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Cannibalization is by far the most difficult feat any established, successful company can pull off. Disney’s efforts to create a streaming video service years after Netflix and then Amazon amzn beat the entertainment giant to market will be one of the great self-attacking experiments of our time.
The challenge is an old one. What to do with a leading business that’s challenged by a new technology wave without hurting an existing profit stream? The single greatest example of recent memory is Apple’s willingness to decimate iPod sales by incorporating all the category-defining product’s features into a new gizmo, the iPhone. The iPod was once so important to Apple that the estimable journalist Steven Levy wrote an entire book about it. And then, poof! The iPod was nearly gone. Yet Apple aapl barely looked back.
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Now Disney belatedly plans its own streaming service. Longtime CEO Bob Iger unveiled some new details about the service Thursday, including that it will be less expensive than Netflix nflx , that it will launch in the second half of 2019, and that new TV series based on big Disney-owned franchises will be part of the service.
Can Disney pull off this magic trick? Its quarterly results revealed it has no choice and that perhaps Iger should have gotten on with things sooner. Film, TV, sports, and cable all were dark spots for Disney in the quarter. Only theme parks shined.
The reliable way great conglomerates grew over time was by adding new products and buying new companies. IBM moved from mainframe to PCs. Disney dis moved from movies to parks to mega-acquisitions like Pixar, Marvel, and Lucasfilm.
Growing by embracing new technology and competing against oneself before true competitors do the job is tougher by far.
Have a good weekend, and thank a veteran for his or her service if you get the chance.
A correction: I wrote yesterday that Chinese Internet giant Tencent had invested in mapping technology firm HERE Technologies. In fact, the U.S. Committee on Foreign Investment in the U.S. recently blocked the investment.