(Welcome to the “Most Important Story of the Week”, my bi-weekly strategy column analyzing the most important (but often not buzziest) news story of the last two weeks. I’m the Entertainment Strategy Guy, a former streaming executive who now analyzes business strategy in the entertainment industry. Please subscribe.)
I hope everyone is ready for a somewhat quiet end of December and holiday season in America and Europe. I wish all my readers a pleasant vacation and break.
Hopefully, the news will be light, right? Right!?!?!?!
I say that because some big news stories broke during winter vacation last year, so nothing is guaranteed to be quiet around these parts. The Warner Bros. Discovery sale alone has enough twists and turns to make my headphone cords look untangled. And in just the last few days, we had news on TikTok’s new ownership group and the Oscars moving to YouTube. Plus, the content firehose never slows for someone who needs to write about ratings and viewership every week.
I’ll be taking a break for the holidays, but I’m going to send a few articles to your inbox. We’ll have another Streaming Ratings Report for the weeks of 10-Nov and 17-Nov next week, then I have a fun article on another media trend I’ve noticed and been researching for over a year. And maybe more.
So, in this last official “most important story of the week” column, I’ll touch on some of the big news from the last two weeks or so. I’ll look at Facebook ending the Metaverse, begrudgingly touch on the latest Netflix buying Warner Bros. news, and more.
Let’s start, though, with the Disney AI deal that had town talking.
Most Important Story of the Week – Disney’s Big AI Deal
Starting in 2006, Disney bought Pixar, followed by Marvel and Lucasfilm. Those three deals should go down as three of the smartest acquisitions in Hollywood history, powering Disney to box office heights Hollywood has almost never seen before.
Back in 2007 and 2014, Disney also bought Club Penguin and Maker Studios. Those two deals could go down as two of the worst deals of the 2010s, as Disney shut down or wrote off both deals.
So…is Disney good or bad at mergers and acquisitions and investments? Tough to say!
I bring this up because, when it was announced that Disney invested $1 billion in OpenAI as part of a larger licensing deal, nearly every article I read referenced their $1.5 billion deal with Epic Games from 2024, which apparently folks now consider a success. (Honestly, I don’t know if it’s a good deal since it’s not like we know what Disney’s share is worth in that privately held company.)
But the past isn’t prologue, nor is past performance indicative of future returns. So one example of a good deal or a few examples of bad deals don’t necessarily mean Disney’s investment in OpenAI will succeed or fail.
That said…
When it comes to Disney’s tech investments or acquisitions, they have a pretty grim history. I had put this thought out on social media, and a few readers gave me additional suggestions:
- Disney bought Club Penguin (specifically New Horizon Interactive) in 2007 for $350 million.
- Disney bought Playdom in 2010 for $563 million.
- Disney bought Maker Studios in 2014 for $500 million.
- Disney invested in VICE Media in 2015 for $400 million.
- Disney invested in Fusion Media in 2016.
- And lately, Disney has done not one but two gambling deals that failed.
(And many, many, many more smaller deals for undisclosed prices.)
Listen, I don’t hate a lot of those acquisitions, especially the interactive ones. Disney saw a need to gain a foothold in the interactive space. Strategically, that makes sense.
But clearly something went wrong. In some cases, Disney bought overvalued properties (like Maker Studios) that turned out not to be the future. (Arguably, Disney was ten years too early to the YouTube party.) In other cases, Disney underestimated the role of platforms in dominating their ecosystems, like with Playdom and again, Maker Studios. There was also likely some execution issue, especially with someone like Club Penguin, Fanlib and Fusion Media.
Of course, Disney may also have just gotten their strategic predictions wrong. A new technology they thought would represent the future…didn’t.
When it comes to big Disney investments, though, one deal worries me most, an investment in the “future” but a future that never came to pass.
By The Way…the Metaverse Died
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