There is another angle to former Disney CEO Michael Eisner’s points about how media companies “possess enormously valuable IP”, but also consistently misjudge how or whether to extend it into unfamiliar formats. These companies also buy—Eisner acknowledged that Disney needed to go on an acquisition spree of Pixar for $7.4 billion in 2006, Marvel for $4 billion in 2009 and Lucasfilm for $4 billion in 2012 because Disney “had nothing in the last 20 years” of his tenure. Disney also acquired 21st Century Fox for $71.3 billion in 2019 to build out its library.
So the decision facing IP holders in traditional media is build, license or buy. If the logic of that dilemma reads familiar, it is because Eisner’s successor Robert Iger and other legacy media executives faced it when confronted with the competitive threat from streaming in the 2010s. Disney first acquired a one-third stake in BAMTech in 2016 and then acquired a controlling stake in 2017—effectively a mix of licensing and building. Other media companies opted to license commoditized third-party software while Netflix and YouTube iterated on their own platforms.
I wrote on Monday that the emergence of generative AI is “rapidly upending traditional processes and business models for content production, distribution and the legal protections for intellectual property. For this reason, it is harder for anyone to identify when to license IP versus when to build.” In doing so, generative AI is disrupting both traditional licensing models and streaming models.
The open question from Eisner’s framing is where buying fits into this calculus. He argued that IP acquisition is “a means to an end” in both traditional entertainment and gaming:
“The key is after you have five or six IPs, you make a great game that nobody’s ever heard of. It’ll be a giant game. But it’s going to take a while.” From the build, license or buy perspective, Eisner is arguing that buy is a survival tactic and build is a strategy.
