1. Iger Wins The Mouse Wars

Team Iger won what is expected to be the most expensive proxy fight ever, cruising to victory over Team Peltz with the help of retail investors who gave him a whopping 75 percent of their votes. 

That is the headline, anyway.

The back story though, is that Peltz and his crew of activist investors may have actually accomplished what they initially set out to do, which was to force Iger and the rest of Disney’s management to think long and hard about the future and what it was actually going to look like.

And that whatever they decide is likely going to have a major ripple effect throughout the industry, especially in terms of how the Old Guard of major media companies approaches the next decade.

Why It Matters

If that sounds hella portentous, it’s because it is. 

We are still at the early stages of the digital revolution and in many ways the media companies are buggy makers trying to get into automobiles.

They are not alone in this.

Actual automobile makers—Ford, GM and whatever Chrysler is called these days—face a similar dilemma. In their case, it is how to move to electric vehicles without gutting the significant profits they make from gas-powered vehicles. Especially when there are companies out there like Tesla and all those Chinese start-ups who don’t have that particular albatross around their necks.

Which is sort of where the media companies are at too.

Iger, for instance, needs to figure out how to keep the ESPN cash cow going while simultaneously standing up ESPN+. At a time when all Reed Hastings has to do is strike a deal with the NBA—even one much smaller than anything ESPN has going—to be considered a hero.

This is a hard truth that the television industry, drunk on decades of affiliate fee billions, has never fully come to terms with.

That there are actually zero instances of companies whose legacy businesses were disrupted by technology who then managed to reinvent themselves while remaining as powerful, dominant and profitable as they once were.

Which is not to say reinvention is impossible. Kodak, once a giant in the days of film photography, has staged a comeback of sorts by focusing on digital printing and imaging. IBM has switched to infrastructure and services. Nokia is a leader in 5G technology.

But none of those companies are anywhere near close to where they were in their heydays.

Iger has made some smart, if somewhat obvious moves, which hew to the old retail adage that there are only three things you can sell on: Price, Selection and Service.

So Disney is now focusing on quality over quantity in terms of its output (Service). It’s adding ESPN into the Disney+ bundle that also includes Hulu (Price). And it’s creating new and unique offerings at its theme parks (Selection).

Will all this be enough to keep the wolf from their door?

It’s hard to say.

They are up against Netflix, for sure, but Netflix is a unicorn of sorts—not the Silicon Valley kind, but a company that does not fit any pre-existing mold that should not, by any form of conventional wisdom, have actually succeeded.

But sometimes the Albanian Army wins.

The real challenge though is not from Netflix, but rather from Amazon, Google and Apple. All of whom have untold billions, massive global reach and the ability to regard entertainment as a hobby business, one that props up their (much larger) ad business.

And who, like Netflix, are building their streaming entertainment businesses first, with all the advantages that conveys over the buggy makers.

So there’s that too.

What You Need To Do About It

If you are Disney, you need to look at what you are good at and what there will be demand for in the years to come.

That’s why divisions like your theme parks and your movie studio are in a good place. No one is disrupting theme parks or movie studios. Well, at least not yet. Sora may have something to say about that in the years to come.

Quality is also a good move. Which means opening yourself up to the idea of new IP, new creators and new genres. Take The Bear, for example. Even if it’s not really a comedy.

(I have a whole theory on how the growth of “peak TV” gave rise to the whole comic book/blockbuster movie thing—something about underserved audiences—but more on that another time.)

If you are one of the other major media companies, look at what Disney is doing and learn, but remember just how massive that theme parks division is, not to mention all the retail stores and licensing deals, and how that all allows them to do the things you can’t.

If you’re the industry, continue on your path to accepting that the money-printing days of the 90s, 00s and 10s are over and they’re not coming back. That you can be profitable and happy and doing good work. You just won’t be anywhere near as profitable and prominent as you were in the years of Pax Hollywoodiana.

2. The NBA Lends A Shoulder To Roku

Talk of sports on the FASTs is all the rage these days—I am guilty of it myself—so there was a collective “A-Ha!” when The Roku Channel, a FAST service, and not an actual channel as the name implies, announced that it had struck a deal with the NBA to stand up a bunch of what is known as “shoulder content” in an exclusive NBA FAST channel. 

The channel will, as per the press release, “feature classic games, highlights, recaps, documentaries, original series, studio shows, and interviews, among other additional content.”

So everything but the actual burger.

Why It Matters

Shoulder content is a smart move for both the leagues and the FAST services. It gives the leagues a very monetizable place to put all that shoulder content, which also allows them to promote merchandise, tickets and eyeballs for the games themselves.

For Roku, it gives them a high profile channel filled with brand-safe ad slots that they can sell at a premium to advertisers. It also allows them to promote their entire FAST service—original series in particular— to sports fans who will, most likely, remain on the platform longer.

More than that, the shoulder content doesn’t have the feel of “reruns” that much of what is still on the FASTs does. It’s also cheap, quick and easy to produce—it’s mostly just editing—and hardcore sports fans can’t get enough of their favorite teams and players.

Now granted, the NBA is a big league—there will be much less of a market for, say, lacrosse shoulder content, but those smaller fan bases still exist and they are loyal and fit easily into the “niche content with strong fan base” buckets that are rightly becoming the star utility players of the FAST world.

(Always good when you can close off a sports story with a sports metaphor.)

What You Need To Do About It

If you are one of the other FAST services, you need to try and strike your own sports shoulder content deals. An exclusive one if possible. 

These will become as big a deal amongst FASTs as the rights to the actual games are amongst SVODs. 

Sports fans are loyal, often hard to reach and are happy to promote your programming, unprompted. What’s more they’ll give you mad love for allowing them to see it all for free, with minimal commercial interruptions.

Advertisers love it too—it feels more premium than reruns of 80s sitcoms, it’s a lot more targetable as a direct buy and it’s a great way to extend your reach to the people who will actually tune in to the live game.

Finally, if you are my old buddy Joe Franzetta, who is now Head of Sports at Roku—well done. This is the sort of high profile deal that will help you attract other sports properties.

But you already knew that.

Kudos.