Bob Iger (@robertiger) is the CEO of The Walt Disney Company
In this conversation, expect to learn all about the interplay between technology, content, and distribution, how Bob Iger’s strategic vision broadened Disney’s intellectual properties, managing creativity, and much more!
Hosts: Sonal Chokshi (@smc90) and Chris Dixon (@cdixon)
It’s been 13 years since Disney bought Marvel; why can’t the competitors replicate the success of Marvel?
According to Bob, you have to choose the right people
He is not talking just about directing; it’s about supervisory management
Most movie studios are over-committed to a production schedule; they won’t wait until mid-production, even if the movie stinks
They force things into the marketplace before they are fully done
For Bob, this means a lack of commitment to excellence. He is a big believer in the relentless pursuit of perfection (kinda like Steve Jobs)
“No one is ever going to criticize a movie that’s great for coming out late. They will certainly criticize a movie if it’s bad and comes out on time.” – Bob Iger
Talent that manages creative talent
Bob hired Alan F. Horn in 2012; he was the kind of studio executive that knows how to manage creative talent and the talent that manages creative talent
Figure out how to insert yourself into the process in a benign way
The key is to look over people’s shoulders but not make them paranoid
Advising them to consider, but not ordering them to change things
Patience and understanding the anxiety of others and not adding to it
Why is this important for tech companies?
A lot of tech companies don’t even know they are creative companies; a huge shift happening right now
The first thing is to put yourself in their place
Their ideas come from within them; it’s their fabric
Their ideas are tied to their self-esteem
You can’t dismiss that
Oftentimes, executives try to exert their authority, show who is the boss
It’s not about the title, primarily it should be about establishing a partnership, not ownership
They should come in peace, give perspective and not boss around
Managing creatives responsibly for the sake of the shareholders is important
Executives can’t allow creatives to do unwanted spending or take however much time they want unless they are James Cameron
No studio can impose its calender on James Cameron. If you don’t know that, as a studio, then it’s your fault
How to articulate feedback about creativity
Some executives can be nitpicky just to show that they are looking, watching
Authentic feedback trumps fake expertise
Don’t be petty with your feedback
Only say things that will make a big difference
Let the creative diagnose the problem instead of micro-managing everything
Don’t use your authority
Know when to stop; read their body language
Also, try to lead in with something positive
The first time he watched Black Panther by Ryan Coogler
It was the first big film for Coogler, he barely knew Bob
Bob could tell Coogler was nervous and intimidated by his title
The first thing Bob said to him after watching the movie was: “You made a great film.”
Bob swears he could see the anxiety pouring out of Coogler
That gave him the license to say something while he was still euphoric
He had some things he wanted to tell him but wanted to put him at ease first
Bob began as the CEO of Disney in 2005
At that time, Web 1.0was starting to impact consumer behavior in a big way
The promise of the Internet was vast;
The use of new technologies was going crazy, and people were spending a lot of money on new tech
Anxiety started to build up in the industry
People running traditional media companies were asked to be visionaries and to contend with the disruption of Web 1.0
The board of directors at Walt Disney wanted to know what Bob’s plan was
He saw a world where technology was going to create an increase in distribution and consumer opportunity to access, consume, and buy media and entertainment
Looking ahead at a world with more distribution, he also saw a world with a lot more production/creativity and consumption
If the world is going to explode like that, what is a company like Disney to do to thrive in that world?
What Bob then realized was that “…great content, high-quality creativity, and branded content would stand the test of time no matter what disruptive forces impacted the business.” – Bob Iger
People would seek out the best brands, best content, and best experiences no matter how they were getting them
He realized they should worry less about the distribution and more about what they were creating
Bob’s whole point was that the content side would always win out, good content will find its way to the consumer and the consumer will find their way to brilliance no matter what
There was a debate in Disney if they should invest more capital in the direction of distribution, but Bob shut that argument down
For him, it was always about high-quality brands and entertainment
Walt Disney proved that in a very obvious way; he made Snow White in 1937 and in 2005 it was still being consumed by kids around the world
The technology doesn’t matter, the product will find its way to people
For Bob, high-quality branded content means telling great stories
Everyone sets out to do that, but they don’t create processes that result in that
They rush things into the marketplace
They don’t take the time
They get impatient
They don’t manage the creative community well
No risk in new ideas that sound odd but could be great
They don’t know how to process failure in creativity
One of the things that Bob sees today is that there is so much anxiety about transformation and disruption that companies managing creative processes transfer that to the creative community
When Disney animation was great, the company was great
Disney animation has such a massive effect on company perception, brand perception, on commerce
If you have great IP, it’s leverageable in consumer products, theme parks, music, etc.
How does one do that? Find great people
Where were the great people? They were all working for Pixar at the time
The relationship with Pixar was ending
What if Disney buys Pixar? It was not for sale
Bob called Steve Jobs with the crazy idea of buying Pixar
Steve was the majority shareholder of Pixar. He bought it from George Lucas
Ultimately, Disney bought Pixar for $7.4 billion in 2006
Steve Jobs became a member of Disney’s board and the largest shareholder of the company (with 7%)
Pixar and Disney had a highly different creative culture
Bob wanted to show support and respect for their culture
They’ve allowed Pixar to remain independent. Pixar didn’t become Disney
They ended up adopting a lot of Pixar’s creative processes
At Pixar, every movement they ever made was driven by the idea of the director
The director pitches the idea, Pixar likes the idea, and they go and make the movie
The passion of the director is evident in every single step of production and creativity of that film
In Disney’s case, they assigned the ideas to the directors. The connection and passion didn’t exist
At Pixar, every movie had a conference room; the movie lived in that room full time
The director and the team put pictures up on the walls, the movie soundtrack was playing, and all the meetings about the movie were in that room
The movie started taking a tangible quality of actually existing in a place
At Disney, they had one room for all the movies
It was obvious to Bob, the movies at Pixar had a home
They showed him cutting-edge animation technology he never saw before
He was blown away by all of it
He walked into the Marvel office alone in June 2009 and pitched the idea of buying them
Told Marvel about the Pixar acquisition story
Got Steve Jobs on the phone to tell them how great the relationship has been
He offered Disney stock, the value of which he already proved to Steve Jobs
At that time they only put our Iron Man
Ironically, Bob was never a comic book fan but he was aware of the passion people had for comics
Like Pixar, they had a core creative team that was impressive and led by Kevin Feige
For Disney, it wasn’t just about the acquisition, it was about the people
Creating a culture that enables the creatives to thrive, and giving them the resources (money, marketing support, distribution help, etc.)
Eventually, Marvel pitched a crazy five-year plan (Avengers)
Was the acquisition of Marvel too “edgy” for Disney? It doesn’t have to be Disney’s Marvell
There was purposely no co-branding
In Bob’s mind, these weren’t just superhero movies, they were Marvel movies
Let the consumer think it’s Marvel, not Disney’s Marvel
George Lucas didn’t want to sell but made it clear if he ever did that he would sell to Disney
Bob let it go and waited
Eventually, George called him later and the deal was announced in 2012
Disney ended up with Pixar, Marvel, and LucasFilm; they had more known brands known for their quality of story-telling than any other media entertainment company in the world
The ones that got away?
James Bond
Harry Potter (already gone to Warner Brothers)
2012-2016 Bob spent developing Shanghai Disneyland, his pet project
Planting a flag on mainland Chinese soil
The winds of change got more fierce as Web 2.0 came
App-based entertainment, and new forms of distribution, and that started Bob’s thinking about the streaming
The disruptive forces that he talked about in 2005 got more profound and started to impact the entire business
“What we were seeing was not just the disruption of distribution but disruptive distribution disrupting essentially almost every area of the business.” – Bob Iger
It was mostly Netflix, but it was very clear that what they were doing would be done by others
They were showing the way, particularly for the big tech companies
Also, the average consumer was starting to exert more and more authority
Technology is giving the consumer much more authority than ever before
Switching costs between channels, devices
Where to watch, when to watch (phone, tv)
Big impact on linear television watching
Consumers want a program, not a channel
Disney was heavily invested in linear channels
The danger of ad-based entertainment was looming over them; they had to do something
Disney was the first movie company to license movies to Netflix
Netflix paid more money for their movies than anybody was willing to pay at the time
Bob had big concerns about technology and streaming
Reed Hastings, co-founder of Netflix tried to convince Bob that Disney is not going to make it
They didn’t have the platform; no way to manage busted credit cards, issues with geo-targeting, etc.
Disney had no tech to execute streaming, no technology solution
The first problem in going into the streaming business for Disney was finding a technology solution
The second problem is that they were making all this money from other forms of distribution (licensing movies to Netflix, cable, and satellite subscription fees)
To make this change happen, they had to convince Wall Street that it was essential for Disney to disrupt themselves
The innovator’s dilemma; it was essential for Disney to reduce revenue to go into the streaming direction
For tech solutions, they invested in a platform called BAMTech, and by investing they had a path to ultimately buy and control (Disney Streaming)
Decentralizing your own decision-making
Decentralization is not anarchy
Bob felt that at Disney too many decisions were being made centrally
Some people who knew more than the central organization were being deprived of the opportunity to apply their knowledge
He felt that managing the brand and its qualities had to be done centrally and consistently
Bob is one of the few cases of non-founder CEO taking the innovator dilemma and succeeding
At this time, Disney+ just passed Netflix in the number of subscribers
He was fortunate to have the board’s support, they even exhorted him to do it
They wanted to give him the chance; speed is the essence, they said
Advice he got from Will Danoff (The Fidelity Contrafund); go all in
Not many companies can go all in; it takes money, disruption, and kill earnings (by 2 billion for the first year)
The license fees from Netflix stopped
The cost went up, they spent more money on production to get ready for the new platform
Revenue went down
It was really important that they were serious and went all-in
Nail biting moment
Disney+ was launched on November 12, 2019
Their plan was for 4 to 5 million subscribers in the first year
They signed 10 million in the first 24 hours
That 24 hours were one of the best moments for Bob
Streaming wins. Plain and simple
Linear cable and satellite viewing are done
Nobody wants to watch channels anymore, except maybe news or sports
With the generational shift, it goes over the edge
Consumers will tolerate ad interruption with lower prices
They want multiple streaming services
To afford more than one streaming platform, they will take ads to cut the cost
All the services will have multiple tiers (like Hulu does)
Netflix already announced it
Advertisers win
Streamers win
Consumers win
Creators win
It’s a great time for creators now, more access to create
Movie theater going will never return to its high water mark
It will still be a thing, but more like a niche activity
Great competition from movie-quality television that can be watched from home
Everything about it is pro-consumer; mobility, time, customization, personalization, etc.
It’s not just about volume and filling your home screen with as many products
More editorial judgment is needed
Disney+ vs Netflix
Netflix has a lot of mixed content, Disney+ is more premium
Bob wouldn’t be surprised if Netflix reduced the volume
Their sub-base isn’t going to grow significantly and they can’t easily price higher due to inflation and competition
Buying rights and perpetuity might be an issue
Licensing and buying things for short-term usage and reverting back to the creator
The creator will then have an opportunity to sell to others
It would be a good thing for creators
“If you create IP that is consumed and appreciated and valued by a consumer, don’t change it too often, maintain consistency.” – Bob Iger
Respect vs reverence
When you innovate with IP, do so in a user-friendly way