In the past year, Disney has been struggling to find a means to restore the revenue lost from its failing television-media sector. ESPN, which brings in roughly 50 percent of the Disney company’s total revenue, is losing subscribers while also seeing licensing costs and operating expenses increase. To put things in perspective, the house of mouse reported a high of 100 million subscribers at the end of fiscal year 2010 but reported that the number was 92 million as of 2015. This represents a significant down-trend for Disney and they are fully aware of the problem, but have no concrete resolution as of yet.
Disney is cognizant that with an emerging generation of cord-cutters, the television sector may be difficult to maintain. They have since tried to replace the loss of this income by revving up their film franchises, reaching out to the gamer class by incorporating E-sports into their media fold, and are scoping out the possibility of acquiring Netflix to further saturate the media market. However, even with all of these plans, Disney is still bleeding cash and the losses are becoming more and more evident. With theme park competitors emerging in China, Disney has major pressure to keep its claim as king of entertainment. So what is Disney to do?
Partner with Activision!
The idea is not as far-fetched as it seems. For the past decade, Disney has focused on acquiring intellectual properties that capitalize on specific demographics in which they had a weakness. Disney was already strong with parents and their children, especially girls but faltered when it came to boys over 10 years of age. They fixed this problem by acquiring Marvel and are now the premiere Cinematic Universe builders of this decade. They acquired Pixar and cornered the children’s movie market, and they purchased the rights to the Star Wars franchise to further saturate the entertainment market. Disney is no stranger to acquisitions. So how would Activision fit into the picture?
Activision is in the business of world building. The mythos they’ve established in Diablo, Starcraft, World of Warcraft, etc. gives credence to their success at creating worlds that people enjoy, and Disney is all about buying worlds as I’ve already mentioned above. However, there is more to Activision that Disney would find even more appealing and from a business standpoint more justifiable.
Activision can become a titan in the e-sports gaming market. The Dota 2 championships, The International, was viewed by more than 20 million people in 2014 according to a release from Valve. According to newzoo.com, Dota2 major tournaments clocked over 200 million hours viewed on Twitch. Now Activision seeks to escalate its investment into e-sports by introducing Overwatch: League, which seeks to create a consistent, salary-based package for e-sports athletes all around the world. Activision strives to expand the e-sports market not just for athletes but for all gamers and consumers worldwide. Just at an eye-ball’s glance, the sheer number of viewers that Activision could make available to Disney would be more than enough to solve its ESPN dilemma.
Not to say that Disney isn’t already attempting to televise e-sports events, but it could go leaps further. Disney could host tournaments at their various parks; they could enter into a profit sharing agreement with Activision in exchange for inflating the tournament prices; they could give Activision franchises greater exposure through a toy line, film media (imagine something like what Disney did with Big Hero 6 translated for Overwatch), or just general advertising. Both Disney and Activision have international name recognition, but for some reason Disney feels that they best way to float ESPN’s losses is by fabricating a sudden interest for predominantly American sports through more media exposure. If the energy Disney was directing into ESPN was diverted into fusing efforts with Activision to broaden the exponentially growing e-sports market, then Disney would solve its problems.
A partnership between Disney and Activision would shoot the e-sports era into a new stage of evolution. In my mind, their combined efforts and resources could result in a culture similar to the one lived in the anime Sword Art Online, where the world raves over career, epic-level gamers. Activision doesn’t need Disney to move its agenda forward, but if Disney wizened up, it would know that this is a great opportunity.