In Q1 2023, PARQOR will be focusing on four trends. This essay focuses on two trends, "Media companies have millions of consumer credit cards on file. What happens next?" and "The definition of scarcity is continuously evolving away from linear. What happens next?”
Bloomberg reported on Friday that Disney is “exploring more licensing of its films and television series to rival media outlets as pressure grows to curb the losses in its streaming TV business”. Disney's entire streaming bet was based on keeping its entire library behind a walled garden and pivoting to Netflix’s distribution model.
Disney now joins its more risk-averse legacy media competition like Warner Bros. Discovery and Paramount that have given up on the value proposition of exclusive walled gardens in streaming. The market has regarded Disney as Netflix’s direct competitor, to date, because both were focused on growing their subscription models, and both treated licensing revenues as either an experiment (Netflix) or necessary for dealmaking (Disney). Disney was so deep into its bet on subscriptions that as of last Fall it was selling investors and D23 fan conference attendees on a “Disney Prime” offering of perks associated with Disney+ that would mirror Amazon Prime membership.
All of that seems either off the table or less of a priority, or perhaps even both.
The significance of this decision may be best understood via something said by Amazon founder Jeff Bezos which popped into my Twitter feed this week. In the video he describes how he built Amazon around the answers to the most important question no one asks, "What’s not going to change in the next 10 years?"
Disney has just told the marketplace that, contrary to what Disney CEO Robert Iger wrote in his autobiography “The Ride of A Lifetime”, its future does *not* lie in owning direct-to-consumer (DTC) relationships over the next 10 years and beyond. We have much more certainty that legacy media will not solve for owning the DTC relationship over the next 10 years, and two of PARQOR’s four key trends for Q1 2023 offers some insights into Disney's challenges, in particular.
Disney's pivot into licensing distribution suggests its future is similar to its smaller competitors, and with real challenges from Smart TV.
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Total time reading: 4 minutes
Disney’s rationale for pivoting into licensing is that it generates cash flow and that is what investors want to see. The implication is that streaming generates insufficient cash flow, something we already ...