It was announced back in December of 2017 that Disney had begun negotiations to acquire 20th Century Fox. This was exciting news for me, mainly because I’m a Marvel fan and this meant that the X-men would be coming home to Marvel and we would finally (hopefully) get to see Magneto tee-off against Iron-Man (because honestly, who wouldn’t love to see that). Unfortunately, I was surprised to see that so many of my fanboy colleagues were not quite as excited as I was.
My colleagues feared that Disney acquiring the “darker” half of Marvel would mean that we would no longer get R-rated versions of Marvel properties like Logan or Deadpool. I tried to assure them that Fox would remain it’s own entity and it was good news because this meant that Fox would be sure to stay in business. Disney owning Fox was good news because it meant that in the face of mass media conglomeration and technological forces like Netflix and Amazon, Disney was beefing itself up in order to compete. I actually wrote a lengthy article about it here.
Yet, in turning to the blogosphere, I sensed much the same trepidation from journalists, bloggers, commentators, talking heads, and so-called “professionals” as I did from my leigh friends. My initial reaction was to assume that most people must just not know how business works. Or possibly they don’t understand the looming threat of Netflix or Amazon or just streaming in general.
Then today I opened up my daily NYT Dealbook Briefing and after scrolling through a bit I saw this:
What people don’t seem to understand is that not so long ago, Disney very easily could have gone bankrupt. Their turnaround is a success that should be cheered, not a corporate takeover to be scorned. How quickly people forget.
“Their turnaround is a success that should be cheered, not a corporate takeover to be scorned.”
Flashback to 2007, Disney was in a position of speculatively selling off some of it’s assets. Amusement park numbers were down, they had literally a decade of lukewarm box office returns, and Disney Animation studios was in talks of being shutdown.
In 2006, Disney purchased Pixar studios. Pixar was coming off a string of huge hits with Toy Story, Monster’s, Inc., and The Incredibles. Execs figured they didn’t need two animation studios, so they planned on shuttering Disney Animation Studios. But Ed Catmull and John Lasseter, not wanting Walt’s legacy to die, set on task to bring Disney Animation back from the dead. I’m assuming you know the rest; Wreck-it Ralph, Frozen, Zootopia, Moana, etc.
At the same time, the newly acquired Marvel Studios set out to essentially launch an entirely new studio using Marvel’s class-B characters. Facing bankruptcy, Marvel sold off rights to their best characters like X-men, Fantastic Four, and Spider-man. We all know the story, it was a huge gamble that remarkably paid off. (Infinity War made over $2 billion worldwide.)
Similarly, knowing that people craved spectacle, Disney acquired Lucasfilm. People tend to think that relaunching Star Wars was a shoo-in, but that’s not necessarily the case. The Force Awakens was a critical and commercial success, but if you look at Rogue One, The Last Jedi, and Solo; while they may have had commercial success, were largely scorned by critics. As it turns out, trying to please hardcore fans is a lot easier said than done.
Lastly, and most importantly, consumer choice has exploded over the last few years. People are now able to watch what they want, when they want, and how they want. Studios are no longer competing against each other (if they ever were); they are now competing against new technologies and new business models. The average consumer sees approximatley four movies a year (which is predicted to be about 246 million theater goers or 1.32 billion tickets sold as of 2018). Compare that to Netflix who has 139 million subscribers, each paying $12 a month. And that doesn’t even include Hulu or Amazon, or people who only watch TV and don’t see movies at all.
The point is that media conglomeration is an inevitability. Just look at the stats on media M&A currently and you’ll see my point. Disney is working to save the theater-going experience, not kill it like so many people seem to think. And to be clear, I love Netflix, I love Amazon, I love YouTube, and I love all the choice we have these days. Frankly, I think the competition is making movies better and better. This a good thing for movie lovers. I just wish more people realized it.