With the closing of Disney's $71.3bn acquisition of most of Fox' media properties, an updated image of the giant company's holdings went viral online. Showing all of Disney's interests and subsidiary companies on a single, appropriately Mickey-shaped diagram, it wasn't entirely clear whether it was meant to shock or impress -- but it certainly made clear the scale and reach of the company.
From its immensely popular parks and resorts via movie studios and TV networks through to print publishing, merchandising and licensing, Disney has its fingers in almost every pie related to entertainment. Moreover, thanks to an incredible series of acquisitions over the past decade or so, Disney owns a fairly dramatic slice of the world's most beloved entertainment franchises.
Pixar (acquired in 2006), Marvel (2009), and Lucasfilm (2012) each brought with them incredibly valuable IP -- Toy Story, The Avengers, Star Wars -- and Fox is no different, not only reuniting a large part of Marvel's film rights with the successful MCU franchise but also giving Disney ownership of everything from The Simpsons and National Geographic through to the Alien, Avatar and Independence Day franchises.
"It's weird that we've just capped off more than a decade of Marvel movies, and yet the closest thing to a game is a squad-based shooter that doesn't use the MCU characters and isn't out until next year"
There is, however, one gaping hole in the Disney empire -- and it's no secret what it is. The company's enormous ambitions in almost every other area of the media, including its aggressive attempt to corner a large part of the streaming video market with Disney+, simply don't seem to extend to video games. The firm makes no bones about it; CEO Bob Iger told investors earlier this year that "the best place for us to be in that space is licensing and not publishing", reiterating a party line that was set with the closure of Disney Interactive Studios back in 2016.
The company's ungracious exit from video games had been signalled for several years -- it shut down several studios on its way out the door, including Black Rock (Split/Second) and Junction Point (Epic Mickey). Since then, it's focused almost entirely on licensing out its properties, notably working with EA on Star Wars titles and with Square Enix on an upcoming Avengers game.
At least one investor thinks Disney needs to suck up the taste of its former failures in this market and get back in the game; Nick Licouris at Gerber Kawasaki, which owns about $22 million worth of Disney shares, argued this week that the company should take advantage of the recently depressed share price of Activision Blizzard and make that into its next major acquisition target.
Now, Gerber Kawasaki isn't exactly a disinterested party here; the firm also owns about $4.3 million worth of Activision shares. That makes it easy to dismiss this story as "guy who would make a packet from Activision being bought by Disney thinks Disney should probably buy Activision, News at 11" -- but even if Gerber Kawasaki's interest is obvious, the idea itself is worth thinking about a little.
Sure, Disney hasn't had much success in running its own game studios -- but it's hard to see its current arms-length attitude to games as being in the company's best interests. The firm's prior failures in this market were largely attributable to a lack of experience and understanding of video games within Disney's executive levels; the company had the know-how and background to successfully complete the integration of acquisitions like Lucasfilm and Marvel without damaging their creative cultures, but working with video games just proved a bridge too far.
The result has been that despite licensing efforts, Disney's IPs are dramatically underserved on the video games front. It's not that anyone wants a return to the bad old days of undercooked tie-in titles being launched alongside every major movie release -- ugh. But I think we sometimes don't appreciate just how weird it is that we've just capped off more than a decade of Marvel movies with a $2.7bn grossing mega-hit like Avengers Endgame, and yet the closest thing there is to a game that will capitalise on that enthusiasm and love for the franchise is, um, a squad-based shooter that doesn't use the MCU versions of the characters and isn't out until next year. Let alone that we're about to hit the third Star Wars film in a new trilogy -- a new Star Wars trilogy! -- and the fifth film made under the Disney banner, and so far all we've got to show for it is an online multiplayer FPS game from a couple of years back that people mostly remember for some very unpopular monetisation choices.
"Disney is a little more active in mobile -- but money spent on a license translates into a desperate need to monetise in incredibly aggressive ways"
By comparison, Sony owns the tiniest sliver of the Marvel universe -- Spider-Man and his associated characters -- and it managed to spin that into one of the best PS4 games of the past year, linking it cleverly to the character's history both in print and on screen, and even tying it to the brand new Spider-Man: Far From Home with both a free DLC for the game and a subtle nod in the movie itself.
"Sony is pretty good at this video games lark" isn't exactly a truth bomb, but the point stands that given only the tiniest fraction of the IP powerhouse Disney controls, the firm has managed to make video games and movies into a mutually beneficial circle (perfectly balanced, just as all things should be). Hell, for all that DC Comics has struggled terribly in Marvel's shadow with its film adaptations, it's knocking it into a cocked hat with games -- the Arkham series of Batman games and the Injustice beat 'em ups are both solid franchises that both draw from and feed back into the IPs upon which they're based.
When Disney has found success with games in recent years, it's largely only been in partnerships which mix its IPs into other companies' formulae -- revivals of Kingdom Hearts with Square Enix and of Marvel vs. Capcom with, well, Capcom being the key examples. By and large its licensing approach doesn't seem to be working; it's not just that it loses the company opportunities to tie together video games, TV shows and movies in interesting and compelling ways; that would be forgivable if licensing was resulting in world-class games that Disney didn't feel it could create on its own, but that just doesn't seem to be the case.
If anything, the licensing approach seems to result in weaker games -- perhaps because the inevitable bureaucratic overhead introduced by not one but two giant corporations leaning over the developers' shoulders is a significant burden on creativity and speed. Or perhaps because the sheer amount of money involved in the license dampens the appetite for risk-taking in the creative process. Or perhaps simply because building games at arm's length from the people who are creating everything else to do with the IP isn't a great idea to begin with. This seems to be especially severe in the mobile space, where Disney is a little more active than in PC or console -- but where the amount of money being spent on a license translates into a desperate need to monetise in incredibly aggressive, off-putting ways.
In short, whatever competence Disney thinks it lacks right now in games is a competence it should really be trying to acquire one way or the other, because†"we'll just license it out" isn't an approach that's going to wash forever for a company of this size and stature. Sure, Disney can't do everything at once and right now it's still focused on integrating the Fox acquisition and gearing up for an epic streaming showdown with Netflix -- but this is a company that's always in search of the next growth opportunity, so constantly overlooking a market the size of video games just isn't an option.
"Should Disney be buying Activision Blizzard? Oh, hell no"
So, should Disney be buying Activision Blizzard? Oh, hell no. An acquisition of some kind might make sense for the firm -- after all, if the issue is a lack of knowledge and experience of games in the C-suite, then a well-managed acquisition of a successful game publisher ought to come with that in droves.
Good acquisitions, however, are additive; they bring growth to a company by allowing it to expand into new markets and find synergies with the existing business to the benefit of both sides. Activision may be cheap right now, at least by the standards of large game publishers -- it would probably cost about $40 billion to acquire -- but it's cheap for a reason. It's had a rough few years and hasn't convincingly shown how it's going to break out of that cycle; its knack for creating valuable new franchises seems to have faded and several of its biggest existing franchises seem to be slowly winding down. If Disney doesn't have the know-how to handle game publishing on its own, it certainly doesn't have the know-how to turn around an expensive acquisition that's struggling somewhat.
Of course, Activision may well turn things around for itself -- I have no doubt that it's working hard on products designed to do just that, but until it proves itself, it's hard to see how Disney would justify opening its war-chest for this acquisition.
If Disney is shopping around, Activision isn't the only company on the shelf. Indeed, for the kind of money Disney has paid for some acquisitions, it could go straight to the top -- Sony's market cap is only around $70 billion, which is an absolute steal for a firm that would bring with it another prestige film studio, a major music label and a huge consumer hardware empire, plus assorted billion-dollar odds and ends.
That's a pipe dream, of course, not least because Sony has absolutely no desire to be acquired right now -- but if you flick through company valuations and daydream a little, you can find any number of better ways for Disney to get into this market -- if and when it gets over its C-suite level reticence and realises that this is a sector it can't afford to sit outside forever.