Walt Disney: BUILDING OPTIONS FOR MICKEY MOUSE

WALT DISNEY: BUILDING OPTIONS FOR MICKEY MOUSE

Walt Disney Co is one of the largest entertainment companies in the world. Disney’s principal activity is to provide entertainment and information through four distinct business segments:

• Media Networks – Includes ESPN and the ABC Television Network, among others. Operates in the broadcast television and cable television;

• Parks and Resorts – Operates The Walt Disney World Resort in Florida and the Disneyland Resort in California as well as international properties in France, Japan and Hong Kong;

• Studio Entertainment – Produces and acquires live-action and animated motion pictures for distribution to the theatrical, home video, and television markets;

• Consumer Products – Licenses the name Walt Disney, as well as the group's characters, visual, and literary properties.

There are some analysts that consider Disney a premier brand operator – for them Disney is more of a brand company than an entertainment company and the focus on the brands should continue to result in incremental profitability from content assets across Disney’s wide range of assets.

1) What are the competitive advantages of the Disney group? Which, if any, are sustainable over time?

The main competitive advantages of the Disney group are:

• Strong Global Brands – As consumer choice proliferates, brands become more expensive to create and established brands increase in value. Disney’s brands are some of the most valuable in the world. In addition to character brands (e.g. Mickey Mouse, Donald Duck, Goofy, etc.), Disney owns many of the important classic fairy tale characters (e.g., Peter Pan, Alice in Wonderland, Pinocchio, the fairy tale princesses, etc.). The Disney family brand and the ESPN sports brand are globally recognized;

• Cable Network Strength – Disney is one of the premier cable network operators, with ESPN, The Disney Channel, ABC Family, as well as minority ownership positions in A&E, History Channel, E! Entertainment and Lifetime Channel in its portfolio;

• Historical Management Expertise – In running its business since 1920s, not only developed strong global brands, but also a unique way of delivering media. These factors combined with its theme parks and its experience in studio entertainment, contributed to the success of this group;

• Content Library Value – Proliferating distribution alternatives create incremental demand for high quality, branded content. High quality content is one of the most valuable forms of differentiation for competing distribution platforms. Disney’s film and television libraries represent differentiated, globally scalable, long-lived content. Disney can digitize past and future library content for distribution over new platforms and can continue to re-release library content for years to come;

These four main factors have been and will continue to be sustainable over time, since they are among the most successful critical factors of the Disney strategy.

Overall a unique strategy that differs from its media conglomerate peers – it’s a brand strategy across all its business segments.

2) Using concepts from this chapter, what are the options available to Disney over the next five years?

As we mentioned before, Disney has a unique strategy when compared with its media conglomerate peers, based on brand recognition. On the other side, Disney has also developed unique market segmentation with four different business segments. These factors, with no doubt, give Disney the competitive advantage and a particular angle in its way of conducting business.

In our view, the options available to Disney over the next five years are:

• Strategy – Continuous focus on the development and monetization of its key brands, namely Disney and to a lesser extent ESPN. Disney’s creative brand managers need to constantly find ways to create value from new and unique content. Numerous recent examples demonstrate the strength of Disney’s creative talent and its monetization ability over multiple platforms such as High School Musical, Pirates of the Caribbean, and Buzz Lightyear;

• Asset mix – The asset mix developed by Disney is mainly content based, especially if one considers the theme parks as essentially brand extensions. In this sense Disney should continue to obtain synergies and cross selling opportunities through its all business segments;

• New technologies and platforms – Disney’s management should embrace and has already embraced the technology changes that are impacting the traditional media world (the actual or future “stars” / “question marks” in the BCG Growth – Share Matrix):

o Disney should be extremely aggressive in pushing its content and products through