“Streaming is dead.” That is the word out of entertainment giant Disney (DIS), as reports note that the new Star Wars series, Andor, faced a lot of problems getting made as its budget simply proved too big for even the House of Mouse to successfully tackle. But it is the idea that streaming might be facing some unexpected problems that is really catching notice. The issue has not quite hit investors yet, though, as Disney shares ticked up fractionally in Thursday afternoon’s trading.
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As it turns out, Andor cost Disney a bundle. In fact, Andor cost Disney the equivalent of over three Snow White releases, and we all know how Snow White turned out. Andor‘s two seasons combined cost over $650 million, 24 episodes all told. Though this was easily some of the best Star Wars content Disney has released in the last 10 years, it is clear that it is unsustainable. And that led to Disney managers coming out with the shocking line: “Streaming is dead.”
Hot on the heels of that, according to Andor creator Tony Gilroy, came an even more shocking pronouncement: “We don’t have the money we had before.” This led to intense fighting over the budget, Gilroy noted, as he fought for more resources and Disney managers required belt-tightening. Gilroy had one critical advantage, though: a ream of positive reviews from critics, which gave Disney something at least kind of like a hit. But with Disney reeling from pricey failures like Willow and The Acolyte, something had to give.
Growing Concerns
Funding a second season of Andor proved difficult, reports noted. While it certainly had the positive reviews, it did not have the viewership, at least, not quite in the numbers that Disney wanted. It certainly was not on par with The Mandalorian, reports noted, and after all those failed launches elsewhere, there was only so much room left.
Andor got away with quite a bit, including more “adult” themes like genocide cropping up, but the less-than-outrageous viewership numbers and the hefty price tag led Disney to push back. Only one Disney brass note got accepted, plans to dial down an expletive into a mere call to “fight the Empire” were accepted with some grace. The unanswered question becomes one of what Disney’s future streaming line will look like. With signs emerging that the big-budget extravaganza is out of fashion, will a more budget-friendly approach swing in? Or will the physical media releases—with much larger sales to rental stores and the like—make a comeback?
Is Disney Stock a Buy or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on DIS stock based on 15 Buys and four Holds assigned in the past three months, as indicated by the graphic below. After a 12.13% rally in its share price over the past year, the average DIS price target of $124.53 per share implies 9.47% upside potential.
