Spielberg: The Handler.
The Financial Times unloads a pretty hefty bombshell about Disney's new strategy to stay alive in a tidy little article complete with gorgeous sound bytes from Bob Iger, CEO of Disney. (And for the record: let me just say up front that anyone who was pushing for David Lynch's Twin Peaks to be on television is a visionary, and should be lauded as such.)
Here are the three quotes:
1.
The Warning. We're not doing to well here, said Mr. Obvious."The business model that underpins the movie business is changing. If we don’t adapt to the change there won’t be a business."
2.
The Goal. Stop the bleeding. On realigining costs associated with marketing and producing movies: "The solution required research and development, risk-taking . . . real focus on changing the status quo."
3.
The Methodology. Eliminate risk by closing down ancillary streams of business activity.On the new distribution deal with DreamWorks: "It creates a business out of distributing movies made by other talented people, without committing our own capital."
I titled each quote, because I think it tells a very interesting and sort of scary story about the near future of the entertainment industry.
It also signals a *huge* opportunity to those with the capital, time, and stomach for a bit of risk to make a major move in shaping the future model of this business.
The Bad News.What Iger seems to be saying here is that:
1. Since the entire business model that has supported Hollywood's massive infrastructure for decades is disappearing, and
2. They can no longer control the flow of the distribution to maximize their profits,
3. They're just going to close most of the spigots, and selectively work with the "best" producer of content while
4. Developing technology that enables them to retain a choke-hold on the distribution of said content.
Why This Won't Work.One simple and recent illustration of this strategy failing is Pixar's rise to the top of the heap by changing the game on Disney. And when Disney no longer had the biggest box office gross for animated films? They had to buy Pixar.
Now, you could say that Pixar's now under the thumb of Disney. But that's not the case as you can read about
here. Pixar retains most, if not all of the freedoms it enjoyed as an independent animation studio. Except now it has Disney's deeper pockets.
My take is that by doing a deal with DreamWorks, Disney wins in the short term. Using them as the primary means of content creation definitely offsets a lot of overhead for Disney in terms of reduction of production costs.
But DreamWorks is one entity. It has a limited range in terms of its ability to produce content. But even DreamWorks (or Pixar)--whose brilliance has been proven over and over again--cannot be relied on solely to continue to create revenue for Disney.
Why? Because people like variety. And they'll look for it elsewhere.
So by circling the wagons--which seems to be the way all big corporations deal with threats to their market dominance--Iger may actually be creating a greater threat to the continuance of Disney in the entertainment industry.
The Opportunity. It's certainly not easy to bring together the gaggle of folks necessary to even produce a quality piece of entertainment content. Not at all. And to produce one that's actually successful? Well, that's a whole different ball game.
But what the big boys are doing now to limit their exposure--because of their concern for their board members and shareholders--is creating a huge portal of opportunity which some lucky stiffs are going to waltz right through, and set themselves up as big players in Hollywood--whatever that will mean in the coming years.
If their goals are not to be bought by Disney or DreamWorks--as I suspect Pixar's never really were--then they'll do just fine by focusing on creating great entertainment that people want to watch.
