Disney Headlines for June 14th, 2023
This week, The Walt Disney Company finds itself the target of a billionaire in India and a trading card icon in America.
Yes, we’ll talk about cricket for the first time in a while in the latest set of Disney Headlines.
A Serious Legal Battle Brewing over…Trading Cards
Photo: Disney Pin Blog
My first wife used to work as an executive at a playing card manufacturer.
Have you ever played Magic: The Gathering? This company physically printed the cards. And it was a whole thing.
Whenever someone messed up a print, one person would have to destroy the entire human-sized sheet as three witnesses watched.
Photo: Disney
Otherwise, everyone knew that someone would cut those cards and sell the counterfeits for lots of money.
Strangers would dig through their trash for discarded Magic: The Gathering cards…and this was during the 1990s!
Photo: Disney
You can imagine how seriously the industry takes all revenue-related matters today. And that brings us to a Disney story that’s not really about Disney.
Instead, an individual worked on a new trading card game at Upper Deck, the formerly great sports card manufacturer.
Upper Deck has suffered through some hard times recently, as it lost licenses for MLB and NBA players.
Photo: Disney
Currently, Upper Deck has pivoted to collectible card games (CCGs), and that’s the crux here.
The employee worked as lead designer on a game called Rush of Ikorr, although it’s unclear whether this individual invented the idea.
After a while, the worker grew disgruntled and spoke with a rival company, Ravensburger, who poached him.
Lorcana at D23 | Reddit
At the new job, this person created Lorcana, the heavily hyped Disney card game that will launch in August…probably.
I say probably because Upper Deck has sued Ravensburger and could feasibly delay the game’s launch.
What Happens Next with Lorcana?
Photo: Disney
This whole thing is messy, and it’s debatable whether Upper Deck has the financials to last in a protracted legal battle against the larger Ravensburger.
The lawsuit feels like a blatant attempt to get a taste of what’s sure to be a wildly successful game.
Disney gave away a set of Lorcana cards at D23, and I’ve got great news if you got one.
Photo: Disney
Yes, those sets are selling for upwards of $15,000…and they were free! You can imagine what the demand must be for Lorcana.
Disney could make this go away by instructing Ravensburger to settle.
Legal experts favor Upper Deck if the employee invented the game during his employment tenure there.
Photo: Disney
The story changes if this CCG expert approached Upper Deck with the pitch.
Nobody has mentioned that as a possibility, though. So, I’m dubious that’s what happened.
For its part, Ravensburger has dismissed the claim as “baseless and entirely without merit.” And that brings us to the other part of the conversation.
Photo: Disney
As a CCG diehard jokingly said to me the other day, there hasn’t been a new trading card game concept this century.
So, Ravensburger could feasibly argue that any similarities between the two games are merely the nature of the industry.
Disney Fights a Losing Cricket Battle in India
Photo: BBC
I understand nothing about the sport of Cricket other than that the uniforms are outstanding.
Still, as a Disney business writer, I’ve had to adapt on the fly to the significance of this sport.
Cricket claims the throne as the most popular competitive sport in India, the most populous country in the world.
Photo: Britannica.com
Understandably, Disney wants to do business in India, what with its 1.42 billion potential customers and all.
When Disney acquired Fox in 2019, it gained the streaming rights to Indian Premier League (IPL) Cricket, the equivalent of the NFL/NBA for this sport.
Photo: ICC
Alas, those streaming rights came up for renewal in 2022, and Disney chose not to pay a high price to keep them.
Instead, Viacom18 spent a whopping $2.9 billion to stream Cricket. Disney kept the broadcasting rights for $3 billion.
However, the loss of Cricket on Disney’s Indian streaming service, Hotstar, cost Disney+ more than four million subscribers last quarter.
Photo: Forbes
These customers didn’t net Disney much – $0.59 each – but the loss in subscribers hurt the company’s stock price.
Disney did the right thing in allowing the streaming rights to go elsewhere, but we already knew that. The new Headline involves what happened next.
Photo: BBC
Billionaire Mukesh Ambani wanted his business, Viacom18’s JioCinema, to own those streaming rights…so that they could stream Cricket for free.
That’s right, folks. This dude spent $2.9 billion so that he could give away IPL Cricket on smartphones.
Source: comicbook.com
Do you know how the top carriers in the United States offer free Netflix, Disney+, and HBO Max to entice customers?
Imagine that on a much larger scale. Current estimates suggest that Viacom18 will lose as much as $1.7 billion with this strategy.
This decision works as a daring billion-dollar loss leader as part of a larger smartphone market penetration strategy.
Disney Shows Cricket for Free
Photo: Disney
Here’s the stunning part. Disney has followed suit!
Yes, those broadcast cricket rights it paid $3 billion to acquire are now available for free on an app.
One investment analyst described Disney’s decision as “desperate.”
Photo:Indian Express
I believe the analyst’s absolutely correct. Disney has chosen a reactionary move to an insane gesture by a third party.
Media companies like Disney cannot compete with smartphone carriers in any sort of revenue battle.
That multi-billion Cricket league is now available on hundreds of millions of smart devices.
Photo:amplitude.com
Meanwhile, Ambani, with an estimated net worth of $86 billion, currently holds the title of the richest man in Asia. He can afford this loss leader.
Purchasing streaming rights for $3 billion is the equivalent of buying a sports car to him. He’ll barely even feel it.
Disney, on the other hand, finds itself competing with new cash-rich entities like the Qatar Investment Authority, a co-owner of Viacom18.
Photo: Hotstar
We just witnessed what happened with the PGA Tour in its fight against the Saudi Public Investment Fund.
The PGA couldn’t afford all the legal bills for the fight and dropped out. That’s part of the strategy here.
Photo: Disney
Keep the idea in mind as Disney negotiates the upcoming NBA rights and other sports contracts.
Some lunatic with cash to burn can outbid Disney for anything. I suspect the league caretakers would prevent that from happening in North America.
Photo: NBA Central
Overseas, Disney has already taken a beating with IPL Cricket.
By giving the product away, Disney cedes hundreds of millions of dollars over the lifetime of the contract.
Photo: Getty
You’ve probably read about several questionable Disney business decisions lately.
Despite what you’ve heard, most of them make sense. This one…is bad. And yes, it’s desperate. Disney should have just ceded Cricket for now.
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