Good morning,

The Medium identifies a few key trends each fiscal quarter that reveal the most important tensions and seismic shifts in the media marketplace. The key trends help you answer a simple question: "What's next for media, and where's it all going? How are the pieces lining up for business models to evolve, succeed, or fail?"

Read the three key trends The Medium will be focused on in Q3 2023. This essay focuses on "Legacy media companies are throwing in the towel on their bets to own the consumer relationship in streaming and beyond."

I had the opportunity to contribute to a smart and thorough breakdown by Deadline’s Katie Campione on the issue of transparency in the Hollywood strikes. I highly recommend reading both the article and the comments from strikers beneath it.

Former CEO Bob Iger wrote in his autobiography “The Ride of A Lifetime” that he believed Disney would not have been able to pivot to streaming and survive the acceleration of cord-cutting trends without a realignment of managerial incentives. Because that pivot to Disney+ required them to focus on the “new thing” instead of the businesses at which they had been successful, to date. The pivot also required “the purposeful erosion and disruption of their businesses”, and the incentives offered needed to match the assumption of that risk.

To get the sign-off of Disney’s Board of Directors on these incentives, he challenged the Board with Clayton Christensen’s innovator’s dilemma, framing Disney as an incumbent that would “spend capital to generate long-term growth or adapt to change”: 

“It’s your choice," I said. "Do you want to fall prey to the innovator's dilemma or do you want to fight it?”

The fairy tale Disney-esque ending to his first tenure as CEO was the board and his management team were heroes, having successfully applied the lessons of Christensen’s research under Iger’s leadership. Six years later — and $4 billion in streaming losses in 2022, alone — the story no longer holds up. Having watched the departure and re-hiring of Iger as CEO over the past three years, and a multiple re-organizations, it is even harder to believe that the interests of managers across the divisions of Disney’s ecosystem were successfully re-aligned.

Disney is one key player in the ongoing “game of chicken” between the Alliance of Motion Picture and Television Producers (AMPTP) and its striking counterparts — The Screen Actors Guild - American Federation of Television and Radio Artists (SAG-AFTRA) and the Writers Guild of America (WGA). That means, if the stakeholders in Disney’s ecosystem are misaligned, and the strikes reflect a misalignment between Disney and creative talent, how badly misaligned are the incentives of stakeholders across the entire media ecosystem? 

Key Takeaway

I wonder whether what I perceive as "quitting" is more a reflection of media ecosystems — both within companies and more broadly — being too complex for management to navigate disruption. 

Total words: 1,300

Total time reading: 5 minutes