EXCLUSIVE: Disney & Sony Ink Deal for Sony to Take Over Disney’s Physical Media Production, Disney Movie Club to Shut Down as a Result

by Bill Hunt

There are some significant developments happening within the home video industry of late, developments that I’ve been spending a lot of time investigating and really digging into these past few weeks here at The Digital Bits.

And I can now confidently report that one of them is this:

Disney and Sony have just inked a major deal for Sony Pictures Home Entertainment to take over all of Disney’s physical media production going forward.

This means that Sony will handle and oversee the actual authoring and compression of discs, that they’ll work with the replicators and packaging vendors, and that they’ll oversee the titles as they go out to the distributors and on to retailers.

I first received word of this deal about two weeks ago, apparently within twenty-four hours of the ink drying, and I’ve now confirmed it with multiple independent sources within the industry—people that I trust and have known and worked with for many years.

This deal makes sense for Disney for a number of reasons, not the least of which is that Sony is far more efficient and cost effective at producing their discs, whereas Disney’s physical media operation has been subject to no small amount of internal/organizational turmoil recently.

First, they were trimmed down in late 2019 and early 2020, after Disney’s infamous and year-long 4K Ultra HD catalog title blow-out, then they were subject to many of the cost-cutting pressures and personnel losses that all the majors suffered during the COVID-19 pandemic.

It hasn’t helped that the studio’s physical media operation—which is now almost an afterthought in the shadow of its Disney+ business and activities—has been organizationally tied to Disney’s digital and streaming operation ever since.

Based on reporting from multiple sources, what this has meant in recent months is that virtually every decision about which catalog titles to release on disc, and which features to include on them, not to mention every technical decision that naturally arises during the course of the production of those titles, requires scores of people to be involved at Disney. And the people who are actually working on the discs don’t have decision-making power about anything—they have to kick decisions upstairs to their bosses, who have to kick it upstairs to their bosses, and so on. Multiple levels of management are involved, which means that decisions that should take two people five minutes instead take thirty people a week or more.

It would be pretty tough for anyone to make money on physical media doing it like that.

What’s more, with Disney’s constant cost-cutting measures, and the fact that the studio has wildly overspent on its streaming operation, everyone involved is naturally afraid for their jobs. So few people at Disney are willing to stick their necks out to make a decision, for fear of getting fired. Unfortunately, that includes the very people who know how to do physical media best.

Ironically, Disney turning over their physical media operation to Sony means that a lot of these people now probably are likely to lose their jobs, which is regrettable. (We hope at least that the studio is wise enough to keep the people who actually know what they’re doing, as opposed to the middle-managers who aren’t adding value to the process.)

But the hope for physical media consumers going forward is that—if Disney does get more efficient and profitable at releasing discs via this arrangement—they might actually start releasing more of them.

As cinephiles are well aware, Disney is currently sitting on a vault that’s chock full of great live action film titles from the classic Disney, 20th Century (Fox), Hollywood Pictures, and Touchstone libraries. In fact, there are at least twenty classic Fox catalog titles that we’ve confirmed have recent 4K remasters, that Disney is doing absolutely nothing with—they aren’t going to streaming or digital, they aren’t appearing on Disney+, and they certainly aren’t being released on Blu-ray or physical 4K Ultra HD.

This at a time when many other major studios are not only digging deep into their film libraries for Blu-ray and 4K Ultra HD releases, they’re also licensing many very deep catalog titles to boutique labels like Shout! Factory, Arrow, Kino Lorber Studio Classics, Indicator, Powerhouse, and more—an arrangement that is generating good profits for those other studios, even as production costs increase and vendor and retailer options shrink.

One way that indie studios in particular are working to adjust to this new climate is by creating their own online stores and thereby selling discs to their fans and consumers directly.

Unfortunately, as part of the Disney and Sony arrangement, we’ve learned that Disney plans to shutter their Disney Movie Club, which for several years now has been doing exactly that.

This is sadly also confirmed: We’ve now learned from Bits readers that DMC is beginning to inform their customers of this fact. Here’s an example of the message DMC is currently sending out via email:

We think this is actually a terrible idea. It would be much better for Disney to let Sony take over DMC, and to ramp it up in order to more effectively communicate with the diehard cinephiles who are now the core of the physical media business.

Speaking directly to your best consumers, making them feel heard, and giving them what they want in terms of titles, A/V quality, and features is exactly how you build a thriving physical media business in 2024.

In any case, we’ve contacted Disney and asked for an official comment and clarification about this new physical media production deal, in particular what it means for Disney catalog physical releases going forward, and we’ll share that with all of you here if and when the studio responds.

Rest assured, we’ll continue investigating and reporting on this news in the days and weeks ahead.

Stay tuned…