Or is it time to turn to other characters? There’s nothing in any way inherently off in terms of the Marvel brand. I think we just have to look at what characters and stories we are mining.”

“And if you look at the trajectory of Marvel over the next five years, you’ll see a lot of newness,” he added. “Now, we’re going to turn back to the Avengers franchise, but with a whole set of different Avengers, as an example.

“Star Wars, we made three what we called saga films, which is obviously the successors to George Lucas’ first six. They did very well at the box office — tremendously well as a matter of fact. We’ve made two so-called stand-alones in Rogue One and Solo. Rogue One did quite well, Solo was a little disappointing to us. It gave us pause just to think maybe the cadence was a little too aggressive. And so we decided to pull back a bit. We still are developing Star Wars films. We’re going to make sure that when we make one, that it’s the right one, so we are being very careful there.”

At a high level, Iger said that the goal is to focus on high-quality programming, calling out not only the core franchises, but also FX, which he praised as both a producer of content and as a brand.

“You know, there’s so much consumer choice right now, and it comes back to, What is differentiated?” Iger said. “That’s one thing obviously we have talked about, is those brands: Star Wars, Marvel and Disney and Pixar, for instance. But quality is also a differentiator.”

“I think HBO proved that well, you know, in their halcyon days when high-quality programming made a big difference, and not volume,” he added. “And because the streaming platforms require so much volume, one has to question whether that’s the right direction to go, or if you can be more curated, more — I used the word ‘judicious’ a few times — but I guess, more picky about what you’re making, and to concentrate on quality and not volume.”

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