Diego Lerner Talks Disney+ LatAm Rollout

Diego Lerner, the president of The Walt Disney Company Latin America, said Disney+ has already exceeded the company’s expectations in the region in his keynote conversation with World Screen’s Anna Carugati at NATPE Virtual Miami, during which he received the Premio Ícono TV Latina for his contributions to the media industry.

Lerner is the second recipient of the Premio Ícono TV Latina; the award was first presented in conjunction with NATPE Miami last year to Pierluigi Gazzolo. Lerner, who has been part of The Walt Disney Company since 1990, led the launch of Disney channels in Latin America and was instrumental in crafting a strategy for creating local content throughout the region. He also headed Disney’s operations in Europe, the Middle East and Africa, before being appointed to lead the entire Latin American business in 2017.

Executives working in LatAm have learned to be “resilient and prepared for very tough scenarios and emerge successful,” Lerner told Carugati, the group editorial director of World Screen. “The never-give-up attitude on situations that are totally unpredictable and unforeseeable let me see the quality of the people running the industry at an extraordinary level versus the rest of the world, which is based on more predictable standards. In LatAm, predictability is a luxury we don’t have.”

He also noted that the region is extremely homogenous. “Yes, we have major differences in terms of cultural environments and realities, but not in terms of people, not in terms of legal systems and political environments and macroeconomic issues. There are only two languages across the board. It’s different from the rest of the world, which is much more heterogeneous, much more eclectic than LatAm. We can imagine in Latin America a good pan-regional approach that allows us to establish certain business models, deployed continentally, while in the rest of the world it’s not that easy. You have to go ad-hoc country by country in many cases. This offers a fantastic opportunity to manage strategies for this company, which is brand-driven. It makes it simpler, despite the complexities of the macroeconomics.”

On the company’s pivot to streaming, Lerner said that he’d been thinking about a direct-to-consumer approach for Disney for about a decade. “In fact, we tried certain models in Europe when I was there. I think the learnings from some countries in Europe gave us the foundation to polish the approach and make it more prepared for what the world is today worldwide.” The announcement of plans for a Disney D2C service by Bob Iger back in 2018 marked the “conclusion of a well-thought process. It was not the beginning. It was years of work before that. We understood that the world is going on a different path, where the consumer has the option, due to the technology, to decide what to pay and what for, in an absolutely individual manner. The technology offered a chance to give the consumer what they want in a more economically accessible manner, with differentiated content that can prove the value of the proposition. The subscription model offered that. And the vision Bob Iger and Bob Chapek, the current CEO, had is we have to generate a proposition for the consumer that is digital, technologically avant-garde, at a price that could be accessible for all types of consumers. When you ask the question, What could I have by subscribing to that service? We have to have a strong answer. Disney+ has proved to be a major differentiator versus any other offering, including our own Disney-branded offers.”

In LatAm in particular, Disney+ allows the company to expand beyond the limits of the traditional pay-TV subscriber base. “It’s the first time in 15 years that we see the chance to offer excellent content, accessible to every single economic consumer profile. That is unique. For $3 to $5, a consumer can have access to an app that permits that them to get the best of The Walt Disney Company, exclusively in many cases, from the best five brands it has: Disney, Pixar, Star Wars, Marvel and National Geographic. In addition, we have relevant local content productions. It’s the first time we are able to manage the presence at the base and middle base of the socio-economic pyramid. Normally, our business was taking place within the 75 million subscriber households that represented the peak of the economical pyramid. In Latin America, 17 to 20 percent of the population managed more than 50 percent of the purchasing power. So our business always took place on top of the pyramid or in the upper-middle side. This proposition allows us to get to the middle and lower. I feel enormously excited about that.”

Asked what the Disney brand symbolizes in the region, Lerner responded: “In most of the countries in the world, it’s fundamentally a family- and children’s-entertainment-driven brand, with a strong emotional connection to the consumers. In Latin America, it’s much more than that. In Latin America the word Disney is broader; it’s connected with multiple ages, not just kids. It is also related to a very idealistic lifestyle that is aspirational for people who are struggling due to macroeconomics. That’s why propositions like Radio Disney exist only in Latin America. It’s the number one, two or three most successful radio for families and for women of all ages. That is only because of the relevance of the brand. The meaning of the brand goes broader than just entertainment for kids and families. That’s why we have to be extraordinarily careful when we manage content approaches to the consumer in the region.”

Disney+ arrived in Latin America in November 2020 and thus far has “exceeded all expectations. It’s not just the numbers of paid subs. It’s the willingness from the people to access the app and experiment with it. I love the engagement factor. It’s early but the beginning has been phenomenal.”

Disney plans to maintain its presence in the LatAm pay-TV ecosystem via its own branded services, Lerner said. But “no third-party [platforms] are having any content of Disney at all. This is probably the boldest decision the company made worldwide. We are enriching the app by not licensing to any third party any of our content. It’s not because of competition. It’s because we want to make it simple for the consumer. There’s one house, a Disney-branded house—it could be the channel, it could be the app—but it’s one house. It is wrong to fragment the offer of the content to different providers. Doing that is a great way to monetize, I don’t object to other companies doing it, but when you have such a powerful brand, with such a strong emotional connection, it is right to keep that value in your house, your exclusive place to go. That’s why we’re not licensing to third parties in any respect anywhere in the world.”

On the plans for local productions, Lerner said the key is “adding value to what we have as a company. That’s different from others who produce locally aggressively and quite well. They don’t have that vertical column of content that is globally relevant, for example The Avengers from Marvel or an animated Lion King or a Mulan or any of the other well -known content from Pixar or Star Wars. This is what generates the main priority in content engagement. And then we go with an aggressive content slate that we produce to make clear our commitment to the cultural communities in key markets in Latin America, the local producers, local actors, directors, scriptwriters.”

Lerner went on to stress Disney’s place in the Latin American content creation industry. “We always believed that our ability to generate value through local talent is key to [embedding] our brand into the community. Disney is not an American brand; it is a global brand. We have a much broader target age with the Disney reach. We need to respond with local talent and local content.”

Lerner went on to briefly discuss the new Star+ service, a “standalone offer that continues the legacy of the success of Fox.” Lerner said that all of the Fox channels will be rebranded under the Star brand and Star+ will eventually arrive in the region sometime this year.

Asked about theatrical releases in a post-COVID-19 world, Lerner noted, “Theatrical is a major, strategic, critical pillar of our company. The business exists due to the natural engagement consumers have with that experience. I have no doubt that the theatrical experience is extraordinarily relevant and will continue always. The ability for people to get together and laugh and cry in a closed environment with others is never going to go away. The value of a big-screen proposition is irreplaceable in managing all the rest of the businesses that come after the creation of that content. These theatrical IPs provide enormous value to the company and [are among] the most important, successful franchises of The Walt Disney Company. They are present in the parks, in consumer products. It’s simply been sleeping. It just needs to wake up, after COVID permits it, after governments permit it, and after individual responsibility to make certain protocols to access these venues happens.”

Windows are evolving, Lerner added, “but that transformation will not jeopardize the relevance of the number one window. [Theatrical] will continue to be the most important marketing umbrella that generates enormous value and glamor to a business that needs to continue that way.” However, Lerner said that it’s crucial to move away from the “rigidity that existed before in terms of long windows,” both to create a simpler proposition for consumers now used to having immediate access to content and to fight piracy. “Remember we are dealing in a world now where technology is incredibly accessible. It’s not that expensive. For all the good things technology permits, one of the negatives is the access to pirated [content]. The best way to fight piracy is to make [content] accessible. That is what the new world will define for theatrical cohabiting with the rest of the media.”

Asked about his biggest achievement over his storied career, Lerner said, “It’s being able to lead this company with such relevant brands, in a region struggling so much with COVID. Being able to lead a group of human beings, about 3,000 individuals, who have been incredibly strong in spirit in managing a challenge that is humanitarian and did not exclude them. Being a leader to them, I feel proud. Being able to continue managing this company in this region, where this challenge of COVID has tested all of us. The company in Latin America is prepared and enthusiastic—worried, absolutely, like everyone else—but excited to get going for the next normality, which is coming.”

Looking ahead, Lerner said, “I don’t believe the vaccine is the end. That’s the beginning. How each of us will keep certain behaviors that have to change in order to prolong the life of the world. We need to listen to what happened here. The change in behavior will impact how we do business in multiple ways. There’s a lot to reflect on. I don’t think we have woken up yet from the shock of this impact. The best is yet to come in how we are going to be absorbing the learnings and [implement] them in our day-to-day life and business.”