This is the fourth and final installment in Benzinga's "The Crisis at Disney"
During the Walt Disney Co.’s (NYSE:DIS) fiscal year, first quarter earnings call, CEO Bob Chapek was asked a question by Citigroup Inc (NYSE:C) analyst Jason Bazinet on whether he viewed the metaverse as a strategic endeavor that is “going to become potentially a more important piece of your core competency going forward.”
Chapek responded to Bazinet’s inquiry by declaring, “This is a very top of mind thing for us because we are continuing over time to augment our skills and the types of people that we attract into the Walt Disney Co. to reflect the aggressive and ambitious technology agenda that we have. You probably notice that one of my three pillars is innovation and specifically technological innovation because we realize that this is going to be an important part of telling a story in that third dimension, that lean forward interactive dimension. So, it is absolutely top of mind.”
But in the fiscal year, second-quarter earnings call featuring Chapek that was conducted on May 11, no question was raised concerning the metaverse and no information was volunteered by Chapek on what progress was made by Disney in this area since the earlier call.
And the word metaverse was nowhere to be found in the company’s fiscal year, second-quarter earnings report — nor, for that matter, were the words non-fungible tokens or NFTs.
This absence is curious, given Chapek’s advocacy of “technological innovation” in his fiscal year, first-quarter earnings call and his enthusiasm for the subject in a Fortune interview from January. But that’s not to say Disney has retreated from the digital environments of NFTs and the metaverse — it’s just that the company’s forward movement is occurring at a somewhat leisurely pace.
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In Search Of Disney: Rebekah Barton, senior entertainment editor for the Inside the Magic blog that focuses on all things Disney, recalled being intrigued on the February earnings call, although she wondered why there was no depth to Chapek’s pronouncement.
“It was sort of intriguing because it was like they were trying to stay ahead of the curve,” she recalled. “But there wasn't a lot of concrete detail given. Whether that's because they simply weren't ready to share or because it's actually not ready, I can't know.”
Chapek’s lack of detail was on display earlier in a January interview with Fortune where he spoke enthusiastically — if vaguely — about the subject.
“The precursor to everything we’re talking about with the metaverse and this customer-personalized blending of physical and digital is the database,” said Chapek, who viewed data mining as his key to success.
“We’ve been collecting very deep, rich data for a long time from our parks. When you sign on to Disney+, we know who you are. We’ve got volumes of hard data that tell us exactly what were the first streams, when did the first streams come on, how long did people watch, how many times did they watch?
“We’ve got a combination of broad data and deep data, and once we tie those together in one common database, we can do an even better job of customizing the experience for the consumer, regardless of whether they started in a park or at home watching Disney+ or anywhere in between.”
One month after the fiscal year, second-quarter call that omitted mention of the metaverse, Disney hired Mark Bozon, the former games creative director at Apple Arcade, the game subscription service at Apple Inc. (NASDAQ:AAPL), as its vice president of Next Generation Storytelling, a unit that encompasses its metaverse endeavors. The luring of Bozon was a lengthy mission — two weeks before his hiring was announced, he tweeted that he was departing Apple after a 12-year stint and was “headed to an absolute dream job.”
Variety, which broke the story on Bozon’s hiring — there was no announcement published on the press section of Disney’s corporate website — noted that he would be responsible for bringing together a team to work with Disney’s diverse product lines and industries while innovating “bold ideas” that can become feasible presentations.
Disney did not offer a clue on when the first fruits of Bozon’s labor would appear, though one might imagine that even with a fast-tracked effort by digital professionals the first preview of the Disney metaverse experience is at least more than a year in the making.
A Token Of Appreciation: Elsewhere in the digital hemisphere, Disney has shown more depth and scope — albeit with minimal speed — in making itself known to NFT collectors.
In August 2021, Disney’s Marvel Entertainment unit collaborated with the VeVe digital marketplace on the release of five NFTs featuring Spider-Man. Pricing on these items was user-friendly: starting at $40 for a “common” edition and rising to $400 for a “secret-rare” animated edition.
More NFTs appeared three months later with the “Golden Moments” collection — the company chose Nov. 21, 2021, as the drop date to coincide with Disney+ Day. The company pursued a "blind box" format which meant buyers had no idea which NFTs they acquired until they opened the box. But the surprise element did not create a problem — with pricing at mostly $60 per NFT, the collection quickly sold out.
Into 2022, Disney released more NFT collections: “Mickey Mouse and Friends” on Jan. 29, “Disney Golden Moments - Valentine’s Day” for Feb. 14, “Pixar Pals” on March 13, “Disney Golden Moments – Disney Duos” on March 19, “Disney Mickey Mouse NFT Collection – Bandleader Mickey” on April 2 and “Disney Villains – Series 1” on April 23 and “Star Wars Dark Side Collection – Series 1” on May 29. According to reports from Disney and VeVe, the NFT collections have been selling out with great speed.
On the day before the “Pixar Pals” collection dropped, Jamie Burke, CEO of Outlier Ventures and host of the Metaverse Podcast, shared a juicy tweet regarding Disney’s plans for its NFT business.
“Rumour is Disney is about to make a big NFT acquisition,” Burke tweeted. “If it happens it would be the biggest deal to date for the industry.”
To date, no such acquisition was announced by Disney, although two days after Burke’s tease tweet former Disney Chairman and CEO Bob Iger joined the board of directors of Genies, a start-up avatar technology company that enjoys partnerships with Universal Music Group and Warner Music Group as their "official avatar and digital goods NFT provider." The company also revealed Iger had personally invested in its operations.
"I've always been drawn to the intersection between technology and art, and Genies provides unique and compelling opportunities to harness the power of that combination to enable new forms of creativity, expression and communication," said Iger in a Genies press release.
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Small Steps Forward: The Iger announcement caught many by surprise, particularly since Genies was working with companies owned by Disney rivals Comcast Corporation (NASDAQ:CMCSA) and Warner Bros. Discovery Inc (NASDAQ:WBD).
But one question that was never satisfactorily answered by the Iger-Genies alliance was why didn’t Iger more actively pursue NFTs or metaverse projects during his leadership at Disney — after all, both sectors have been around during his years in the corner office. As a result of not being more proactive on this front, Disney was late to the game.
According to Scott Johnson, president of the Brookfield, Connecticut-based digital marketing firm Mack Media Group, Disney lacks the nimbleness displayed by the smaller companies that are often at the forefront of high-tech innovations such as NFTs and metaverse applications.
“It takes a company as big as that forever to do things,” Johnson said. “Because as big as they are, they also have some other issues that are probably more on the forefront.”
Johnson recalled that the Iger-era Disney was cautious about exploring new eSports and gaming, pointing to 2017 when Epic Games, the video game and software developer, was selected to be part of the Disney Accelerator program. But rather than seek to enfold Epic Games into its corporate operations and have its own eSports division, Disney opted for collaboration and allow an independent Epic Games to concentrate on what it did best.
“For a while, everybody thought Disney was going to buy Epic Games,” Johnson said. “But, instead, Disney has a huge partnership with them.”
David Noble, director of The Werth Institute at the University of Connecticut, highlighted the digital realms where Disney is only now tiptoeing into have risk management considerations that have yet to be fully addressed.
“The technology in the blockchain space is relatively new and large companies do not often have the skill-set within to adopt something widespread,” Noble said, noting how smaller companies specializing in these fields have been tapped for major projects — for example, the Web3 company OneOf presenting the NFTs for the Grammy Awards in March.
“The business decision would be on what platform should they do this,” Noble continued. “Disney might want to sit back and wait until this stuff settles out because they don't want to put Mickey Mouse on a blockchain and then have that thing go defunct or go bad or not work from a security perspective. And then they would have to start over again somewhere else.”
But as Chapek told Fortune magazine earlier this month, he is less interested in immediate results and more focused on building new opportunities from the ground up.
“We want to harness technology to tell different and better stories and continue the legacy that Walt started,” he said. “For me personally it’s making the pivot to setting up the company for success for the next 100 years. It’s not a short-term thing.”
Yet, Inside the Magic’s Rebekah Barton wondered when Disney would resonate in this area with the same prominence it brings to other sectors of the entertainment industry.
“There is something in the works,” she said. “But as far as being a leader in that area, I would not call them a leader in emerging technology right now.”
Photo: Mickey Mouse in “Steamboat Willie” courtesy of Disney; color effects by Joshua Clancy Hall
The full series of Benzinga's "The Crisis at Disney" can be found here.
