Describe pricing strategy & summary expected revenue table

Table Contents

1. Expansion Goals

2. Competitor Strategy Summary

3. Business Strategies

4. Entry Business Structure 1- Internet Based Entry

5. Strategic Partner and Its’ Value

6. Entry Business Structure 2- Entering the Mobile Market

7. Advantages and Disadvantages

8. Recommended Entry Vehicle

9. Resources

Expansion Goals

Currently, the Walt Disney Company is in position to expand their streaming services, Hulu and Disney+, into the global market. Ten countries from the BRICS and Next Eleven groups were analyzed to determine if their markets will provide an economic environment for Disney to begin their global expansion.

After analyzing each country, Mexico and India were chosen to be looked at more in depth based on the results of their PESTAL analysis. Both countries are currently having an established market and buyers for entertainment streaming services which provide subscription video on demand (SVOD). PESTEL and SWOT analysis are conducted in order to determine which country is best suited for Disney to begin its global expansion.

After examining the current opportunities and threats associated with entering the VOD markets in Indian and Mexico, Disney will pursue the expansion of their streaming services in Mexico. Both countries would provide Disney with an ideal setting to launch as well have enough opportunities to succeed. However, through the PESTAL analysis of both countries, the threats were used as the deciding factor in the selection of Mexico as the target country. India’s threats in particular could make the launching of Disney+ and Hulu very difficult for Disney. Notably, the amount of other streaming services in India would be a harder for the market entry than Mexico. Currently, Netflix is the leading streaming provider in Mexico and there are currently not many other major competitors. Disney will be able to compete with Netflix in Mexico through brand loyalty with content on Disney+ and through original content created by Hulu. Additionally, while Mexico is not one of the largest countries or economic markets in the world, they do boast a growing SVOD market that is projected to generate $2.9 billion in revenue with a total user population of 390.8 million (Statista, 2019). As a result, Disney should expect to quickly build its user population in Mexico due to its content and subscription price. Since Disney will offer a lower price point for their services and will also bundle package for both services, they will be able to attract users quickly.

Competitor Strategy Summary

The recent decision by Disney + to expand its global coverage leads to the need to determine its competitive advantage. For years, the company has based its operations on the production and distribution of content using conventional methods. Current technological trends force it to adopt SVOD which both Netflix and Amazon have embraced. The ongoing analysis of the best strategies to enter the Mexican market require thorough analysis of the SVOD market and factors that will support a smooth entry.

The Mexican market offers a huge opportunity with a large subscription base of approximately 9 million. The number of subscribers is bound to increase over the next five years by 10%. The expected increase in SVOD market aligns with the global market which continues to quickly adopt to the technological changes. Currently, the Mexican market has four major competitors, Netflix, Amazon Prime, America Movil, and Blim. Netflix enjoys the largest subscription base in the country with a 63% of the total subscribers (Martinez, 2018). Netflix has an upper hand over the local competition due to the volume of content it has. ESPN, Lucas Films, National Geographic, Pixar Studios and 21st Century Fox among others Disney Companies (Aguilar, 2019). This gives Disney the same competitive advantage that Netflix has in the country as it will be offering subscribers a variety of content to choose from. Its recent acquisition of Hulu gives it even more competitive advantage over other companies that will be competing for the same market. Other advantages include its good reputation and financial abilities.

The best competitive strategy for the company is bundling. As stated above, Disney + already owns a number of content producing companies. These companies will give the company and target market the required diversification. The acquisition of Hulu enables bundling to become Disney +’s best weapon. Bundling is also its best weapon because the diversity and amount of content that both Disney and Hulu has increases options for its potential customers. In addition, the acquisition of Hulu gives Disney an advantage of acquiring two markets, potential subscribers in Mexico and American locals of Mexican descent. This niche allows the company to determine their most profitable bundles and lower their operational costs.

The target market, Mexico, offers a huge opportunity to the company. Based on price, the company has a large pool of content to offer its customers. Pricing becomes easy for the company due to its financial stability. Through bundling and offering content at low prices, the company is bound to attract customers from the target market. The biggest challenge in pricing is the lack of payment mechanisms in the country since only 18% of the population own credit or debit cards. Based on quality, the customers can choose from a wide variety of content that the company offers. The acquisition of Hulu makes the company more attractive. Approximately 82.5 million people in Mexico use the internet. The company can acquire subscribers from this huge customer base. Also, 30% of Mexican households will have become SVOD subscribers by 2025 (Roshan, 2017).

For successful entry into the market, Walt Disney will have to use the Penetration Pricing Strategy. The strategy states stipulates that a company offers its products at a lower price than its competitors to rapidly attract customers and market share. The financial stability of the company makes it easy for the company to lower its prices. Also, the company is already planning to lower its prices in the American market. Lower prices will guarantee the acquisition of a large market share. The stable financial background of Walt Disney will allow it to sustain the high cost of content which has been the reason for the increase in subscription prices over the last three years by companies like Netflix.

Despite having Netflix as the largest competitor, Walt Disney stands to attract a large customer base in Mexico. The company will use a best-case strategy where the company can offer their premium service and access to content at a lower price point than their other international competitors. Additionally, the company will utilize their ownership of both services as an incentive for customers to join through a bundling package of the two at a discounted price point. As a result, Disney will need to capitalize on their expansion by implementing penetration pricing for both services and the bundles. A price point that is similar to local competitors for international content will draw more interest and investment from customers to begin to gain a loyal consumer base.

Business Strategies

Some of the major threats that Disney will face while entering the Mexican SVOD market, will be able to be mitigated through the implementation of Disney’s strength. One of the largest hurdles will be for Disney to catch up to the pace that Netflix and other competitors are releasing original content. Netflix is the global leader in original content by SVOD providers, however it is extremely costly to produce content at such a high pace. While Netflix and other providers must solely rely on subscriptions as their primary revenue and funding source, Disney has an extremely large portfolio and multiple business segments which each generate a large amount of extra cash. As a result, Disney will have an easier time dealing with the financial impact that creating original content for Disney+ and Hulu will create than its competitors. Additionally, this will allow Disney to offer both of its streaming services for a lower price than its international competitors. By offering both services at the same price as the local competitors, Disney will have an easier time attracting new customers and will be able to mitigate the level of risk associated with entering an already populated market.

The final major risk that Disney will be able to use its strengths to help mitigate is related to the political corruption in Mexico. Due to Disney’s prior relationships with the Mexican government when building and opening Disney Mexico Pavilion in Epcot, the company has already been able to go through the growing pains companies will initially face when entering a new country.

One of Disney’s largest current weaknesses is the amount of original content their services have compared to their competitors. As the leader in original content production, Netflix has set the standard for the SVOD market as well as capitalized on creating new trends within content genres. For example, the company has recently expanded to creating original reality content which includes dating shows to further expand their target viewers. In Mexico specifically, Netflix will be filming 50 different series and movies in the current year. In order to capitalize on their entry into Mexico’s SVOD market, Disney cannot just rely on their brand loyalty as the sole attraction to gain subscribers. Instead, Disney must use their brand loyalty in combination with original content production. Hulu already has many original content series which are known globally, including The Handmaids Tale, however Disney should explore creating content specific to Mexico through Hulu to compete with the Netflix Mexican productions. Additionally, Disney should begin creating original series and movies for their Disney+ brands such as Marvel and Star Wars. Both of these would be a big draw to consumers that are fans of that content. In order to truly succeed and capitalize on their opportunities within original content, Disney must ensure that they do not identically mimic the strategies that their competitors such as Netflix follow. Instead, the company must implement a blend of what their competitors execute while also staying on the same level as Disney’s overall mission. As a result, the company should use Hulu as the platform that implements similar strategies as Netflix, while Disney+ creates original content under the company’s major brand labels.

Entry Business Structure 1- Internet Based Entry

For this section, we will take a close look at Disney’s entry vehicle using Direct Investment. Disney will rely on internet based entry. Since Disney is planning on starting their own SVOD service to couple it with HULU, internet based entry makes sense. In order to access this product, customers will need an internet service. The internet is a relatively new avenue, where existing companies can expand their customer base or where new companies can start with a fully online store, with little up- front cost (Friesner, 2014). Before the invention and use of the internet for ecommerce and other advanced services, companies needed some expertise in exporting and expanding their business to other countries (Chen, 2003). Without this international experience, it was highly unlikely companies were able to expand other foreign countries. Now, with the invention of the internet and ecommerce, very little prior international experience is necessary to expand to other countries, if entering the market using the “internet only entry vehicle”. Furthermore, it allows businesses expand customer base on an international scale (Chen, 2003). Keep in mind, this does not mean a company does not have to research, when entering a foreign market, they still do, if they want to succeed.

One of the first companies to experiment and excel in ecommerce using the internet was Amazon. Amazon started a garage business selling and delivering strictly books all over the country and even internationally (Armstrong, n.d.). With continuing success, Amazon eventually branched off into selling movies, music and now even have their own SVOD services, with many of their services being offered on an international scale (Armstrong, n.d.). Even Chen (2003) points out that Amazon grew very quickly via internationalization via the internet, by expanding to the UK, Japan, Germany and Canada within in their first few years.

As we established, internet based entry allows companies to expand their customer base to other parts of the country and other foreign countries (Chen, 2003; Freisner, 2014; LaMarco, 2019). Furthermore, it allows Disney to diversify the current status of their company, which reduces business risks (Competing in International Markets, n.d.). First, Disney is diversifying by adding a new SVOD service to their portfolio, and second they are expanding to Mexico.

Initially, the cost for starting up SVOD services was a costly endeavor (Tuchman, 2017). Back then, the technology was at the beginning stages, technology was glitchy etc. However, as technology has excelled in recent years (regarding SVOD technology), it is easier than ever for companies like Disney to create their own SVOD service. According to LaMarco (2019), not only is it easier for larger companies to get into SVOD, it also helps reduce overall and overhead costs by creating their own SVOD services. Furthermore, for Disney, their transition into the SVOD market is further softened by their acquirement of majority shares in Bamtech, a tech company that specializes in “direct-to-consumer streaming technology and marketing services, data analytics, and commerce management (Bamtech Media, 2018)” Disney has already used their acquisition on Bamtech to improve their SVOD services for ESPN and plan on using the same technologies to create and bolster Disney+ (Bamtech Media, 2018). Bamtech will be discussed in more detail in the next section.

Disney, currently is has two primary disadvantages/weaknesses- 1. The multitude of current competitors in the SVOD industry within and outside the United States; 2. Technologically, Disney is very far behind. Adding to this, Netflix currently has 63% of all subscribers in Mexico (Martinez, 2018). In other words, Disney has a lot to catch up on in the United States, Mexico and the rest of the world. Assuming Disney’s acquirement of Bamtech alleviates these weaknesses/disadvantages, Disney could still face other disadvantages.

There are also a few pitfalls Disney needs to take into account when starting their SVOD service and expanding it to Mexico. They need to focus on their major brand recognition, originality content and ability to be unique. Trying to copy Amazon or Netflix too much, will not create uniqueness, driving down demand (Ooyala Sales, n.d.). As discussed in our groups overall literature, Disney currently operates the old-fashioned way of business, whether it be licensing or franchising their brand. In order for Disney to diversify into the SVOD market, they will need to significantly re-structure how their company will work and run their SVOD service. Maintaining their old market structure will not work here (Ooyala Sales, n.d.). This is why Disney’s acquisition of a majority of shares of Bamtech is important. Lastly, Disney must be willing to experiment with new ideas and implement them (Ooyala Sales, n.d.). This mainly pertains to Disney continuing to create more original content to compete on Netflix’s level. These are all weaknesses/disadvantages that Disney must consider when implementing their own SVOD service. It is important to note, that DC shows are popular in Mexico (Parrot Analytics, 2019); if Disney utilized the Marvel brand correctly, they can be considered a major competitor to do DC comics shows.

Strategic Partner and Its’ Value

As we touched on in the previous section, Disney is still operating within their old business structures. Operating under their old business structure will create challenges for Disney to create and implement their own SVOD service. First they will need funding, next they will need expertise in this area. This is why Disney has been on a buying spree, buying everything from other media companies to content. This is what makes Disney’s acquisition (of the majority of shares) of Bamtech crucial for success in the SVOD market (Bamtech Media, 2018). For this part of the paper, we will consider the acquisition of Bamtech and internal partner or ally for Disney’s mission of creating their SVOD service. As mentioned earlier, Bamtech is a leader in building “direct-to-customer streaming technology, marketing services, data analytics services, and commerce management (Bamtech Media, 2018).” If we take a close look at all of those services, Disney seems to have invested in a goldmine of expertise, know-how, and ability to help them create an SVOD service. Per Robert Iger, Chief CEO of Walt Disney, the acquisition of Bamtech will allow Disney to be flexible and adapt to drastically changing markets, thus allowing Disney to grow their SVOD services overall (Bamtech Media, 2018). This deal was valued at 1.58 billion dollars for Disney to acquire a strong majority of Bamtech (Bamtech, 2018). This is further supported by their use of Bamtech in creating their SVOD service of ESPN (Bamtech, 2018).

On top Bamtech being able to assist Disney in creating their own SVOD service, Bamtech can also support Disney’s flexibility to adapt to market changes as they happen with Bamtech’s marketing services, data analytics series and commerce management services. Not only can Disney rely on these services to support their SVOD services, but they can also use them to help Disney to expand into other new markets as they arise, with research in hand. According to Hemsworth (2017), with Bamtech, Disney will be able to “monetize advertising while providing more insight into user data”. So not only is Disney getting expertise in creating their own SVOD services, they are also getting plenty of support services to further their SVOD services and other lines of businesses they choose to pursue. With Bamtech as their internal partner, Disney will be able to fulfill multiple required supporting services as well, besides SVOD development and services.

Entry Business Structure 2- Entering the Mobile Market

Disney+ and Hulu streaming service is planning to enter a new foreign market in Mexico. One of the strategies is to promote their streaming service by partnering with local cellular providers like Telcel to attract more subscribers. According to a statistic report, Mexico will have a larger mobile phone internet use from 2017 to 2023. In 2017, 43 percent of the population users accessed the internet through their mobile device. This figure is projected to grow to 59 percent by 2023.

According to Statista Research Department, statistics show leading wireless operators in Mexico in the fourth quarter of 2018, by market share. In the presented period, Telcel held a 64 percent share of wireless subscribers in Mexico. Almost half of population in Mexico use their smartphone to access online content. Now a days, everyone prefers to watch their online content on their smartphones rather than on TV’s because of the convenience. SVOD (Subscription Video on Demand) is not a new concept in Mexico. Mexico’s younger generation is more demanding and is driving mobile and internet economy towards digital platforms for messaging , social media, and SVOD services. The ability of entering Mexico’s SVOD market for Disney+ depends on effectively executing digital transformation strategies that will be essential for success. Cellular service has become a global marketplace, in order to attract more Disney+ SVOD subscribers , partnering with cellular companies like Telcel is a strategic investment. Mexico may be in an attractive position to benefit from these activities with the right strategic development and growth plan. The SVOD market is strong in Mexico. According to Statista data there are about 19.5 million subscribing households. Mexico local major cable companies Televisa owns izzi Telecom which is one of the largest VOD providers. Even though subscribers still watch traditional TV services, but as time spent viewing content increases, OTT and mobile industries will continue to see significant usage growth rates.

For now, Netflix is in the lead. Netflix has a 70% market share. However, it is no longer the only major player, as Televisa’s Blim has increased its market share from 1.5% in May 2016 to 17.5% (Statista Research Department, 2018). Disney+ has bigger and has better content and can bundle their service which will successfully beat out their competitors.

According to Statista, SVOD revenues for 2016 were $218 million USD, which is in stark contrast to the $2.9 billion USD spent on TV ads in Mexico for the year. However, the Mexican SVOD streaming industry grew 39% year over year in 2016, due to increased broadband and smartphone usage. SVOD revenue is projected to increase to $500 million USD by 2020. Disney+ should also adding local favorite Spanish program as part of the global entry strategy by adding localized original content production to attract subscribers and stake claim to a large market share of Mexico’s OTT landscape.

The Mexican cellular phone market has become a rapidly growing internet entry point for users. As of 2016, Mexico has a 69% mobile phone penetration rate with projected growth to 84% by 2020. More than half of all mobile customers have a smartphone currently, which should increase to 70% by 2020.27 Two-thirds of the entire Mexican population should have mobile internet access by 2020.(Statista, 2016). All of this growth should lead to more SVOD subscribers. The growth in the mobile market will continue to drive opportunities for digital platforms and distribution. 68% of internet users, use their mobile phone to access the internet While mobile internet usage is on the rise, laptop connectivity is dropping.

Another benefit to partnering with a local cellular company Telcel to use for an alternative payment method. One of the limitations to Over the Top (OTT) growth in Mexico is the lack of credit and debit card usage. For SVOD services, credit card payment method is the easiest way to pay for the recurring subscription fees. According to the Global Findex survey, credit card usage is extremely low in Mexico, registering less than half the cards per person than Brazil. According to a PwC report, there were only 18% of the population had a credit card. Partnering with Telcel would solve this payment issue.

Disney has invested a multiplatform content producer to help them reach millennials in the digital age for a total of $400 million. Disney has also invested $1 billion into BAMTech to help them better navigate the OTT distribution industry. In both cases, Disney is looking forward at the digital landscape and positioning itself to stay relevant as consumer demands for content and distribution change.

Expanding the SVOD service in Mexico looks very bright, with better broadband technology development and the growing competitive landscape. Partnering with Telcel as a legitimate wireless company in Mexico and taking advantage of using a SVOD bundle with mobile phone plans is a strong strategy. It is important to continue to monitor the trends and content trends within and outside of Mexico, and using the right strategy and execution plan, Disney+ streaming expansion in Mexico would put them in good position.

Advantages and Disadvantages

Disney is crafting is own rival to Netflix, where you'll be able to stream all things Star Wars, Pixar, Marvel and more. Here's everything we know about Disney Plus. Disney is betting big on its 2019 streaming service called Disney Plus, the future home for streaming almost all things Disney. We will look at the possibility of Disney merging with other companies in Mexico to become the overwhelming streaming company in Mexico (Disney Plus) as an upcoming over-the-top subscription video on-demand service owned and operated by Walt Disney Direct-to-Consumer & International.

Telcel have harnessed the forces of globalization to transform a Mexican-based company with a few international operations into one of the largest global companies in our industry. Advantages of merging with a Mexican company like Telcel Partnership. Telcel (Mexico) uses 2 GSM bands, 2 UMTS bands, and 1 LTE band. Find out if your unlocked phone or mobile device will work with Telcel (Mexico).

• The Telcel offering will be run on mobile phones on the Telcel wireless network. Telcel is Mexico's leading provider of wireless communications services with approximately 75 percent market share and a network reach of more than 740 of the country's cities.

• The competitive advantage of Disney will be the high number of contents currently produced under Disney and owned production companies.

• Disney would have a huge impact if it transferred its various content to their own streaming platform to Telcel.

• Disney can offer Telcel the various packages for example sports through ESPN to the sports fans and action movies for those fans that enjoy actions movies.

• Disney has its own contents due to the originality of the products, it can share a number of production ideas to Telcel to be more successful.

• Disney streaming platform would have a huge impact on the market since the subscribers who initially used other platforms to access the Disney produced contents would shift to Disney’s platform so that they can continue enjoying their products and services.

Telcel is pay-as-you-go, with no bills, coverage charges, or activation fees. Telcel also provides voicemail, caller ID, and call waiting at no additional cost. There are disadvantages that Disney and Telcel will face as a company that are trying to merge.

• Mexican companies are at a competitive disadvantage because of expensive and low-quality telephone and Internet services.

• Telcel need to improve its telecommunications by making better use of a government-owned fiber optic network and opening up the fixed-line sector.

• Businesses in Mexico are paying more money than they need to for telecom services.

• Telcel phone is a wireless mobile telephone; therefore, it does not work exactly the same as your landline telephone, and you may have an occasional service interruption. Your phone will work well in town, but in some rural areas you may have an occasional service problem.

Although slow to react, Disney (NYSE:DIS) has recognized the strategic importance of building its own streaming platform. Disney is now building three streaming services and intends to compete directly against Netflix. The Walt Disney Company announced that it has agreed to acquire majority ownership of Bamtech, LLC and will launch its ESPN-branded multi-sport video streaming service in early 2018, followed by a new Disney-branded direct-to-consumer streaming service in 2019 (WaltDisney).

Bamtech advantages

• BAMTech Media gives fans the freedom to access content on their terms across any connected device, time, or location.

• BAMTech Media aspires to become the leading distributor to direct to customer live entertainment and the premier provider of video streaming solutions globally (Bamtech media).

• Disney controls the subscription streaming platform Bamtech as the foundation for its online sports and entertainment future (Noam, 2018).

• Disney announced that it would introduce two subscription streaming services, both built by BAMTech. One, focused on sports programming and made available through the ESPN app, would arrive in the spring. The other, centered on movies and television shows from Disney, Pixar, Marvel and Lucasfilm.

• BAMtech is already running ESPN+, and it appears to be doing a great job. On its Q1 2019 earnings call, Disney noted that BAMtech was able to handle half a million customers signing up for ESPN+ in the same day. On that same call, CEO Bob Iger praised the platform's stability.

The real winner is the consumer. Disney and many other media players are stepping up their game by investing more money in high quality content than ever before. However, everything comes with a cost when you are building to be the best streaming company. Disney will have to face some disadvantages with BAMTech as they move forward to being the streaming giant in Mexico.

BAMTech Disadvantages

• Disney has a vast content library, it has a technology disadvantage compared to Netflix.

• To address its infrastructure needs, Disney acquired a majority stake in BAMTech, which forms the technology backbone of Disney's streaming services. The BAMtech acquisition was a smart move because it would have been extremely difficult to build the technology infrastructure from scratch.

• People can access your personal information through unsecured connections or by planting software for their benefits. Another feature that Disney will have to address within the infrastructure needs.

• Enhanced resiliency to ad blocking vulnerabilities.

Recommended Entry Vehicle

Due to the overall size of the company and business segments it currently has in place, the Walt Disney Company already has a business segment and infrastructure in place for its expansion into Mexico’s SVOD market. Currently Disney’s fourth primary segment is their “Direct-to-Consumer and International” segment. This portion of the business is centered primarily on Disney’s two major streaming services, Disney+ and Hulu, as well as their international television channels (The Walt Disney Company, n.d.). Each of the primary segments of the company has its own chairman that reports directly to the CEO of the company Robert Iger. As of 2018 Kevin Mayer was named as the chairman of the Direct-to-Consumer and International business segment (Spangler, 2018). Within Mayer’s organization structure falls a number of different presidents for the segment’s divisions including for Disney+ and Hulu. 

Both of these divisions for each streaming platform already have an extremely large organizational structure which will be the primary support for both the streaming platforms regardless of which country each service is being used in. However, in order to ensure the company’s entry into the Mexican SVOD market is successful, Disney should hire additional staff for both streaming services as shown in Figure 1. 

Figure 1 – Disney Direct-to-Consumer and International Segment Organization Chart

Each service should hire their own web developer, software engineers and administrative workers to aid any issues that arise during the expansion. The primary role of the web developers for each streaming service would be to maintain and edit the user interface as well as ensure content is correctly pushed to the interface. Meanwhile, the software engineers would be responsible for making enhancements to the software which drives the interfaces. This includes making the interface language options and allowing each service to be accessed throughout Mexico based on user IP addresses. Finally, administrative roles would include customer support and support of day to day operations. 

In addition to those new roles within both Disney+ and Hulu, Disney must also further add staff to its Content and Marketing division. This division will oversee the content, both original and standard, that is offered on both streaming services. In order to truly cater to the company’s audience within Mexico’s market, Disney must hire additional staffing to this division including marketers and content specialists. Marketers will develop strategies to best advertise the perks of being a subscribers to either or both services. Content specialists will exclusively focus on the content that is available to the Mexican population. This includes both the standard content as well as original content that is available on each streaming service platform. Disney should also utilize its already established Latin America division as a resource as it begins its expansion. The Latin America division oversees all Disney owned television within the region and will know the consumer demands and viewership trends within the market. This will aid Disney+ and Hulu to provide content that will maximize their subscriber base. Additionally, the Latin America division can assist the Content and Marketing division with creating original content that will most likely appeal to customers as well as the best marketing strategies to reach them. In total, it is estimated that the creation of these additional positions will cost Disney $1,270,000 in salaries each year which is broken down in Table 1.

Table 1: Staffing Costs 

In order to operate successfully in Mexico, Disney will not need to open any large headquarters within the country. Since Disney+ and Hulu are online services, they just need to be deployed and made available to subscribers based upon IP addresses. The most effective way in doing this is to begin working with Internet Service Providers (ISP) to ensure the service is made available to the public.  Once an established relationship is achieved with the major service providers in Mexico, Disney can further enhance their quality of service by continuing their usage of Amazon Web Services (AWS) as their primary cloud computing service. By using AWS Disney will be able to ensure that “all of the logic of the application interface, the content discovery and selection experience, recommendation algorithms, transcoding” is consistently maintained so that Disney+ and Hulu can optimize their streaming performance (Florance, 2016).  Due to the already established relationship between Disney and AWS, the costs associated with the cloud services should not be added to the expansion into Mexico’s SVOD market. Although the company does not initially need to open a headquarters within Mexico, they will need to in the future if they decide to make original content specific to Mexico. This year Netflix announced that the company will produce 50 new original series and movies within Mexico alone. As a result, the company also opened a new office location within Mexico City (De La Fuente, 2019). After establishing an initial subscriber base during its expansion of Disney+ and Hulu, Disney should consider opening a location as well if the company’s Direct-to-Consumer and International business segment decides that production in Mexico is necessary to compete. 

Resources

Armstrong, C. (n.d.). The History of Amazon.com. Retrieved July 8, 2019, from https://www.techwalla.com/articles/the-history-of-amazoncom