Disney is a Tech Company?

August 14, 2024·36 min·2 clips

Bob Iger realized Disney had been 'selling nuclear weapons technology' to Netflix by licensing its movies and Marvel shows — building the very competitor that would threaten Disney's existence.

1. Land of the Giants examines the final chapter of Disney's streaming transformation, asking how a 100-year-old media company competed with tech giants by trying to become one. 2. Host Joe Adalian is joined by former ESPN president Jon Skipper, analyst Matthew Ball (former head of strategy at Amazon Studios), Wall Street Journal editor Ben Fritz, B of A analyst Jessica Reeve-Ehrlich, writer Alana Pena, and former HBO CEO Richard Plepler. 3. The episode's core thesis is that Disney's delay in launching streaming was rational given its financial structure, but that rationality helped build its competition. 4. In 2012, Jon Skipper became ESPN president just as the number of pay-TV subscribers declined for the first time — still enormous but no longer growing — and was now in the room hearing Disney leadership discuss the threat. 5. HBO's experience in 2014, when Game of Thrones' season four finale crashed HBO Go, convinced HBO CEO Richard Plepler that streaming demand was real and led to HBO hiring BAM Tech (a Major League Baseball streaming company) to build HBO Now. 6. Bob Iger called Plepler in 2015 while on the way to the airport to ask about the BAM Tech partnership, signaling Disney was watching streaming technology closely. 7. Disney initially struck a $300 million-a-year licensing deal with Netflix in 2012 for Disney movies and eventually licensed Marvel originals including Daredevil, Jessica Jones, and Luke Cage. 8. Jon Skipper explains Disney kept feeding Netflix because Wall Street required earnings growth, and taking Netflix's money was more rational than missing quarterly targets for several years while investing in an unproven streaming platform. 9. Bob Iger later said Disney had been 'selling nuclear weapons technology to a third world country' — a private acknowledgment that licensing Disney's IP to Netflix had helped build the competition's platform and subscriber base. 10. Matthew Ball says between 2012 and 2015, U.S. internet speeds more than doubled, Roku and Apple TV devices took off, and Netflix began producing original prestige content like House of Cards and Orange is the New Black, rapidly accelerating the cable decline. 11. Disney bought BAM Tech in stages, ultimately paying more than $3.5 billion for the company, and in August 2017 Iger announced Disney Plus would launch in 2019 and Disney would terminate its Netflix distribution agreement. 12. Disney Plus launched in November 2019 and reached 70 million subscribers within one year, far exceeding Netflix founder Reed Hastings's prediction that the probability of hitting 60 million in four years would be 'zero.' 13. However, Disney Plus did not enter a two-way battle with Netflix — it launched within weeks of Apple TV Plus and was followed within months by Quibi, HBO Max, and Peacock, making the streaming wars a multi-front conflict that drove up churn and content spend for everyone. 14. In 2022, Netflix reported its first subscriber decline in over a decade, losing more than $50 billion in market value and triggering a shift in what Wall Street demanded: profits, not just growth. 15. Disney responded by purging dozens of original shows from Disney Plus and Hulu for tax write-offs, including writer Alana Pena's two-season show Diary of a Future President, which was erased from the platform with no public trace. 16. Disney ultimately cut back on new show commissions and conducted substantial layoffs, acknowledging that it could not out-spend tech companies like Apple and Amazon for whom streaming is a side business. 17. The episode has a documentary-style narrative format with extensive archival audio from Bob Iger, earnings calls, and TV clips woven into the analysis; the pacing is brisk and the production is high. 18. The storytelling uses strong structural metaphors — the Wile E. Coyote cliff, the nuclear weapons analogy, the streaming wars military framing — that make abstract financial dynamics vivid. 19. Business, media, and tech professionals interested in platform strategy, streaming economics, or corporate decision-making under disruption will find this episode directly relevant. 20. Listeners wanting current news or looking for a shorter episode will find this a 36-minute deep narrative requiring some existing knowledge of the streaming landscape.

As heard by us

A sharp account of how Disney's licensing choices helped build the rival that later boxed it in.

This episode looks at Disney's streaming story less like a media saga and more like a business decision with a long shadow. It makes the case that licensing helped Netflix grow, and that the lure of near-term earnings made the choice easy to defend at the time.

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Why you'd press play

When Disney fed Netflix, it was also teaching the future to bite back.

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