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Disney’s CEO is slowly pruning the company ahead of a huge sale (buyer unknown), signaling the end of an era. But it’s also the start of a new one.
Not all that different from today’s social media creators, amirite?
The media world is buzzing with speculation that Disney’s CEO is positioning the company for a blockbuster breakup or sale.
Well, after acquiring hefty media assets like Pixar (US$7.4b, 2006), Marvel (US$4b, 2009), LucasFilm (US$4b, 2012), and 21st Century Fox (a whopping US$71.3b, 2019), Disney may actually have bitten off more than it can chew.
The news that Bob Iger, Disney’s CEO, is signaling that Disney may spin off its TV and cable networks (ABC, FX) so it can refocus on streaming.
Unfortunately, as I’ve previously written, streaming is actually a horrible business: it costs a lot of money to make good shows, but it’s pretty easy for people to cancel their subscriptions once they’ve binged what they want to watch.
And there’s a lot of competition. Apple+, Paramount Plus, Max, Amazon Prime, Hulu, Peacock, and of course Netflix are all fighting for the same subscribers that Disney+ is. (And that’s not even addressing free ad supported streamers like Freevee, Pluto, and Tubi.)
All that may be a big reason why $DIS stock is down more than 21% over the past five years, and down more than 28% this year alone.
A NEW ERA
But the big picture above all of this is the fear fact that Disney may be losing some of its historical magic and cultural relevance, especially amongst younger consumers.
This might be why Disney is seeking some eyebrow raising “strategic partnerships” for their sports network, ESPN.
Last week, ESPN announced a US$2b deal with Penn Entertainment, a big casino and horse racing firm.
The link up will offer consumers “the ability to place bets with less friction from within our products,” as ESPN’s chairman put it in a statement.
BET ON THIS
Betting doesn’t exactly feel on brand for the famously family friendly company. As one analyst reminded us after the Penn deal was announced, “for a long time, you couldn't [even] get an alcoholic drink” in the Magic Kingdom.
Now it sounds like you’ll be able to place a Lucky 15 on the ponies while standing on the Space Mountain line with your kids.
I’m gonna go ahead and sayyyy… money?
Plenty of sports media outlets see betting and betting content as a huge engagement and revenue opportunity. The NBA has had an official betting partnership with MGM Resorts since 2018, while the NFL actually has three official sportsbook partners (Caesars, DraftKings and FanDuel) —and also allows sportsbooks to operate at league stadiums.
ESPN understandably wants has to capitalize on this shift. Disney may have avoided gambling in the past, but the opportunity today is just too lucrative to pass up.
The big news here is that Disney seems to be ready to chop its own kingdom up, and sell it for parts.
A moment, if you would, to reflect on just how much of a fall from grace this would be.
Disney has dominated family entertainment for generations. Its name is literally synonymous with magic.
But today, the shift to streaming (aka “cord cutting”) has decimated the profitability of Disney’s cable channels, networks, and movie theaters, and young audiences appear either apathetic towards Disney’s nostalgic staples, or straight up unaware of it.
Look around: young people today are enthralled by YouTube, TikTok and Snapchat. And while Disney IP like Frozen remains popular, Mickey Mouse and friends don’t seem spark the same fervor as, say, Cocomelon (an American YouTube channel showing animated nursery rhymes), or even YouTube unboxing videos.
That’s where things get interesting.
The cracks in Disney’s façade reveal some deeper societal shifts.
RIP DISNEY MAINSTREAM POP CULTURE
I’ve written a lot about the end of mainstream popular culture, which is fast being replaced by ever more niche entertainment streams.
Then there’s our ever shortening attention spans, which make it harder for any one source to command a large share of our time (and wallets).
Meanwhile, Disney’s embrace of sports betting actually reflects some seriously evolving attitudes. Once taboo associations like gambling are now totally acceptable revenue streams, as financial motivations override tradition.
The pace of change is profound.
OK, WHAT’S THE POINT HERE?
If you don't hold Disney stock (I don't), or don't feel any nostalgia for Disney films or parks, you may think all of this has nothing to do with you.
Disney's current plight is a wakeup call: cultural flexibility seems to be replacing old fashioned rigidity, faster than ever. In our view, readers should recognize that it might be time to shed their shyness, hesitancy, or their outdated notions, to embrace opportunity.
Here’s what I mean.
I stumbled on something else that I thought was kinda profound while researching this piece:
Walt Disney himself was the 1920s version of the innovative, entrepreneurial, creative spirits swirling around Instagram, TikTok and YouTube these days.
Disney started his career by messing around with then-new tools like cut out animation, at home. That’s not a million miles away from today's digital creators, messing around with Midjourney and Blender and sharing their creative vision with the world.
Today, nothing —not even the lack of training or talent— stands in the way of creators, except for self-belief.
As I’ve previously written, if you’ve ever had any hint of a creative impulse, there has literally never been a better time in human history for you to act on it than right now.
This century’s Walt Disney might even be reading this note.
Is it you?
Disney’s future is a hot topic among Hollywood’s elite »»
It’s not all magic in Disney’s kingdom »»
Everyone has an idea for how to fix Disney. Does Bob Iger? »»
Disney got The Simpsons and Avatar. But some now see the Fox deal as a mistake (from February 2023) »»
Written by Jon Kallus. Any feedback? Simply reply.