Walt Disney Analise de Estudo Harvard (em ingles)

Walt Disney Harvard Business Study

Disney owns Disney Live Action, Walt Disney Animation Studios, Marvel, Pixar, and Lucasfilm. Disney’s strategy is to make 12 movies annually where 8 of them are high budget tentpole movies, and 4 are low budget ones.

Most of Disney’s primary competitors are making a considerably higher number of movies per year. Also, the fact that Disney does not accept any co-financing puts the company at a disadvantage when the high profile tentpole movies do not work. Furthermore, while box office grosses have been flat in the United States, the China market is enjoying an annual growth projection of 20%. However, the Chinese government will not allow the release of more than 34 films a year that are not produced in partnership with or fully owned by a Chinese company. Disney needs to decide if it wants to keep making only a limited number of movies a year, keep its financial strategy, and how to target both the United States and the Chinese Market.

First, Disney should continue with their strategy of making fewer movies, taking their time to produce them, and investing high budgets on them. Figure 2b shows that Disney’s 12 films a year had a higher average box office gross between 2010 and 2015 ($4126) than all major competitors. Since Disney is seen as a quality over quantity production company, if the company were to make more tentpole movies, that would be an unnecessary accumulation of financial risk. Also, launching too many movies could dilute the brand since the market space was crowded during prime seasons. Thus, leading to the cannibalization of their films.

Additionally, while a tentpole movie can cost up to $250 million to produce, low budget movies have also been successful as part of the company’s strategy. For example, figure 5a shows that lower budget movies bring profits that are at least twice as high as their budget. Saving Mr. Banks had a budget of $35 million and a total box office gross of $118. Hence, these low budget movies allow for risk diversification. However, the case indicates that the Chinese market has a stronger preference for higher budget movies and that 3D technology is essential. A scatter plot graph used to compare twenty-four high-budget films and their box office gross returns between the U.S. and the foreign market from exhibit 3 also indicates that Disney can profit more in China with higher budget movies since it accounts for most of the overseas market. So, Disney should keep making the low budget movies, but refrain from launching them in the China market.

High budget movies usually work well in China since the Chinese are still seeking for a unique experience when going to the movie theater, and they do not have access to the same variety of entertainment that people do here in the U.S.A. Therefore, Disney should keep its strategy of not receiving co-financing in the U.S. but consider a joint venture with a Chinese filmmaker. Some benefits of a joint venture in China would include the fact that they would have a partner who knows the market better. They would also have better relations with the government, take advantage of the 20% growth projection in the that market, make a higher profit of each dollar earned at the box office (40% instead of 25%), and keep diversifying risk by having multiple streams of income (movies, parks, merchandise). Lastly, Disney would be able to bypass the 34-film limit

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