The Walt Disney Company

Strengths

A prominent strength the company has neutered since its birth is their brand image and presence. Their logo is instantly recognisable, and its name has always generated positive reception from the media and from the public, aiming to inspire and bring joy to children and families with entertainment experiences. Disney have a strong reputation to constantly defend as being the best, this position was reinforced with the company acquisition of reputed companies like 21^st Century Fox and Marvel Entertainment (Johnston, 2021). By taking in other household names the company has acquired resources far beyond their own, as well as rights to creative content that can last for a lifetime. The business has always achieved an appropriate free cash flow for an enterprise their size, enabling them to continuously invest in high-quality and high-budget projects to keep demand and consumers happy. Disney’s annual cash flow for 2020 was $3.594B a great 224.37% increase from the previous year (macrotrends, n.d.).

Opportunities

An area of opportunity for Disney to progress further is to invest more into technological innovation. Currently Disney have announced that they are in the works of introducing the metaverse to its business joining Zuckerberg and Microsoft. The metaverse is a new niche concept that aims to blend the physical and digital worlds where we can interact virtually. Cutting edge technology isn’t new territory for Disney, their iconic mascot Mickey Mouse was used in a small animation tilted ‘Steamboat Willie’ and has a landmark in animation as the first to use synchronised sound. Breaking the ground for storytelling and leaving silent films behind. Disney want to incorporate this new tech in their theme park attractions with a combination of wearable devices and mobile phone features. This advancement could be promising for Disney parks as they have generated $20.3 billion in 2018, the highest revenue in over 10 years (Statista Research Department, 2021). With all the pandemic has shown us going digital and investing in technology is the right move especially for a company like Disney to create happiness and deliver that to as many consumers as they can.

Covid-19 Pandemic

As highlighted in their 2020 annual report Disney took a great hit and suffered major losses due to the current Covid-19 pandemic. Disney goods and services that relied heavily on physical presence were badly hit by the world shutting down.

Theme parks were closed or saw a significant reduction in capacity, along with cruise ship journeys, guided tours and stage performances were all suspended until further notice. They suffered a $1.4 billion loss to profits in the first three months of 2020 to closed parks and attractions, cancelled movie releases and reduced ad sales.

However, since Disney+ had just launched they were able to move cinema releases that were cancelled onto the streaming service, the long-awaited live action ‘Mulan’ movie was scheduled to be released March 2020 during the pandemic taking full effect. Disney turned this into a money-making opportunity by releasing it on Disney+ but under a premium access option, allowing current members to pay $30 (Cohen, 2020) if they wanted a quick access before it was available to all members. Although this couldn’t replace box office revenue it gave users the experience of a virtual ticket to watch at the comfort of your home instead of a traditional theatre.

However, this strategy did not work as smoothly with other releases. Disney were facing a lawsuit brought down by Marvel actress Scarlett Johansson over the handling of the ‘Black Widow’ release. Disney offered the premium access option to the 2021 movie while it was still showing in cinemas, Johansson claimed she was deprived of potential earnings (BBC, 2021).

This issue was later settled and both parties agreed that no hard feelings were left and business as usual will continue, this may reflect badly on Disney as potential talent in the future might avoid working with them.

Disney and the Vertical Integration Strategy

Disney have applied the vertical integration strategy to their business for a long time, and this strategy become stronger as they acquired more family entertainment services such as ABC which came along with its ESPN cable service in 1996 for $19 billion (Lakritz, 2020).

This strategic move put them in the lead among its competitors as The Walt Disney Company was the first media company with a position in four systems of distribution: cable tv, filmed entertainment, broadcasting, and telephone through its relationship with regional phone companies (Fabrikant, 1995).

This strategy reinforces Disney’s competitive approach to the market. By conquering this area of the vertical supply chain was a big step for Disney and left a lot of competition behind, as they were limited to fewer outlets for their content and opportunities for consumer attention. Competitor’s media goods had no value without a distribution pipeline.

Disney were falling behind with how they created content and needed to try a different creative approach, the stories were there but the execution and production was lacking. Former CEO Robert Iger (2005-2020) had specific objectives in mind on how to take Disney further one being to invest and dedicate time into creating high-quality content (Wasko, 2020, p. 69).

Pixar was ahead with their technology what would become of Disney if they failed to make great animation? Iger fought for Pixar acquiring the studio for $7.2 billion, Pixar was daring and weren’t afraid to take risks this culture and mindset changed Disney Animation from within.

This bond between Disney and Pixar is an example of horizontal integration. This strategy is defined when two firms in the same stage of the supply chain or are similar in business combine forces (Doyle, 2013). This allowed Disney to open its resources to be shared and used to create content that would benefit both brands, gaining economies of scale and reputation.

Vertical integration has centred Disney at the heart of the conversation on production and distribution in media, divide and conquer was the aim and Disney achieved this with their impressive portfolio of brands collected over the years.

Though vertical integration Disney showed a film and moving pictures should not be limited to that single form but can be extended and reach various industries within the media and entertainment field.

We can apply this to the 2013 animated film ‘Frozen’ which ranks within the top five highest grossing animated films of all time making $1.282 billion in the worldwide box office. At the time of its release ‘Frozen’ exceeded expectations and become the fifth biggest film in box office history, not just the animation category winning two Oscars in that movie season (BBC, 2014).

In Disney’s 2014 annual report the holiday season was profitable period for the brand during the release of this movie, as merchandise of the Elsa doll alone had generated $26 million in retail in the US and continued to grow in the new fiscal year (The Walt Disney Company, 2014). The movie gained worldwide attention for its title track ‘Let It Go’ sung by actress Idina Menzel topped first in the Billboard album chart, selling out the previous year’s top title it was among A-list performers such as Beyonce and Katy Perry (Peoples, 2014). Disney have room to mix freely between different forms of media to satisfy their consumers as the content they produce and distribute can be moulded to fit different markets.

We have clearly seen why Disney is a force to be reckoned with and a company this strong will have competitors that want to replace Disney in the spotlight. It’s hard to go against Disney head-to-head when it has a fiercely loyal customer base and the advantages of big named brands under its belt. It has more resources than other studios and companies will ever imagine acquiring. Disney has stepped into new territory with Disney+ their own version of what Netflix and Amazon prime video has given us, they’re late to the game but the numbers speak for themselves. The streaming services is equipped with 11,700 episodes and 700 movies from the company’s extensive library (The Walt Disney Company, 2020) which will be able to satisfy 50 million of its subscribes that joined in just five months after the launch. It took Netflix seven years to reach 160 million having moved from DVD rental to streaming in 2006 (Sweney, 2020). Disney is set to dethrone Netflix by 2024 as the world’s biggest video streaming provider.