Last week, sports journalists Andrew Marchand and John Ourand discussed the impact of sports betting on sports media (~9:30 in) on their new NY Post podcast Marchand & Ourand.
They argued Disney and ESPN notably do not want to build a sports betting ecosystem around ESPN+. Disney is actively avoiding content and outcomes that are too "edgy" for both the ESPN and Disney brands, and sports betting requires "edgy" content and outcomes.
On Monday, Disney CEO Bob Chapek sent out a memo that went out to all Disney staff outlining three pillars for the future of Disney, the third of which was "relentless focus on our audience":
We are a big company with many constituents and stakeholders, all of whom have a place in our decision-making. But at the end of the day, our most important guide—our North Star—is the consumer. Right now, their behavior tells us and our industry that the way they want to experience entertainment is changing—and changing fast thanks to technology and the pandemic. We must evolve with our audience, not work against them. And so we will put them at the center of every decision we make.
On its face, the statement seems obvious: technology is disrupting Disney's model and it needs to adapt. That is in keeping with the story Disney has told since it launched Disney+, and a key theme of former CEO Robert Iger's autobiography, The Ride of a Lifetime.
I wrote about this in Robert Iger, Mark Zuckerberg & Vision, where I included Iger's story of holding the video iPod for the first time:
You can't tell anyone about this," [Steve Jobs] said. "But what you're talking about with television shows--that's exactly what we’ve been imagining." He slowly withdrew a device from his pocket. At first glance it looked just like the iPod I'd been using."This is our new video iPod," he said. It had a screen the size of a couple of postage stamps, but he was talking about it like it was an IMAX theater. '"This is going to allow people to watch video on our iPods, not just listen to music," he said. "If we bring this product to market, will you put your television shows on it?"
I said yes right away.
Any product demo by Steve was powerful, but this was a personal demonstration. I could feel his enthusiasm as I stared at the device, and I had a profound sense of holding the future in my hand. There could be complications if we put our shows on his platform, but in the moment I knew instinctively that it was the right decision.
It was an "aha!" moment, one where Iger realized that Disney's future faced "complications" from a new technology but was also a distribution channel that Disney content needed to be on.
Sports betting also is a new technology that creates "complications" for Disney's future. But, it is also a growing trend amongst younger demographics:
More than 60% of current sports gamblers are ages 40 or younger — 46% are millennials, while 15% are Gen Z adults, according to preliminary findings of an online consumer survey by Kagan, a media research group within S&P Global Market Intelligence.
The open question is whether Disney's brand and ESPN's brand need to be invested in sports betting given the different, if not higher risks, for those complications.
Chapek's statements to investors and the public reflect an ongoing openness to navigating those complications, and the language and logic of this third pillar suggest that if sports betting is what younger audiences want, then Disney and the ESPN brand must evolve with that demand.
The PARQOR Hypothesis sheds a different light on the "complications" posed by sports betting. Whoever Disney ends up partnering with on sports betting will have an ecosystem whose strengths and weaknesses also will be reflected in the PARQOR Hypothesis.
In other words, in order to capture sports betting consumers, Disney must figure out if and how its ecosystem will map to a sports betting ecosystem.
That outcome will require Disney and the sports betting company to share the sports betting consumer, and at risk to both their evolving DTC and broader business models.
Moreover, that outcome will dilute Disney's attempts at a "relentless focus" on this next generation of consumer, and will position Disney's PARQOR Hypothesis advantages over the rest of the media marketplace at risk.
As longtime readers may recall,IAC's August 2020 letter to shareholdersabout its investment in MGM Resorts inspired the PARQOR Hypothesis. It lays outa checklist of five attributes for why Disney has advantages over pure-play streaming companies in the ...