In the midst of unveiling upcoming material from Lucasfilm and Marvel, as well as Disney’s Avatar at D23, Disney CEO Bob Chapek made himself available for a 15-minute interview with The Hollywood Reporter. The conversation touched on topics ranging from the handling of the Scarlett Johansson conflict and the “Don’t Say Gay” controversy in Florida to ticket pricing and more.
This presentation was very Disney+. It seems like all these things had their roots on the big screen – the whole Marvel Universe – it’s all in circulation [from movies] and you have the theme parks, you have the cruise ships, you have so much at stake in launching franchises. With many investors re-evaluating going “all in on streaming”, are you too?
It’s important to go back to when Disney+ launched and what the premise was about how much food you had to feed that system to really maximize its potential, and I’d say we dramatically underestimated the hungry beast and how much content they needed to feed . As we were realizing this, COVID hit and we were completely limited in terms of creating new things. So we had very little stuff coming into our system and we had to make the very difficult decision of where to put it. When the theater world shut down due to COVID, it was kind of an easy decision. You either put it off for a couple of years – and we started putting off, as you remember – but we also had this kind of empty pipeline on this very important strategic initiative for the company, which was Disney+. Our viewers, our subscribers, were asking for more, so we started diverting content that was originally intended for theaters before Disney+ was even envisioned. But at the same time, we started a very methodical plan to try to determine how much content we would need as a company to take full advantage of the opportunities in theater, because we love the theater business, and how much we would need to be able to feed the content pipelines that were driving on Disney+ so we can take advantage of that opportunity… Now that the production is fully back and we have a full understanding of what’s needed, right now – this fall – we’re able to fully schedule the theatrical release, without having to steal content from one party or the other, as well as our streaming services.
Think you can start a franchise – the one that turns into a theme park – in one go? Is there a movie ever made or a series that leads you to create an Avatar attraction? Where is the proof of this?
Absolutely. We fully believe it. We’ve had titles in the past that, frankly, we put out in the theatrical exhibition world [like] Encanto. It was a modest success theatrically and then we put it on Disney+ and it went to No. 1. I don’t have to tell you what a phenomenon it was from a merchandising and musical standpoint and how many people saw it on Disney+.
Do you think the theatrical element was essential or could you do without?
I think there are movies where theatrical distribution is essential. I think so [with] big blockbusters, there are titles that would be nice to have a theatrical release and then get on Disney+, but I don’t think that’s necessary for a franchise to be born. We have flexibility. This is a word I’ve been using now since the beginning of the pandemic when I first got this job…. There are a lot of people in business, in industry, who want the world to go back to the way it was and it’s not, because the consumer has moved on. Ultimately, everyone involved in this business serves one entity, and that is the consumer. The business went ahead. That doesn’t mean we’re not going to take great Marvel movies and Star Wars and Avatar and put them in theaters first. We will because it’s a great way to experience these movies. But that doesn’t mean that everything, to be credible or to eventually become a Disney franchise, has to go through it.
You come in and Wall Street was like, “Go streaming everything.” Then Netflix hits this big hit and they spin. How do you process this short-term, volatile Wall Street thinking?
When we went into the 2020 investor conference, we were guided by two factors: One was [subscribers], where all the focus was at the time. But even when Wall Street wasn’t focused on the earnings stream at all, we gave a same-day earnings guide. We knew the hype of the streaming business in the eyes of investors would abate at some point, we just didn’t know when. And profitability would become just as important, if not more important eventually than revenue and add-ons. For us, it wasn’t as big of an internal change as it might be for others, because we had our foot on both the clutch and gas at the same time, so for us, it’s not a big deal. We are operating as we would, not reducing the amount of content we intend to put on the system or spend. We’ve said in our investor calls that the amount of content we’re bringing to market will be essentially flat.
You’re known as a guy who cuts costs and raises prices. You raised the prices pretty hard [for some streaming plans] and the parks. And you’ve received some backlash from superfans. How much can you keep raising prices and their ill will creates a brand problem?
We love all our fans equally. We love superfans, obviously. But we also like fans who don’t have the same expression as their fan. We want to make sure our super fans who love to come with annual passes and use [the parks] as their personal playground — we love that. We celebrate it. But at the same time, we have to make sure there’s room in the park for the family from Denver that comes once every five years. We didn’t have a reservation system and we didn’t control the number of annual passes we were giving out and honestly the annual pass price was so high that people were literally coming all the time and the park accessibility was unlimited They and that family from Denver would go in the park and they would not be allowed to enter. This doesn’t seem like a real balanced proposition. I guess it’s possible that the super fans see this as a downside to how they consume the park, but we have to make sure that we’re not only taking into account the needs of our super fans, but taking into account the needs of everyone traveling from across the country once every five years. We have a real high-quality problem: we have far more demand than supply. What we won’t stoop to is giving someone a less-than-stellar experience in the parks because we jammed too many people in there. If we’re going to have that ground rule, you have to start balancing who you let in. … Ticket prices and the restrictions we put on how often people can come and when they come directly reflect demand. When is too much? Demand will tell us when it is too much.
You had some bumps in the beginning. If you were in Scarlett Johansson’s situation again, would you do it differently?
There were a lot of people who took a vote on how we handled this. And I was a voice, and I’ll just say that our relationship with her agency and her has never been better.
You apologized to the staff at Don’t Say Gay. This thing caused you a lot of trouble no matter what you did. Do you feel you have won back the trust of the staff?
These are complex social issues where we absolutely, positively want to represent the needs and aspirations of our cast members, but we also realize that sometimes in such a divided world, there is a misalignment between the potentially large constituencies of the guest base and the our consumers. they’re looking for in terms of what kind of content they want to show their kids at that particular moment. What we try to do is be all things to all people. This tends to be very difficult because we are the Walt Disney Company. When you’re a lightning rod for clicks and political speeches from the podium, the essence of our brand can be misappropriated or used to try to meet the needs of a particular group’s agenda. We want to rise above it. We believe that Disney is a place where people can come together with shared values about what an optimistic and ideal future can be. We certainly don’t want to get caught up in any political undermining, but at the same time we also realize that we want to represent a brighter tomorrow for families of all types, regardless of how they define themselves.
And the staff? Do they feel that from you?
We are a very tight-knit, big, happy family. I think our staff saw how I stood firm during the last barrage of attacks from certain political constituencies and, frankly, I think it was much stronger and much longer and much more difficult than they could have ever imagined and we stood at our height. So I think it’s safe to say that actions speak louder than words and they saw resilience and consistency no matter how strong the attacks.
The interview has been edited for length and clarity.
