Disney magic is the power of IP

I still remember the joy in our household when we finally subscribed to Disney+ last year and not just from my two children. For grown-ups and children alike, Disney is synonymous with one of the best escapes from reality, enabling us to feel like kids again.

For me, Disney also means restorative nostalgia, a trademark they often use in their films. It means celebrating the past and offering familiar narratives about order, power, and the future. They release legacy films that re-release, remake, or retell their animated classics – basically building on their existing catalogue of Intellectual Property (IP).

This strategy is helping the Group deliver on its growth targets. Disney last week reported quarterly results, a bit of a mixed set. The Group beat Wall Street estimates, and that was mainly down to the streaming services, Disney+, ESPN and Hulu and how they turned a profit for the Group of $47 million. Now you might think that's relatively small for such a big company, but a year ago, they had an operating loss of $512 million.

What really helped to drive that profitability was the success of the movie Inside Out 2, released in June, which I believe was the highest grossing animated film of all time. It has so far taken $1.5 billion at box offices worldwide, overtaking Frozen II, which made $1.45 billion in 2019.

Disney really banked on the fact that the movie was going to be a success. This was quite a gamble, however, just as the first trailer dropped for the film, 1.3 million people signed up to Disney+ just to watch Inside Out, and according to the Group, the first movie got over 100 million views on the streaming platform that week.

This Disney business magic seems to be the strategy for the year. On the cinematic front, we are getting a string of sequels including Moana 2, Mufasa: The Lion King and Deadpool & Wolverine. Although most people would like to see new original Disney movies, the success of sequels is undeniable, and they have proven to be some its highest grossing movies. In fact, in the last decade, the majority of Disney movies seem to have been sequels or remakes.

Disney really knows when they have a hot IP and how to build on it, whether it's Marvel, Star Wars or, in Inside Out’s case, Pixar property. It’s a sort of ecosystem: one good property can do so many things, from live shows to TV series, the goal is to keep those consumer eyeballs on the brand.

But they are at the point where, as a Group, when you invest in a movie, it has to be a hit. As we all know, not all sequels have been a success for Disney. The only way you can assure it's a hit is if it's based on a property that people are familiar with and love. They can approach the movies already knowing the backstory and feeling a connection to the characters. Disney keeps building on its established audience who come to these movies for nostalgia, whilst at the same time introducing younger audiences to the IP. I don’t know about you, but I will be taking my children to all the new Disney releases this year, whilst also enjoying the originals on the streaming platform.

Bill Gates famously said once that “Intellectual property has the shelf life of a banana”, linking IPs to a perishable commodity, emphasising their short life span. But the same cannot be said for Disney whose properties hold some sentimental value for most people in some capacity.

Disney is built on connecting consumers to a brand and falling in love with it repeatedly through continued storytelling and sequels. Disney has mastered how to create fans and build long-lasting relationships and makes delivering growth a lot easier and safer to bank on.