Well Played Disney: 4 Steps to the Future to TV

I think it’s worth taking a moment to acknowledge the strategic brilliance of Bob Iger and Kevin Mayer recognize how well they played their cards over the last 36 months. 36 months ago, ABC was the clear #4 network, ESPN numbers were starting to fall across the board, and its tech endeavors were most notable for spectacular misses (Club Penguin, Playdom…). Fast forward to today, and they are in better position than anyone, Netflix, Facebook, and Amazon included, for the next 10 years.

How did it happen?

Step One: Shore up the technical foundation with MLBAM

Disney’s purchase of MLBAM gave it the technical footing to take control of their own destiny in direct to consumer, live and on-demand, ad-supported and subscription video. It also strengthened its connection to the major sports leagues which will put ESPN into a much stronger position in the next round of contract talks with each of the leagues which will be the critical infliction point of the next 10 years of live TV. Wasting little time, ESPN quickly capitalized on the MLBAM acquisition with the launch of ESPN+ and the coming launch of Disney+ built on MLBAM infrastructure.

Step Two: Shore up TV talent (and reduce competition along the way) by buying key parts of 21CF

For as much success Disney has had in movies, it’s TV studios and networks were a mess. In acquiring (portions of) 21CF including Fox Studios (TV and movies), FX, Nat Geo Disney critically also acquired and immediately installed top Fox talent (Peter Rice, Dana Walden, John Landgraf among others). And in closing the acquisition of 21CF assets, it also set itself up to….

Step Three: Take control of Hulu

Disney acted quickly to resolve what would have been an untenable situation with NBC in jointly operating Hulu, with Disney controlling the Board and took full control of Hulu. Short of buying Netflix, Hulu is the single smartest acquisition Disney could have made. In Hulu, Disney gets deep expertise in running scale subscription businesses and digital TV advertising product and sales that will be critical to the operation of all three of their subscription products (ESPN+, Disney+, and Hulu).  Additionally, the Hulu acquisition also adds to its tech, product, and content talent rosters and an instant infusion of 28M paying customers to market EPSN+ and Disney+ to.

Step Four: Watch competitors flail

While the first three steps were great strategy in action, this step is where they caught a bunch of good breaks. CBS/Viacom continued its “lost years” plagued by infighting and scandal – a real dumpster fire. NBC, losing out on 21CF and Hulu, is stalled. ATT continues to shuffle leadership deck chairs of Time Warner assets and Game of Thrones is over. The tech giants that everyone feared haven’t materialized - Facebook’s leadership can’t get out of its own way and is thoroughly distracted, Amazon itself weathered scandal in its content group and can’t seem to pull together its impressive stable of assets (FireTV, Prime Video, Prime Music, Twitch), and Apple, well, it’s not clear what customer Apple is trying to get or if they are really in the game for the long haul. It’s often said, you don’t have to be good if you are lucky, over the last 36 months, Disney has been both good and lucky.  

Today

So here were are 36 months later and Disney is poised to have 3 direct to consumer video products (ESPN+, Disney+, and Hulu) each with a clear audiences and value propositions (sports, kids and family, and teen/adult TV) allowing it to transition to the future of TV much much more gracefully than I think anyone would have thought 3 years ago. The present challenge for Iger and Mayer is going to get these acquisitions to become outstanding cast members and team players. If they can do that (easier said than done), the future is bright.