Thomas Edison, Disney+, and the Eternal Pursuit of Synergy
April 11, 2020
In the larger context of cinema history, the relatively new streaming service of Disney+ is at once a relic of the past and radically new, bringing some of the same age-old production and economic concerns of cinema’s past into the modern day. Bringing Disney+ onto the market meant thrusting the company into a vicious Streaming War, with older services like Netflix and Hulu and newer players like Quibi competing for viewership and dominance. In creating content like The Mandalorian, Disney+ is seeking an age-old economic dream that long predates the age of streaming: “synergy.”
This buzzword signifies the possession of one economic body over every step of the process, a goal which is achieved by mergers and acquisitions. These deals are typically broken up into three specific strategies: horizontal integration, vertical integration, and conglomerate acquisition. While horizontal acquisition/integration takes place when a company buys up other similar companies in order to eliminate competition (such as Disney’s purchase of ESPN, for example), vertical integration is a process by which a company acquires control of multiple stages of the supply chain. From production to distribution to merchandise to advertising, to the TV channels where those advertisements are aired — all Disney.
In recent years, massive consolidation of this kind has taken place in the media and entertainment industry, with The Walt Disney Company participating in multi-billion-dollar mergers (Pixar in 2006, Marvel Entertainment in 2009, and Lucasfilm in 2012) rendering it one of the most powerful media conglomerates in the world. In a transaction that took years, The Walt Disney Company beat out Comcast in a bidding war to acquire most — but not all — assets from 21st Century Fox, for a whopping $71.3 billion (Yang, 122). The development of Disney+ has allowed Disney to confront an existential threat of new shifts in the media and tech landscape, or what some have dubbed the “four horsemen of the digital apocalypse”: Apple, Google, Amazon, and Netflix (Krafczyk, 2).
Though the radical reorganization of Disney — compounded by its ensnarement in the Streaming Wars — may seem a purely modern phenomenon, its strategy of vertical integration, and desire for synergized control over production, distribution, and exhibition dates back to the very beginnings of the film industry. In the American context, the Motion Picture Patents Company (aka the Edison Trust) is the most important example of this. The MPPC was formed in 1908, after Edison’s notorious gusto for suing his rivals effectively killed the growth of the burgeoning motion picture industry in America. This licensing agreement was the first attempt at monopolizing the industry, and the trust swallowed up all of Edison’s weary competitors (with the notable exception of Biograph).
This consolidated his own production company with a slew of others, including Essanay, Kalem, Lubin, Selig, and Vitagraph. The MPPC’s reach expanded well beyond the realm of production and distribution, though, after Edison made a deal with Eastman Kodak founder George Eastman, who agreed to supply perforated celluloid film exclusively to members of the Edison Trust. The group became international when Gaumont, Méliès and Pathé joined up, and came to domineer distribution with the General Film Company.
Not only were producers and Nickelodeon owners subjected to endless regulation and intimidation, but exhibitors also had to pay multiple licensing fees, including a fee of ten cents a foot/about $3 today for each film. If all else failed, Edison would resort to “hiring gangs of armed thugs to smash the production and exhibition equipment of those rival producers, distributors, and exhibitors who defied him” (Dixon, 29–30).
With the MPPC, Edison succeeded in consolidating picture production, distribution, and exhibition, achieving that oh-so-seductive “synergy” with a monopoly of epic proportions.
But a dream so sweet, and propped up on such shady business practices and endless litigation, could not stand for long. Its dominance grew shaky over time, and by 1915, the MPPC had collapsed under antitrust laws. The MPPC had already left an indelible mark on the industry, though, as their stringent rules quite literally drove out the competition — triggering a massive westward migration of independent filmmakers and movie companies, which shifted the epicenter of American motion picture production from New Jersey and the outer boroughs of New York City to Southern California.
In Hollywood and the San Fernando Valley, the MPPC’s grip around the throats of independent filmmakers was loosened, and crossing the Mexican border (where Edison’s patent claims would be null and void) was always an easy escape plan. Turns out, the Hollywood studio system cobbled together by independent filmmakers washed up on the west coast, many of whom were first- and second-generation Jewish immigrants from central and eastern Europe, would evolve into the most iconic names dominating American film: Adolf Zukor and Jesse Lasky (Paramount); Carl Laemmle (Universal); Samuel Goldwyn, Louis B. Mayer and Marcus Loew (MGM), Lewis J. Selznick (Selznick Pictures), William Fox (Twentieth-Century Fox), and the Warner brothers (Ferncase, 3).
Though the Motion Picture Patents Company eventually fell apart, we can see in the story of the MPPC the first attempts at what The Walt Disney Company is currently doing: creating a monopoly at any cost, with complete ownership of every step of the process. The rise of Disney+ is a prime example of the cyclical nature of the movie business. Star Wars (inherited by Disney along with Lucasfilm in 2012) is among the highest-grossing movie franchises of all time.
Further, The Mandalorian is the perfect embodiment of what TWDC is trying to achieve with Disney+. The Mandalorian is a live-action series designed to stand on its own, but also meant to draw out (and capitalize on) the nostalgia of the original Star Wars universe.
The streaming service Disney+ was made at a similar convergence of new and old: pumping out original content to compete with giants like Netflix or Amazon Prime, but also maintaining exclusive rights over both the extensive backlog of Disney gems and the fruit of their endless absorption: Pixar, Marvel, National Geographic, 20th Century Fox, and so on. The Walt Disney Company, in the great Edisonian tradition, is vertically integrating and horizontally expanding.
SOURCES:
Bowser, Eileen. The transformation of cinema, 1907–1915. Vol. 2. Univ of California Press, 1994.
Dixon, Wheeler Winston, and Gwendolyn Audrey Foster. A short history of film. Rutgers University Press, 2018.
Ferncase, Richard K. Outsider features: American independent films of the 1980s. №52. Greenwood Publishing Group, 1996.
Krafczyk, Marius Peter. A media and entertainment colossus: the acquisition of 21st Century Fox by The Walt Disney Company, p. . Diss. 2019. https://bibliotecadigital.fgv.br/dspace/bitstream/handle/10438/28346/Marius%20Krafczyk_Thesis_FGV.pdf?sequence=1&isAllowed=y
Musser, Charles. Before the Nickelodeon: Edwin S. Porter and the Edison Manufacturing Company. Berkeley: University of California Press, c1991 1991. http://ark.cdlib.org/ark:/13030/ft3q2nb2gw/.
Staiger, Janet. “Combination and Litigation: Structures of U.S. Film Distribution, 1896–1917.” Cinema Journal, vol. 23, no. 2, 1984, pp. 41–72., www.jstor.org/stable/1225124. Accessed 11 Apr. 2020.
Yang, Jingwen. “Analysis of Business Operation Management under the Harvard Analytical Framework: A Case Study of the Walt Disney Company.” 1st International Symposium on Economic Development and Management Innovation (EDMI 2019). Atlantis Press, 2019, https://www.atlantis-press.com/proceedings/edmi-19/125914932.
