An industry insider clearly explains why Disney+ is removing movies and shows from the streaming service. Joining in on the trend that quickly became controversial when HBO Max began cutting content, leaders at Disney announced that more than 40 series and films, including high-profile projects like Willow, will be removed from the platform on May 26. In general terms, the removal is understood to be Disney's attempt to reduce costs and increase profitability. But there remains confusion about how removing original shows actually accomplishes these goals, and whether the shows could resurface elsewhere.
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Writing in the Puck newsletter, veteran entertainment journalist Matthew Belloni clarified why Disney+ is removing a chunk of its content. In the excerpt, included below, Belloni says the chief reasoning behind the removals is not the payment of residuals. While that factor is real, it's a "relatively small part of the cost of putting shows and movies on streamers." The main issue is the licensing fees that a streaming service like Disney+ has to pay to the owner of the content, which is the production studio behind the show. By removing the show, Disney saves money by not having to pay the fee. The possibility that the removed content could eventually reappear elsewhere is also discussed:
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The mechanics are interesting here. First, many seem to think that artist residuals are the cause of the purge. Not really. Residuals make up a real but relatively small part of the cost of putting shows and movies on streamers. Such a small part, in fact, that the Writers Guild is on strike to improve them.
The major costs here are the license fees that must be paid by the distributor (Disney+ or Hulu, in this case) to the owner of the content. We may think of these shows as just sitting on a service, waiting to be discovered at 3 a.m. by your stoned cousin. But sitting on a streamer is the same thing, from a licensing perspective, as if the show were being syndicated on TBS or sold into a foreign territory. Disney+ is an exhibition, and fees must be paid. That’s the case even if the owner of the content is also Disney (or an affiliate), which must at least pretend to engage in an arms-length transaction.
The way it works is that the Disney people look at the library, figure out what’s not performing (and trust me, some of these shows were literally being watched by nobody), yank it off the service, and take an impairment charge. The cost of entertainment product is typically paid up front but amortized over time, yet when you take an impairment on an asset, you can write off the cost today, meaning you’re saying, This is not worth the money we paid. If it’s a Disney+ show, like, say, the Willow series from Lucasfilm, or whatever the heck Encore! was, D+ won’t have to carry that ongoing burden. The downside is that once you take the impairment charge, you can’t put that asset back on Disney+ again. It’s gone, at least for the full impairment period.
But it’s not necessarily a total loss. When you impair an asset, like a TV show, you then look at what value you might be able to gain from other sources: Electronic sell-through platforms (like purchases on Amazon or Apple TV), a FAST channel (PlutoTV, Tubi), maybe Netflix or Amazon bites, etcetera. If you do find a buyer, you subtract what you’ve earned there from the write-off, and the content lives on somewhere. If not, it disappears.
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What The Removed Titles Indicate About The Future Of Disney+
Although the list of removals includes some Disney+ movies, it's largely populated by series that have been canceled by the streaming service. There are also examples of shows that have been canceled at Hulu, like the Kat Dennings comedy Dollface, or at FX like Y: The Last Man. Both FX and Hulu fall under the Disney umbrella, and it points to the fact that canceled shows could be at the highest risk of removal.
In terms of removed movies, reporting and speculation have suggested that Disney+ is likely to move away from approving smaller family comedies and instead focus more of its efforts on established franchises. But, in a bit of a positive outlook, as Belloni writes, the removed titles could eventually reemerge. The same happened with several of the titles that HBO Max removed last year.
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Some of the most high-profile removals such as Westworld have since resurfaced on free streaming services with advertisements like Tubi and Roku as part of a licensing deal. But on the other hand, Love Life, which had the star power of Anna Kendrick and William Jackson Harper, not to mention a likable romcom premise, hasn't popped up elsewhere. On the whole, with more removals reportedly planned, the path forward of Disney+ is far from certain.
Source: Puck
