Disney ‘Aggressively’ Pursuing Gambling in Mickey Mouse’s Clubhouse

Company's CEO is willing to bet that gambling won’t affect the brand
By Riley Steward
Riley Steward
Riley Steward
Freelance Reporter
November 30, 2021 Updated: December 6, 2021

News Analysis

Walt Disney Co. is in the midst of an identity crisis that could shape the future of the company and the worldwide media landscape for decades to come.

CEO Bob Chapek recently announced that the company was “aggressively” looking to enter the sports gambling business.

In the company’s fourth-quarter earnings call on Nov. 10, Chapek said: “As we follow the consumer, we necessarily have to seriously consider getting into gambling in a bigger way.” He believes ESPN, which is majority-owned by Disney, would be a “perfect platform” for this new venture.

“We have done substantial research in terms of the impact to, not only the ESPN brand, but the Disney brand in terms of consumers’ changing perceptions of the acceptability of gambling. And what we’re finding is that there is a very significant insulation. Gambling does not have the [baggage] now that it had, say, 10 or 20 years ago.”

Disney’s acquisition of 21st Century Fox brought with it franchises such as “Predator,” “The Simpsons,” and “Deadpool,” which carry associations and connotations that depart dramatically from the traditional Disney brand of movies, TV, and theme parks.

As the media giant and alleged monopoly grows horizontally, it’s becoming harder to maintain its brand identity. It’s hard to measure to what extent Disney’s branding and brand association has carried the company forward from the days of Walt Disney himself to be the aggressive, dominant entity that it is today, however, academics and accountants agree: Brands are valuable.

Apple’s brand, for example, is worth $260 billion.

Stephen A. Greyser and Mats Urde at Harvard Business Review speak to the power of brand identity to create a competitive advantage.

“A clear, unified corporate identity can be critical to competitive strategy, as firms like Apple, Philips, and Unilever understand. It serves as a north star, providing direction and purpose. It can also enhance the image of individual products, help firms recruit and retain employees, and provide protection against reputational damage in times of trouble.”

Until fairly recently, Disney had one of the clearest brands in entertainment. Chapek is willing to bet that gambling won’t affect that brand.

“We have some concerns as a company about our ability to get in it without having a brand withdrawal,” he said. “But I can tell you that given all the research that we’ve done recently that that is not the case. It actually strengthens the brand of ESPN when you have a betting component, and it has no impact on the Disney brand.

“Therefore, to go after that demographic opportunity plus the, of course, not insignificant revenue implications, that is something that we’re keenly interested in and are pursuing aggressively.”

A recognizable brand takes a long time to build, and rebuilding a damaged one is a difficult process.

United Airlines ruined its brand by dragging Kentucky doctor David Dao from his seat on an overbooked flight, dislodging his teeth and giving him a concussion. Taco Bell’s use of a Chihuahua mascot in its commercials associated their food with dog meat in thousands of customers’ minds, the greatest mistake the company’s ever made, according to at least one executive. SeaWorld no longer seems so family-friendly after rampant allegations of mistreatment of animals and staff, and Chipotle’s salmonella outbreaks have tainted the assumptions of the consumer almost as much as it tainted its fare.

The Orange County Register reported that Disney-owned websites that contained “gambling content” were blocked on Disney World Wi-Fi only a few years ago. Could this shift in strategy be stemming from Disney’s underwhelming financial performance in the recent quarter and the subsequent drop in stock price? What may be even more likely is that both phenomena stem from the same cause, a deeper corporate culture misalignment. Dramatic shifts in corporate strategy that don’t align with brand identity should never be taken lightly.

Chapek also spoke about the company’s plans to enter the Metaverse and the NFT space, which doesn’t on its face contradict Disney’s family-friendly identity quite as starkly as gambling.

Disney’s research may be a solid, accurate prediction. Its brand may be undamaged by ESPN’s venture into gambling. However, there is a risk that stories of gambling addicts potentially losing their life savings to a company known for creating “the happiest place on earth” and the subtle internal changes to the corporate culture that come with a dramatic shift in revenue streams such as this could change the company in a way that makes it less competitive, less focused, and less in touch with its historic roots.

Riley Steward
Freelance Reporter