*if they want to survive

In the 1900s Sears ruled what we now call DTC marketing. Their catalog came straight to American homes, bursting with products to be chosen by the customer and delivered. How dominant was the Sears catalog as a business? They sold houses. In the catalog. That people bought and lived in. Over 70,000 of them. From a catalog.

Even as late as the 1980s, I remember carefully reviewing every page of the Sears catalog as a kid, circling items for my Christmas list, though a pre-made house never made my list.

They controlled the customer relationship. Sears curated the products, presented them, priced them, delivered them and handled customer service. They were a powerhouse.

Disney just announced their new approach to streaming services. In the past, they had sprinkled the magic pixie dust of their amazing characters, TV shows and films across as many channels as possible. Let’s be in front of as many customers as possible. But now they have decided to pull back. Be more selective. In fact, to bottleneck access to some of the most popular properties to their own service.

Disney recognized now what Sears failed to. The market has changed. Sears continued acting like a dominant force well past the introduction of the consumer internet. When other companies were solving for earning people’s trust with ecommerce, Sears was done. That ushered in an era of open distribution, where companies diversified products, holdings and brands to fill as many channels as possible. Sears waited 35 years too long to spin Craftsman into a standalone brand, hoping instead to use it as a new customer draw that never materialized. If Craftsman was available in Home Depot, Lowe’s and WalMart with premium products only in Sears, they may have generated more awareness and interest in the brand and increased revenue.

You can see historically that when distribution is wide and diversified, companies also take that shape. Pieces and parts within the company work independently to find their way to market. When distribution collapses, the successful companies work more holistically.

Disney sees that Netflix has changed the market. Netflix speaks directly to its customers, not even allowing advertisers in to the conversation. In this current shape, Disney recognizes the importance of controlling the customer relationship. And Disney has the payoff of their theme parks that Netflix lacks. Disney acquired huge properties, reorganized and launched new products and services to capitalize on a changing market built around controlled distribution. They’ll thrive. At least until the market shifts again, and we’ll see how the next wave of companies reacts.