The Medium
Disney's Direct-to-Consumer Future Is Now Overcomplicated
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This has been quite the 72-hour news cycle for Disney. On Tuesday it announced a joint venture with Warner Bros. Discovery and Fox Inc. for a streaming platform that bundles their sports broadcast channels. Then, yesterday a quarterly earnings call with a “kitchen sink” of announcements that included a $1.5 billion investment in Epic Games and Taylor Swift’s movie “The Eras Tour” coming exclusively to Disney+ (with four extra song performances, no less).
The strategy seemed to be throwing everything possible at preventing Nelson Peltz from winning a seat or two on the Disney board. The call played out like Oprah Winfrey’s famous “You get a car! You get a car! You get a car!” moment but tailored to wary Disney shareholders.
Wall Street responded positively, with the stock price up over 10% since yesterday. Peltz’s firm Trian Fund Management responded with a statement quoting Yankees legend and famous wordsmith Yogi Berra: “It’s deja vu all over again” and added “We saw this movie last year, and we didn’t like the ending.” (NOTE: I used Yogi Berra quotes last March in my Medium Shift column “Disney’s Hulu Deal Ain’t Over Till It’s Over”). Meaning, Iger made promises to shareholders last November in his surprise return. After an initial bump, the stock price dropped below $80.
The question is, with all this newfound enthusiasm from shareholders, why be skeptical about Disney’s future? There are two answers based on recent essays from The Medium:
- Streaming models should be market-making, first, and content distribution models, second; and.
- Disney continues to rely upon third parties to own the customer relationships in its direct-to-consumer businesses.
Key Takeaway
To save itself from Nelson Peltz and other activists, Disney appears to have overcomplicated the foundation of its pivot to a direct-to-consumer future. In trying to pivot to a DTC business that should owns its customers, Disney seems to risk losing valuable customers and ceding its relationships with next generations to third parties.
Total words: 1,900
Total time reading: 7 minutes
Streaming models should be market-making, first
There is a simple question to apply to Disney’s swath of announcements: Is Disney connecting supply and demand to its content as Netflix does with personalization algorithms? Or as it does to theme parks and cruises in its Experiences business?
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