The media and entertainment
landscape is one characterized by disruption
and innovation
with the evolution of technology a critical factor.
One of the boldest change makers
in that industry or any industry is Bob Iger.
As the CEO of Walt Disney Company,
he led the industry transforming acquisitions of Pixar
Marvel Entertainment, Lucasfilm
and 21st Century Fox,
while also driving Disney's push into streaming services.
Altogether, he more than quadrupled
Disney's net income during his 15 years as CEO.
Since leaving the company,
he has continued to focus on technology and innovation,
supporting entrepreneurs
as an advisor
and investing in companies
that are making a name for themselves on a global stage.
I'm delighted
he can join us today to share his experiences
I'd like to start with a broad question.
You had a chapter in your book Innovate or Die.
In larger organizations,
how do you maintain the entrepreneurialism
and stop it being broken by bureaucratic process?
It's hard.
First of all, in large organizations
that have been around for a while.
You discover pretty quickly
that everything is designed to protect incumbency,
to essentially keep things as they are
particularly in businesses that have been successful.
You know, let's not change it.
But I think what you forget
is that the world, our world, is changing
at a more rapid rate than we've ever experienced.
I think that's probably been true for generations
and in very significant ways.
And so protecting incumbency or the status quo
ultimately catches up to you.
It becomes a mistake, but it's a very hard habit to break.
I found
the best way to do it,
the best way to essentially swim against that tide
was, first of all,
it takes strong leadership
as a leader,
you have to be resolute in your desire to innovate
and to change and to keep pace with change.
To do so,
you have to be very clear in your thinking,
meaning declare
what direction you believe the company should go.
You should be very clear
in the reasons why that makes sense.
Basically,
bring it right down to what I call ground level,
the reasons why it makes sense for everyone
that needs to participate
in making sure that change happens.
And then at some point,
you're not only asking for the mandate,
you're demanding it from people,
you're demanding basically that they follow you
in your pursuit of innovation,
in your pursuit of keeping ahead,
basically, of all the changes that are going on.
And again, I think
it calls upon leaders to be even stronger as leaders
because again, you're fighting so much habit.
And one of those innovative moves that you made
was the move into streaming
and deciding
to vertically integrate
and move away from the established content providers.
Can you tell us more about your thinking on that decision
and where you think streaming is now?
Are we oversaturated?
Well, it's interesting by the way,
just bringing that
up reminds me that the lessons I learned
about how you force change in a company,
particularly a traditional company,
I learned pretty much during that period of time
that we were essentially disrupting our own businesses.
And the lesson really is that the innovators
dilemma is real
because of
some of the things I talked about,
because of how ingrained habits are
and how everything is designed to protect incumbency.
What we were witnessing
was tremendous disruption of the media business,
television and movies
led largely by technology based companies.
Netflix being certainly one of them.
But Apple and Amazon going into that business as well.
And they were gradually not only
having an impact on our business,
but they were rising in the consumer's eyes
as significant entertainment brands and destinations.
So I felt that it was imperative
for the Walt Disney Company to go in that direction,
that we were being disrupted by others
so why not disrupt ourselves?
Not an easy thing to do
because we required significant investment.
We had to make more content for the new platforms.
We had to buy and build technology
to serve the streaming needs.
And we also reduced our revenue by basically canceling
licensing agreements
we had with some of these third parties,
new third parties, the insurgents really
that were generating a lot of revenue,
a lot of profitability for the company.
So we went down in revenue, we went up in costs,
and we had to tell Wall Street, by the way,
basically, don't worry,
we're going to reduce our profitability
by a couple of billion dollars.
But this is what we're doing.
And we were actually surprised, pleasantly so
that they applauded the move
because they believed that
if anyone had the ability to do it, it was us.
But when we launched the Disney Plus Service,
it had been our plan to,
I think, attract
4 million subscribers, four to 5 million in a year.
And we signed up 10 million in a day.
So we were shocked ourselves.
And so now is it oversaturated?
Look, I think we're still in the early stages
of basically new forms of media delivery and consumption.
And I think that there are
issues that some of these businesses are facing right now.
Some have to do with the environment, global
economic environment, including inflation.
Some have to do with just more competition
coming into the marketplace
and that making it difficult for anyone to break through
at a significant
enough level, particularly with all the investment
that people are making.
I don't think it's oversaturated.
I think this new form of media
distribution and consumption
is addressing
consumers needs to have basically more authority over
what they're paying for
and what they're consuming.
Not only just more choice, but more access in more ways.
And so I think what we're seeing
now is we've seen tremendous growth very fast.
We're now seeing some of that growth
basically slowing a bit.
But some of the issues that some of these businesses face
are rising to the surface and making
it a bit more challenging. But I think it's here to stay.
But your vision on the vertical integration
seems to have played out for all the competitors now. Yes.
You know, we'll see
I don't know that there's room
for everyone to be successful forever. We'll see.
I think it's just too soon to tell.
But clearly, being vertically integrated,
which is essentially a means of saying,
not only relying less on third parties, but
being in the business
of having your own customers,
because prior to the advent of streaming,
a company like Disney and many other traditional media
companies were distributing their content
through obviously movie theaters
and on cable and satellite platforms.
But in all cases, the customer was owned and controlled
by those third parties.
Even, by the way, in selling merchandise
we were doing through Amazon
or through big box retailers in the U.S.,
certainly Walmart was one of them.
And so the customer
relationship was really the seller and the distributor
and not the creator.
And because of that,
I think there was a lot of value being lost
in essentially the sale of great product to the customers.
So I think vertical integration
has huge value, particularly when you can mine data
and use it more effectively.