Ben Thompson’s Stratechery evaluation, “Disney and OpenAI, Totems in an AI World, Google Versus the World,” explored the elemental shifts occurring within the digital financial system, specializing in the altering roles of established giants and rising powerhouses. The article, printed in early 2024, unpacked the strategic challenges and alternatives dealing with Disney, OpenAI, and Google, framing them by means of Thompson’s influential ideas of “aggregators” and “totems” in an period more and more outlined by synthetic intelligence.
The Shifting Sands of Digital Energy
Thompson’s analytical framework supplies a lens by means of which to grasp the evolving dynamics of expertise and media. His ideas of aggregators and totems clarify how energy accumulates and shifts inside industries.
Thompson’s Analytical Framework: Aggregators and Totems
Thompson posits that the web period basically altered enterprise fashions, giving rise to “aggregators.” These firms, exemplified by Google, Fb (Meta), and Amazon, function by immediately buying customers, having fun with zero marginal prices for serving extra customers, and leveraging demand-driven multi-sided networks. Their energy stems from their direct consumer relationship and their capacity to mixture provide. As an example, Google aggregates info and advertisers, Amazon aggregates merchandise and consumers, and Fb aggregates customers and content material. This direct relationship permits them to commoditize their suppliers, shifting worth in the direction of the aggregator.
In distinction, “totems” characterize foundational firms or manufacturers that historically outlined an trade by means of distinctive, usually irreplaceable property or capabilities. Traditionally, these have been firms like IBM within the mainframe period, Microsoft within the PC software program period, or Disney in leisure. Their worth was derived from proprietary expertise, mental property, or important capital investments that created excessive obstacles to entry. The web, by enabling aggregators to bypass conventional gatekeepers and immediately join with customers, considerably eroded the facility of many totems.
Disney’s Legacy as a Content material Totem
The Walt Disney Firm stands as a quintessential totem within the leisure trade. For many years, its energy derived from an unparalleled portfolio of mental property, together with iconic characters like Mickey Mouse, beloved franchises from Pixar, Marvel, and Star Wars, and a worldwide presence by means of theme parks and merchandise. Disney’s content material library, constructed over almost a century, represented a singular and difficult-to-replicate asset.
Within the conventional media ecosystem, Disney leveraged this IP by means of varied distribution channels. Its movie studio produced blockbusters, its tv networks (together with ABC and the Disney Channel) reached tens of millions of houses, and its cable channels, most notably ESPN, turned indispensable elements of the cable bundle. ESPN, particularly, functioned as a “totem inside a totem,” a important lynchpin for all the cable tv trade. Its unique sports activities rights and stay programming made it essential for cable suppliers, permitting Disney to command important affiliate charges and cross-subsidize different elements of its media empire.
Nonetheless, the arrival of streaming companies started to problem Disney’s conventional mannequin. As shoppers “minimize the twine,” the foundational worth of the cable bundle, and thus ESPN’s leverage, began to erode. Disney acknowledged this shift, embarking by itself direct-to-consumer (DTC) technique with the launch of Disney+, Hulu, and ESPN+. This transfer was a strategic crucial to keep up direct relationships with shoppers in a fragmented media panorama, however it additionally launched new complexities, together with important funding prices and the problem of transitioning from a extremely worthwhile linear TV mannequin to a streaming mannequin usually characterised by decrease margins and intense competitors.
Google’s Dominance as an AI Aggregator
Google, since its inception, has been a chief instance of an aggregator. Its core search engine aggregated the world’s info and related customers with advertisers, creating an immensely worthwhile enterprise mannequin. Google’s dominance prolonged to different areas, together with Android (aggregating cell customers and app builders), YouTube (aggregating video content material and viewers), and Chrome (aggregating net customers). Its success was predicated on its capacity to offer superior consumer experiences at scale, leveraging huge quantities of information to refine its algorithms.
Crucially, Google has been on the forefront of AI analysis for many years. Its investments in DeepMind, its pioneering work on the Transformer structure (the muse for many fashionable massive language fashions), and its integration of AI into its core merchandise (resembling search rating, advice engines for YouTube, and Google Assistant) underscore its long-standing dedication to the sector. For a few years, Google’s place in AI appeared unassailable, with its huge knowledge troves, computational assets, and top-tier analysis expertise making a formidable moat. AI was seen as an enhancement to its present aggregator merchandise, making search extra clever and companies extra personalised, relatively than a disruptive pressure to its core enterprise.
Key Developments: The Emergence of New Totems and Challenges
The late 2022 and 2023 interval marked a major inflection level, notably with the general public launch of ChatGPT, which dramatically reshaped the AI panorama and launched new strategic dilemmas for established gamers.
OpenAI: A New AI Totem within the Making
OpenAI, based in 2015 with a mission to make sure synthetic basic intelligence (AGI) advantages all of humanity, emerged as a pivotal participant. Whereas initially centered on pure analysis, its trajectory shifted considerably with groundbreaking developments. The discharge of fashions like GPT-3, DALL-E, and notably ChatGPT in November 2022, introduced generative AI into the mainstream consciousness. ChatGPT’s capacity to generate human-like textual content, reply advanced questions, and even write code demonstrated a brand new degree of AI functionality that captivated the world.
Thompson argues that OpenAI is quickly turning into a brand new kind of “totem” within the AI world. In contrast to conventional aggregators that amass customers, OpenAI’s worth lies in its foundational AI fashions – the underlying intelligence layer that different functions can construct upon. Its massive language fashions (LLMs) and multimodal fashions have gotten the “working system” or the “electrical energy” for a brand new technology of software program and companies. Corporations should not essentially aggregating customers immediately by means of OpenAI, however relatively leveraging OpenAI’s intelligence to energy their very own merchandise, creating a brand new dependency.
Microsoft’s strategic funding and partnership with OpenAI, which reportedly consists of billions of {dollars} and unique cloud computing assets, solidified OpenAI’s place. This alliance offered OpenAI with the large computational energy required for coaching more and more refined fashions and gave Microsoft an important edge in integrating cutting-edge AI into its Azure cloud companies, Workplace suite, and Bing search engine. This partnership has been instrumental in accelerating OpenAI’s transition from a analysis lab to a product firm, able to delivering extremely scalable and commercially viable AI options.
Disney’s Strategic Pivot and Content material Totem’s Dilemma
Whereas the AI world was present process a seismic shift, Disney was grappling with its personal existential challenges within the streaming period. The launch of Disney+ in 2019 was met with preliminary enthusiasm, quickly accumulating subscribers. Nonetheless, the streaming enterprise proved to be capital-intensive, requiring huge investments in content material manufacturing and advertising, usually resulting in important losses. The profitability challenges of its direct-to-consumer section turned a serious concern for buyers.
The return of Bob Iger as CEO in late 2022 signaled a interval of intense strategic overview. Iger confronted the daunting job of navigating the advanced transition from linear tv to streaming whereas additionally addressing legacy points. A central query revolved round ESPN. Because the cable bundle continued its decline, the immense worth ESPN as soon as commanded as a “must-have” for cable suppliers diminished. Thompson highlights the dilemma: does Disney spin off ESPN to unlock its worth, doubtlessly promoting it to a tech large, or does it decide to a full direct-to-consumer ESPN providing, which might necessitate charging a premium value and doubtlessly alienating present cable companions?
The strain between preserving the normal cable bundle’s income streams and totally embracing the direct-to-consumer future turned Disney’s core strategic problem. Sports activities rights, that are astronomically costly, stay a important asset for ESPN, however their worth in a fragmented, streaming-first world is being re-evaluated. Disney’s capacity to stay a content material totem hinges on its capability to adapt its distribution fashions and proceed to create compelling, high-quality IP that justifies client spending in a aggressive panorama. The corporate additionally started exploring how AI may improve its content material creation processes, from animation to personalised experiences, although this remained secondary to its rapid distribution challenges.
Google’s AI Awakening and “Versus the World” Problem
The general public launch of ChatGPT triggered a “code pink” second inside Google. Regardless of its lengthy historical past of AI analysis, Google had been cautious about releasing generative AI capabilities on to the general public, partly attributable to issues about accuracy, security, and the potential impression on its core search promoting enterprise. ChatGPT’s rapid recognition demonstrated {that a} new interplay paradigm for info retrieval and content material technology was rising, immediately difficult Google’s conventional search dominance.
Google’s response was swift and multifaceted. It quickly accelerated the event and public launch of its personal generative AI fashions, beginning with Bard and later introducing the extra highly effective Gemini household of fashions. The corporate dedicated to integrating generative AI throughout its product portfolio, from search (Search Generative Expertise or SGE) to Workspace functions (Gmail, Docs). The purpose was not simply to catch up however to leverage its huge knowledge, compute infrastructure, and analysis expertise to reassert its management.
Nonetheless, Google confronted a singular dilemma. Its search engine is an extremely profitable enterprise, producing tens of billions in promoting income yearly. Integrating generative AI into search, whereas providing extra direct solutions, may doubtlessly cut back clicks on conventional advertisements, cannibalizing its major income supply. This “innovator’s dilemma” compelled Google to stroll a tightrope: evolve search with AI with out undermining the enterprise mannequin that sustains it. The problem prolonged past OpenAI/Microsoft; the provision of foundational fashions meant that smaller gamers may additionally construct progressive AI functions, doubtlessly chipping away at Google’s varied product strongholds. Google’s “moat” of information and compute was nonetheless formidable, however the pace of AI innovation meant incumbents may now not relaxation on their laurels. The corporate discovered itself in a strategic battle not simply with direct opponents, however in opposition to a quickly decentralizing and democratizing AI ecosystem.
Influence: Reshaping Industries and Energy Dynamics
The emergence of AI as a foundational expertise, mixed with the continued transformation in media, is profoundly reshaping industries, altering energy dynamics, and presenting each immense alternatives and important threats.
The Way forward for Content material and Media
Generative AI holds the potential to revolutionize content material creation. Instruments can now help with scriptwriting, storyboarding, producing idea artwork, animating characters, composing music, and even localizing content material for world audiences. For an organization like Disney, this presents a dual-edged sword. On one hand, AI may drastically cut back manufacturing prices, speed up artistic workflows, and allow personalised content material experiences at scale. Think about AI-assisted animation that maintains Disney’s signature type or instruments that assist writers develop new narratives inside present franchises.
Alternatively, the proliferation of AI-generated content material raises questions in regards to the worth of human creativity and distinctive mental property. If AI can generate compelling tales or photos, what occurs to the shortage and premium related to human-created artwork? Disney’s power lies in its iconic characters and narratives, which evoke deep emotional connections. The problem shall be to leverage AI as a artistic assistant and enhancer, relatively than permitting it to dilute the authenticity and perceived worth of its model. The corporate’s capacity to guard its IP from AI mimicry and guarantee moral use of AI in content material creation shall be paramount.
Moreover, the economics of sports activities broadcasting proceed to evolve. As extra viewers transfer away from conventional cable, the price of buying unique sports activities rights stays exorbitant, but the promoting income generated by means of streaming could not but totally offset these prices. Disney, by means of ESPN, is on the epicenter of this shift, needing to discover a sustainable direct-to-consumer mannequin that justifies the premium value of stay sports activities. The potential for AI to reinforce sports activities viewing experiences, by means of personalised highlights, real-time analytics, and even AI-generated commentary, may provide new avenues for engagement and monetization.
The New AI Ecosystem
Thompson’s evaluation factors to a transparent stratification within the new AI ecosystem. On the base are the “picks and shovels” suppliers: firms like Nvidia, which provide the specialised {hardware} (GPUs) important for AI coaching and inference, and cloud suppliers (AWS, Azure, Google Cloud), which provide the computational infrastructure.
Above this layer are the foundational mannequin suppliers, the brand new “totems” like OpenAI, Google (with Gemini), and Anthropic. These firms develop the big, general-purpose AI fashions that may carry out a big selection of duties. Their worth lies within the intelligence embedded inside these fashions, which is then made accessible by means of APIs.
Constructing on high of those foundational fashions is an utility layer, the place builders create specialised AI-powered services for varied industries. This ecosystem fosters innovation, as startups and established firms alike can leverage highly effective AI capabilities with no need to construct them from scratch. This creates a possible for brand new aggregators to emerge, not by proudly owning the underlying intelligence, however by aggregating customers round particular AI-powered functions or workflows.
The shift is profound: from “knowledge as the brand new oil” (the place firms with huge knowledge had a bonus) to “intelligence as the brand new electrical energy.” Whereas knowledge stays essential for fine-tuning fashions, the core worth now resides within the general-purpose intelligence offered by foundational fashions. This democratizes entry to highly effective AI, decreasing the barrier to entry for a lot of startups and doubtlessly accelerating innovation throughout various sectors.
Repercussions for Incumbents and Startups
For incumbents like Google, the repercussions are important. The corporate faces the daunting job of defending its search dominance in opposition to a brand new paradigm of data entry. Its problem is not only technological but additionally business: find out how to combine generative AI with out disrupting its major promoting income stream. Success would require a cautious steadiness of innovation and enterprise mannequin adaptation, doubtlessly resulting in new types of monetization for AI-powered search. Microsoft, by means of its OpenAI partnership, has skilled a resurgence, demonstrating how strategic alliances with new totems can revitalize an incumbent.
Startups, then again, see unprecedented alternatives. With entry to highly effective and comparatively inexpensive foundational fashions by way of APIs, they will quickly develop and deploy progressive AI functions with no need to take a position billions in analysis and infrastructure. This ranges the enjoying subject to some extent, permitting agile firms to problem established gamers in area of interest markets or create solely new classes of services. Nonetheless, the focus of energy round foundational AI fashions additionally implies that these startups are sometimes depending on the “totems” offering the underlying intelligence.
Societal and Financial Implications
The widespread adoption of AI carries profound societal and financial implications. On one hand, AI guarantees to spice up productiveness, automate repetitive duties, and doubtlessly create solely new industries and job classes. Alternatively, issues about job displacement in sectors amenable to automation are legit. Societies might want to grapple with the moral concerns of AI growth and deployment, together with problems with bias, privateness, mental property, and algorithmic transparency.
The potential for AI to democratize creation, making refined instruments accessible to a broader inhabitants, is immense. Nonetheless, there may be additionally the chance that the management over foundational AI fashions may additional centralize energy within the arms of some dominant firms, elevating questions on competitors, innovation, and equitable entry to superior intelligence. Governments and worldwide our bodies are starting to discover regulatory frameworks to handle these advanced challenges.
What Subsequent: The Highway Forward for Totems and AI
The long run trajectory of Disney, OpenAI, and Google, in addition to the broader AI panorama, shall be formed by ongoing technological developments, strategic choices, and market dynamics.
Disney’s Path to Reinvention
Disney’s rapid future hinges on its capacity to realize sustained profitability in its direct-to-consumer streaming section. This includes optimizing content material spend, refining pricing methods, and doubtlessly exploring new bundles or promoting tiers. The profitable transition from a linear TV-centric mannequin to a streaming-first enterprise is essential for its long-term viability as a content material totem.
The last word destiny of ESPN stays a pivotal query. Whether or not it is spun off, bought, or totally built-in right into a standalone direct-to-consumer providing, its future will considerably impression Disney’s monetary construction and strategic focus. Disney may leverage AI extra deeply in content material manufacturing, personalization, and even interactive experiences inside its theme parks, creating new income streams past conventional media. As an example, AI may energy extra dynamic character interactions or personalised narrative experiences in its parks. The corporate’s distinctive IP, mixed with AI-driven innovation, may unlock new types of leisure.
OpenAI’s Evolution and the AGI Quest
OpenAI’s evolution will contain continued developments in its foundational fashions, pushing in the direction of higher capabilities in areas like multimodality (understanding and producing textual content, photos, audio, video) and sophisticated reasoning. The pursuit of Synthetic Basic Intelligence (AGI) stays its acknowledged mission, and future breakthroughs will outline its long-term impression.
A important problem for OpenAI shall be balancing its fast commercialization efforts with its dedication to security, ethics, and accountable AGI growth. The strain between its non-profit roots and its for-profit operational arm will possible persist. Its relationship with Microsoft will even evolve; whereas at present extremely symbiotic, potential factors of friction may emerge as each firms mature their AI methods. OpenAI’s capacity to keep up its “totem” standing will rely on its continued innovation and its capability to fend off rising competitors from different well-funded AI labs and open-source options.
Google’s Strategic Reorientation
Google’s rapid precedence is to efficiently combine its Gemini and different AI fashions into its core merchandise, notably search, with out undermining its profitable promoting enterprise. It will contain growing new AI-native services that complement, relatively than cannibalize, present income streams. The Search Generative Expertise (SGE) is a key experiment on this regard, testing how customers work together with AI-enhanced search outcomes and the way promoting could be seamlessly built-in.
Google should additionally defend its cloud AI choices (Vertex AI) in opposition to formidable opponents like Microsoft Azure and AWS, making certain its platform stays enticing for builders constructing AI functions. The long-term impression on its promoting income mannequin, notably if search queries shift in the direction of conversational AI brokers that present direct solutions relatively than hyperlinks, shall be a defining issue for the corporate’s future. Google’s huge knowledge property and computational scale, mixed with its deep bench of AI expertise, nonetheless present a powerful basis, however agility and decisive execution shall be paramount.
The Broader AI Panorama
The broader AI panorama will proceed to be characterised by fast innovation, intense competitors, and rising regulatory scrutiny. Governments worldwide are actively exploring frameworks for AI governance, specializing in points resembling knowledge privateness, mental property rights, algorithmic bias, and the potential for misuse. These laws may considerably impression the tempo and route of AI growth.
The race for computational energy and specialised expertise will intensify, with firms investing closely in superior chips and recruiting high AI researchers. The strain between proprietary AI fashions developed by giants and the burgeoning open-source AI group will even form the ecosystem. Open-source fashions, whereas usually lagging behind the chopping fringe of proprietary programs, provide higher transparency and customization, doubtlessly fostering a extra various and decentralized AI utility layer. Sudden disruptions, from new technological breakthroughs to geopolitical occasions, may additional alter this dynamic panorama, doubtlessly giving rise to completely new totems or reshaping the roles of present ones.