Disney's Epic Ambitions
After reporting great earnings yesterday, Disney came out swinging with a series of rapid-fire, large announcements:
Robert A. Iger has insisted for months that his turnaround plan for Disney was working. But distinct proof has been elusive, and investors, as evidenced by the company’s underperforming stock price and multiple proxy campaigns by activists for board seats, have been hesitant to buy in.
On Wednesday, Mr. Iger delivered financial proof — along with a flurry of announcements about future entertainment offerings, including a “Moana” sequel, the arrival of Taylor Swift’s concert movie on Disney+, a partnership with Epic Games to create a Disney universe connected to Fortnite, and the 2025 rollout of a flagship ESPN streaming service that includes the sports giant’s primary programming.
We've already discussed the ESPN streaming service, which seems like an awfully long time to wait to launch a new streaming service – unless you have another new sports streaming service up your sleeve to unveil. Which is apparently what Disney is going to do this fall. With all due respect to Taylor Swift and Moana, two of my oldest daughter's favorite things, the real story here is the Epic investment.
First and foremost, it's a massive investment by Disney – $1.5B, which Iger noted was their “biggest entry ever into the world of games and offers significant opportunities for growth and expansion.” Disney does not have a great history with gaming. Which is odd given what they do and what IP they do it with. So now they're clearly just full-on outsourcing it to the makers of perhaps the most popular game, one they've partnered with in the past.
As the teaser trailer released by both companies would seem to make clear: this is going to be Fortnite, just with Disney characters. I mean, it will probably be less of a shooter, you have to assume – this is Disney, after all. But it will be something that looks a lot like Fortnite. Again, just with Disney IP. Several different "worlds" to explore – Frozen, Marvel, Tomorrowland, Cinderella's Castle, what I assume is Main Street USA, etc. This all seems to make sense as this is how Disney's own theme parks are constituted. So it all feels like it will be that experience, just with some sort of gameplay element.
My real question though: everyone knows that Disney is very close with Apple. They've long traded board members and stage presence at each others' events. At one point Steve Jobs, and later Laurene Powell Jobs, was the largest individual Disney shareholder. We all know Apple is apparently having a hard time convincing a bunch of the large media players to sign up to make apps for the Vision Pro. But you know who is there on day one? Disney. Anyway, that clearly special relationship is interesting in the context of this new Disney partnership. You know who doesn't have a special relationship with Apple? Epic. Well, to be fair, they do have a special relationship. It's just the litigious kind.
Is it crazy to think that Bob Iger can be a sort of mediator here between the two sides? I mean, probably. But again, it is a very big deal for Disney. Presumably, they're going to want to see the output of that partnership on Apple devices. A Bob bridge may have to connect the two Tim towns.
Aside: kudos to Trian Fund Management for this statement:
Trian brushed aside Disney’s strong quarterly numbers and many announcements. “It’s déjà vu all over again,” a Trian spokesman said, apparently referring to February 2023, when Disney unveiled its turnaround effort. “We saw this movie last year and we didn’t like the ending.”
A sports reference for ESPN and a Taylor Swift lyric. Nice.
Update 2/19: Some updated thoughts with Epic saying they'll work with Apple to launch their own app store in the EU...
M.G. Siegler