Why Paramount's Oracle Ownership Beats Disney's Fragmented Cloud Partnerships
The Ellisons own both studio and cloud provider—enabling end-to-end IP control Disney can't match with separate AWS and Google partnerships. Disney's best path: Sell stake to cloud provider.
Disney seems caught in an “Invert your business or be inverted” purgatory of its own making. It needs cloud infrastructure leverage to protect its IP in the AI era, but its fragmented partnerships (AWS for cloud, Google for generative AI) prevent the end-to-end control that Paramount Skydance achieves through Oracle ownership.
First, this week’s new distribution deal with YouTube TV forced Disney to invert the exclusive contents of its ESPN Unlimited app outside of its paywall.
Going off of Disney’s press release, alone, that may not seem obvious: ESPN’s Unlimited app will be “made available at no additional cost to YouTube TV subscribers” and “a selection of live and on-demand programming from ESPN Unlimited” will be made available inside the YouTube TV app by the end of 2026. However, CNBC’s Alex Sherman confirmed that it will not be a “selection” of programming but “the full catalog of ESPN Unlimited”. In other words, Disney surrendered ESPN Unlimited’s exclusivity.
Second, Disney CEO Robert Iger used the fiscal year end earnings call to tout Disney+ offering more engagement: Users will soon see “game-like features” from Epic Games in Disney+. They will also have the ability to create user-generated AI content and to consume user generated content — “mostly short-form: — from other users. Disney+ will not be inverted but rather become “a portal to all things Disney”.
There is one big challenge with this: Generative AI creators like “Neural Derp” already have moved well beyond Star Wars Stormtroopers and using Disney characters to create reggae music videos (below)—which they are posting to YouTube and X. They do not need the Disney+ app for creation or distribution.
This new generation of creators are saying loud and clear that they do not need Disney+ to create or consume generative AI.
So what should Disney do in response?
Three Key Challenges
Three key challenges for Disney management emerge in this story.
The first is the most obvious: piracy like in the music video above is “a demand signal”. Research firm Muso argues piracy persists “not because consumers reject legitimacy, but because legitimate options still fail to meet expectations in price, access, or timing”. This means Disney+ as priced, as built and as developed is not meeting Disney fans where they are now.
