Case Analysis

D. SWOT ANALYSIS

STRENGHTS

1. Popularity and strong brand reputation. Walt Disney is not only popular in the nation but also worldwide. The company’s name is one of the most popular and recognizable brand names in the entertainment business across the world. Additionally, its family-oriented industry is appropriate to different types of customers in a variety of age groups. Its brand reputation and popularity has been around for nearly a century and was ranked number eight in the 2019 Forbe’s Most Valuable Brands list with a value worth 52 billion dollars.

2. Diversity of products and services. Disney is involved in four different business segments: media networks, parks, experiences and products, studio entertainment, and direct-to-consumer and international. Its media networks include Disney Channel, ABC, Freeform, ESPN, FX, and National Geographic. Disney parks and experiences on the other hand include: Disneyland Resort, Walt Disney World, Shanghai Disney Resort, Disney Cruise Line, Disney Vacation Club, Aulani Disney Resort and Spa, Adventures by Disney, Walt Disney Imagineering, Disney Publishing Worldwide, and Disney store. In addition, the company’s studio entertainment business include: Disney Studios, Disney Animation Studios, Pixar, Marvel, Disney Nature, Lucas Film, Disney Music Group, Disney Theatrical Group, Blue Sky, 20th Century, and Searchlight Pictures. Lastly, their direct-to-consumer and international business which comprises of streaming services, media distribution, and advertising to deliver personalized entertainment across the world include: Disney+, ESPN+, hulu, and hotstar.

3. Strong and Growing product portfolio. Disney’s diversity in products and services they offer is a key factor on how they manage to consistently grow and have a strong portfolio. The unveiling of their most recent streaming service called Disney+ in November 2019 is a prime example of their continuous growth and increasing revenue with the addition of new products. As of April 2020, Disney has an estimated 50 million paying subscribers to this new streaming service. The product was first launched in the USA, Australia, New Zealand, and the Netherlands. On March 24th of this year, the company launched this product in the UK, Ireland, France, Germany, Italy, Spain, Austria, and Switzerland. Its judicious subscription fee and variety of content are some of the main reasons why this new product was such a hit.

WEAKNESSES

1. Overreliance of revenue from North America. Despite Walt Disney’s presence in many countries in North America, Europe, Middle East, Africa, Asia, Latin America, and others, a majority of its revenue comes from only two countries. According to Statista’s online revenue breakdown for Disney in 2019, 73% of its revenue came from the United States and Canada. Due to its dependency on those two countries, its vulnerability to any changes in the U.S. or Canadian market is significantly high.

2. Limited expansion through acquisition due to antitrust laws. In August 2018, the Antitrust Division’s final judgement on the U.S. v. The Walt Disney Company case as it pertains to Disney’s proposed acquisition to certain assets from Twenty-First Century Fox resulted in them agreeing to divest 22 Regional Sports Networks. Due to antitrust law restrictions to protect loss of competition and prohibit monopolization in their market segments, Walt Disney is limited in expansion opportunities through acquisition.

OPPORTUNITIES

1. Increased Demand for streaming services. As part of their Direct-to-Consumer streaming services, Walt Disney’s hotstar acquisition in 2018 and hulu in 2019 enabled them to expand their opportunities within this market segment. In addition, their launch of ESPN+ in 2018 and Disney+ late last year reinforced their streaming services and their ability to generate revenue through the direct-to-consumer market across the globe. The variety of sports shows in ESPN+ is also a great opportunity for the company to supplement their revenue from their media networks business. Furthermore, Disney’s astonishing 50 million paying subscribers as of April 2020 to their newly launched Disney+ has been nothing but a huge success. Lastly, this opportunity is projected to grow due to the unfortunate COVID-19 pandemic that’s forcing a lot of families to stay home and will most likely find other ways for entertainment specifically through streaming services.

2. Technological Advancement and Innovation. With the growing need for advance and modern technology across the world, Disney’s 2018 acquisition of BamTech, a streaming service provider, was a clear sign of the innovative direction the company’s trying to pursue in the future. BamTech’s expertise in personalizing consumer experience through their vigorous video streaming capabilities will not only help the company have a competitive advantage but also present them a massive opportunity of gaining millions of new consumers which could result in a significant growth of revenue worldwide. In addition, the rise of electric powered machinery can also provide Disney another opportunity to invest in cost-saving equipment and other resources that’ll benefit their company in the future by making them more efficient and effective at the same time.

THREATS

1. Growing competition. The increasing consumers of online television, movie rentals, and other streaming services may negatively affect Disney’s media network and studio entertainment business segments. Subscription fees to these online services are more affordable compared to cable network providers. In addition, cost conscious consumers will most likely go the online route versus paying for network television or the expensive movie ticket prices. And sure the U.S. laws encourage competition in order to prevent monopolization in certain business segments but it’s more for the benefit of the consumers. With that said, the rise of competition is always bad news for businesses such as Walt Disney. Its top competitors to include CBS, Sony, Viacom, Warner Media, and Comcast in the media and entertainment market are all finding ways to improve and generate yearly revenue. In fiscal year 2019, Comcast topped Walt Disney in revenue with a total of 108.9 billion dollars compared to Disney’s 69.6 billion dollars. In addition, the company’s main streaming services in hulu and newly launched Disney+ are all facing stiff competition from top provider Netflix and others such as Amazon Prime.

2. Potential return of digital content piracy. The digital content piracy issue has been gone for a while but it never left and was always around. And now with the rise of multiple streaming services from different companies, not everyone’s favorite shows will always fall under the same provider. A majority of consumers nowadays are cost conscious and tend to focus more on the value of what they’re trying to purchase. With that said, not everyone can pay and subscribe to multiple providers at the same time just to be able to watch all their favorite shows and movies. For those reasons alone is what makes the potential return of digital content piracy extremely high since it’s free.

rEFERENCES

ABOUT THE WALT DISNEY COMPANY. (n.d.). Retrieved from The Walt Disney Company: https://thewaltdisneycompany.com/about/

Anitrust Division. (2018, August 15). United States v. The Walt Disney Company, et al.; Proposed Final Judgment and Competitive Impact Statement. Retrieved from Federal Register: https://www.federalregister.gov/documents/2018/08/15/2018-17521/united-states-v-the-walt-disney-company-et-al-proposed-final-judgment-and-competitive-impact

Brown, L. (2017, December 17). Walt Disney Company SWOT Analysis & Recommendations. Retrieved from Panmore Institute: http://panmore.com/walt-disney-company-swot-analysis-recommendations

Disney History. (n.d.). Retrieved from D23: https://d23.com/disney-history/

Feldman, B. (2019, June 26). Piracy Is Back. Retrieved from Intelligencer: https://nymag.com/intelligencer/2019/06/piracy-is-back.html

Jurevicius, O. (2013, February 16). SWOT analysis of Walt Disney. Retrieved from Strategic Management Insight: https://strategicmanagementinsight.com/swot-analyses/walt-disney-swot-analysis.html

St Leger, H., & Roberts, S. (2020, April 22). Disney Plus: our guide to exclusive shows, 2020 movies and how to sign up. Retrieved from techradar: https://www.techradar.com/news/disney-plus-shows-movies-sign-up

The Walt Disney Company. (n.d.). Retrieved from Fast Company: https://www.fastcompany.com/company/disney

The Walt Disney Company competitors. (n.d.). Retrieved from Craft: https://craft.co/the-walt-disney/competitors

The World's Most Valuable Brands. (2020). Retrieved from Forbes: https://www.forbes.com/powerful-brands/list/3/#tab:rank

Watson, A. (2019, December 16). Revenue of the Walt Disney Company in different geographic regions from 2010 to 2019. Retrieved from Statista: https://www.statista.com/statistics/193263/revenue-of-the-walt-disney-company-in-different-regions/