Sora Is Dead: What Does That Mean for Disney? Plus, ‘The Bachelorette’ Scandal.

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16:11Matt Belloni:Get tips along the way, add expert assist to talk to tax experts and let our experts do your taxes for you with expert full service. Tax Act helps you find the deductions and credits you deserve so you can get them over with. Visit taxact.com to learn more. Conditions apply. See taxact.com for details. Now, that deal was one that Josh DeMauro at Disney may not have been 100 % behind. We know he was 500 % behind this Epic Games relationship that Disney has, where they are developing a world, an experience within Fortnite. Then on the same day that the OpenAI deal unraveled, Epic announced a thousand layoffs.

16:58Matt Belloni:And specifically, they announced the layoffs because they said that Fortnite was not catching on. The new versions of Fortnite, people are not into.

17:06Alex Heath:Not growing like it has been.

17:10Matt Belloni:Yeah. Right. So what does that mean for Disney? I don't know. Would you be actually stressed about that if you're tomorrow? Or is it, you know, they say it's still going strong, that they're still going to do what they're planning to do.

17:23Alex Heath:I think if Epic went away, Disney would be fine, right? There's Roblox. There's other open world platforms like this.

17:30Matt Belloni:But they put all their chips into this. There were rumors that Disney might even buy Epic Games at some point.

17:36Alex Heath:I know for a fact there are senior executives in Disney who want them to buy Epic and are just waiting for that moment. And then there's others who think it's a bad idea. So I think if Epic ever sold, if it ever decided to call it quits on being an independent company, Disney would be the most natural home for it for a lot of reasons. For the park integration, can you imagine a Fortnite park to all the open world, integrating Disney IP into it, which they've already announced. and also you know disney's you know gaming platform and i i can see that but at the same time i mean you have to understand epic is a uh founder controlled company so tim sweeney there the founder um has full you know voting stock control and can make unilateral decisions and it's really up to him and um he is as we saw you know he was the guy who went to battle against the app stores, against Apple and Google to open those up.

18:34Alex Heath:And it's almost an illogical crusade when you're running a company like Epic to do something like that. And he even acknowledges in the layoff email like that cost us. But that kind of thinking is something that I think is going to keep Disney a little bit at arm's length until...

18:51Matt Belloni:I don't know. People would have said the same thing about Steve Jobs and Pixar. Maybe. And then all of a sudden they were feuding with Michael Eisner. They were thinking about maybe ending their distribution deal with Disney. And then the new CEO, Iger, comes in. And six months later, they have a deal.

19:07Alex Heath:Well, has any of this Disney stuff with Epic even materialized? They haven't launched any of the worlds or anything, which is also kind of crazy. It's taken a while.

19:15Matt Belloni:It has. So, and, you know, but if Fortnite, if this is the beginning of a long, slow decline for Fortnite, which I'm not sure it is. I don't think it is. then it's not great if Disney's putting all their chips into a declining business.

19:29Alex Heath:Gaming in general is having a hard time. But if you look at Roblox's growth, which is where Epic has been trying to take Fortnite into more of an open world creator first ecosystem where creators can build businesses building on top of Fortnite, Roblox is just killing it with that. And I think, you know, these experiences are probably still the future of not only gaming, but social media for young people, right? They're hanging out in these worlds. Yeah, I've got a 10-year-old.

19:59Matt Belloni:He's hanging out in Fortnite with his buddies.

20:01Alex Heath:Yeah, so like Fortnite's not dead. Your 10-year-old's hanging out there. A lot of 10-year-olds are.

20:06Matt Belloni:And he would be stoked if all of a sudden, you know, Tony Stark showed up. Sure. And Yoda and a bunch of Jedis, and they could play with those.

20:13Alex Heath:It's the best combination to potentially actually challenge Roblox's dominance here. And, you know, you can call it gaming, but it's really entertainment and it's also social media. So yeah, I mean, Disney's on the cap table. They're supposed to be doing this integration. If Josh, I don't know where, do you feel it? So you think Josh loves that deal or at least the long-term implications of it?

20:37Matt Belloni:He mentioned it in his remarks to shareholders. He did not pointedly mention the OpenAI deal in his remarks to shareholders.

20:45Alex Heath:Well, it wasn't done, that's why.

20:47Matt Belloni:Yeah, I mean. And he sees it as a linchpin of the entire interactivity of Disney+. Yeah. Where if Disney +, becomes the portal into your entire Disney experience, including shopping, gaming, socializing, and luxuriating in the Disney brand, Fortnite is a part of that.

21:12Alex Heath:For sure. also epic has the unreal engine which is a huge part of production for everything from mandalorian

21:19Matt Belloni:to a ton of shows right so i've seen it i went i went to playa vista john john favreau showed it to me this is like seven years ago now when he was making mandalorian yeah and it's pretty impressive it is and i was like you have to use a gaming engine for this like you're freaking disney

21:37Alex Heath:he's like yeah they have the best one they do and you know epic i think overhired in the pandemic the reaction to gaming going through the roof when everyone was in lockdown, right? Like a lot of other companies, they don't have the benefit of the rigor of being a public company like Roblox. And they're also founder controlled. So sometimes that leads to things like this, where you have to pull things back. Epic's not going away. But yeah, I mean, if Tim ever kind of realizes like, hey, this is just a slog on my own. I mean, he's already a billionaire multiple times over. So it's hard to know where his incentives lie here.

22:11Alex Heath:But I think he wants the company to be a thing that lasts way beyond him. And he has big, big ideas about technology and platforms in the future. And I think if he ever, you know, decided like, look, I think it's better if I take a step back and the company go to another home, it would be Disney. I mean, there's no question. I think Josh would want it. A lot of the executive team would want it. and the deal would probably pay for itself uh honestly in the first day when they announced it in the stock price i think investors would look at this and go man like this is a great link up this is something that can actually challenge the tech platforms and roblox you think so i think if they did the integration well and they integrated fortnight into disney's ip and disney's uh cinematic universe not just the other way around so a fortnight park right i think that would that would be a movie very simple taking your son to like a fortnight disney park i mean

23:06Matt Belloni:he would he would go crazy he would love it yeah but the thing is is the they need a narrative disney needs some kind of growth narrative and better shows and movies is not the narrative because they have to replace the cable bundle money somehow and nobody has really figured it out amongst the legacy studios what that narrative is going to be and disney i think is the best position because they have the best brand and the best ip to lure some kind of partner like an epic and i don't know if tim sweeney wants to ultimately be a employee of the walt disney company sounds

23:46Alex Heath:like you think he doesn't i do not i think i think if that happens tim's gone yeah yeah but

23:51Matt Belloni:it does this would change that narrative in a way that maybe bob eiger thought an open ai press release would do it didn't seem to really do much for them and obviously now it's going away but maybe that helps the disney narrative because they got to do something in interactivity and digital

24:10Alex Heath:well epic has shown that it's struggling with these layoffs so maybe the opportune time is is coming i mean uh if epic's getting to this point then maybe those discussions will have i mean i'm sure you'll break that if that does happen right we'll see all right thank you alex appreciate you coming on the show thanks matt appreciate it we're back with the call sheet craig how closely are you

24:30Matt Belloni:monitoring this bachelorette scandal i know you are not a regular viewer of the bachelorette franchise but did you know who this person taylor frankie paul was before the scandal no i don't watch the mormon wives show and she's the first person they picked to be the lead that's outside of the bachelor universe i did used to watch the bachelor and bachelorette a lot i was even in a bachelor fantasy league so i used to be in the world and then i kind of got out of it all right we'll get to that in another episode that serious character flaw you just revealed but whatever the point is this show is now imploded and they canceled the entire season and we've been debating whether to do an episode on this i've been resisting because to me this is a pretty easy analysis when you are in the reality tv game you push the line you get into business with crazy people you push them push them push them and then occasionally it goes over the line and the entire thing blows up that's what happened here yes but it's a clear attempt by abc and the bachelor franchise to try to revitalize and inject some energy out of this because sticking to people that come from the bachelor world was boring it's like dancing with the stars being like you know what we're just gonna have a bunch of influencers on the show and it worked they were like we need to get somebody from the outside world and it did generate a lot of buzz but ultimately too much buzz because one thing they knew about some of the domestic violence charges prior to casting her they knew that she had pled guilty to a misdemeanor domestic violence charge and there were many other charges against her now disney says they did not know about this video which if you haven't seen it it's really awful she is throwing chairs at her partner i'm sure in most domestic violence cases what we see on the video is not the entirety of their relationship she has said that you know it was abusive on both sides but the second disney saw that there was a kid involved there's a kid in this video they said we're pulling the plug and the kid was allegedly hit by one of the stools the video it's it's funny how this stuff works because the second the video comes out that's when things get bad you see it in sports there was the big ray rice scandal where he allegedly hit a woman in an elevator they suspended him for a couple games but then the video comes out it looks terrible even though it's the same report and then they have to actually extend the suspension just like ABC now got rid of this season of the show.

26:52Matt Belloni:So the question is, for our purposes, is what are the business ramifications here? Yes, they lost$30 to$40 million on the season, probably more when you talk about advertising relationships. Maybe this is the end of the Bachelor franchise. Rachel Lindsay was on the Bachelor Party podcast, a ringer pod, and she said this is the end. They can't come back. My prediction is they actually can come back. I think that The Bachelor will come back. They will figure out a way to lean into this and discuss it. They're not going to air this season, I don't believe, in its entirety. I think they will figure out a way to address it on the show and bring back the franchise in some way that at least tries to salvage it.

27:35Matt Belloni:So you think the season never airs? Maybe they do like some tell-all type thing, but the season will not come back, but the show will. I do think so. Now, there's all sorts of other things. I think these threats against the show by contestants, oh, you put us in danger. Oh, you know, we lost opportunities not being on the show. That's bullshit. That Mark Garagos, the lawyer, can say whatever he wants. Like the male contestants saying they were put in danger? Yes. That's what they're, that's what, Mark Garagos did a TMZ piece where he's talking about how they may sue. These releases are so ironclad that I, now granted every reality producer I've talked to since this broke has said, there's one rule in dating shows.

28:14Matt Belloni:You do not put someone on the show if you know they have a history of domestic violence. Well, what I was going to say is this would have never happened if the lead was a man. If the man had these issues, there's zero chance they would have cast this person as a lead. Of course not. But it wasn't a man. It was a woman. And I've talked to people at Disney who said that she has been sober. She has been saying the right things about wanting to move on with her life. They wanted to give her a second chance. They thought they could contain it during the show. And they admitted this was good ratings.

28:47Matt Belloni:Yeah. Like everybody, like everyone's asking me, oh, who's going to get fired at Disney? No one's getting fired because they all knew what they were doing. Rob Mills, who runs reality for them. This was his idea. He suggested it apparently. But Deb O 'Connell, who is running the TV division now, and Dana Walden, who's running all content. They knew this was happening. They leaned in because Hulu's biggest show is the Mormon wives show. And if they could sprinkle a little dust on the Bachelorette and bring it back using synergy, you got to try. I understand the idea, but you don't think there has to be a fall guy here?

29:18Matt Belloni:I don't. I think at most companies, there probably would, but Disney doesn't really operate that way. Disney is this like big monolith. I think by firing someone, they would - But Disney is a progressive company. I mean, how are you supposed to explain why you cast a woman who had been charged with domestic assault? They say, we wanted to give her a second chance and we didn't know the extent of it. We were made aware of the video and we acted promptly. That's what you say. I guess. Yeah. Trust me, it smells bad, but they're going to move on. And they'll find somebody else to be the Bachelor or the Bachelorette.

29:53Matt Belloni:Maybe they'll get Bluey. Bluey should be the Bachelor. The animated dog? Yes. No track record, no domestic violence history. Yeah, Bluey is safe. And maybe they could have used Sora to just make an AI Bachelor, but they can't do that anymore. They should. The AI Bachelor would be huge. There needs to be a dating show where you, it's like Love is Blind. Didn't I say this on the show once already? I don't know. I forget if I did. Love is Blind, except one of the suitors is AI. And you don't know until the big reveal. Oh, God. That's probably going to happen. It's got to happen. They should do a season of The Bachelor.

30:32Matt Belloni:Some of the contestants are AI. That's unfortunately a great idea. We're off topic. but my prediction is the bachelor franchise will come back. It cannot be killed like this. All right. That's the show for today. I want to thank my guests, Alex Heath producer, Craig Horlbeck, our editor, John Jones. And I want to thank you. We'll see you one more time this week.