The Walt Disney Company is an entertainment company, a diverse organization operating in four major businesses i.e. Studio entertainment, media networks, consumer products, parks and resorts. Headquartered in California at Burbank, the company operates world wide covering major geographical regions like Latin America, North America, Europe, and Asia Pacific. The company seems to be insulated from the economic fluctuations due to its diverse and broad revenue base. However with the passage of time the market competition is getting intense that may erode its share in certain segments of business.
The diverse service and product portfolio of Walt Disney is the major strength of the company. The company’s aim is to cater customers from all segments of life, no matter of what age, sex and ethnic background they are, the company has something to serve to everyone. In addition to that the company owns a portfolio of brands with world wide recognition. For instance ESPN, Disney, Miramax, Pixar and Touchstone, all these have very strong brand equity which has helped the company to gain repute consequently it has become easier for the company to gain consumer acceptance of newly launched products. Along with this the company also enjoys the option of leveraging its strong brand image in order to enter new markets and businesses.
The company maintains its strength by having significant number of subscribers connected to Walt Disney via strong cable and satellite networks. Also the company has its capital invested in international cable and broadcast properties. This strong penetration in the cable network market enhances the stability of the company. Parks and resorts business like Walt Disney World Resort, the Disney Vacation Club, and the Disney Cruise Line also adds to the strength of the company. Furthermore, Walt Disney owns 47 percent of ownership rights in the Hong Kong Disneyland Resort, also the company licenses Tokyo Disney Resort operations.
The company though has its operations world wide yet its major revenue is generated from the North American markets which shows its overdependence on these markets and does not reflect its global presence truly. The company concentrates on the mature markets like the American and Canadian and has less focus on emerging economies like Latin America, Asia Pacific and others. The mature economies are witnessing economic downturn and Walt Disney’s present trend towards North American markets can create serious problems for the company in the near future. Monotony in visual merchandizing is also becoming a weakness for the company and the declining market of DVD is adding to the expected misery. According to 2012 financial disclosures Disney’s Home Entertainment revenues descended to 9 percent which is an alarming situation.
Having such diverse setup Walt Disney has open opportunities to expand and strengthen its position in the industry by acquisitions or by franchising in the emerging markets. The company has acquired a number of companies in the recent years to expand and enhance its placement in the families and kids media markets. Wideload Games, Marvel Entertainment and Playdom are few examples of the company’s acquisitions in the cyber social gaming industry. These companies owned some of the strongest global brands and renowned characters that include Spider Man, Iron Man, X Men, Fantastic Four and other five thousand characters. The acquisitions have brought these characters under Disney’s banner. In addition to this the company has also done distribution contract in 2009 with the dream work studios according to which the company will distribute thirty dream work studio’s motion pictures over 5 years. These steps have contributed to the company’s revenues remarkably; still there is much space for more.
Although the company is flying high and is enjoying a considerably stable position in the industry, yet the competition is intense, especially when it comes to the broadcasting segment. With the ever increasing number of entertainment channels and the variety they offer, the companies like Fox and CBS are giving Walt Disney a hard time. The parks and Resort segment is also in tough competition with other parks and amusement centers like Xanterra Parks & Resorts and others. Also, the growing proliferation of piracy in the industry is eroding the entertainment business slowly and Walt Disney is one of the victims. Changes in the regulatory requirements set by the US Federal Communications Commission can also put the company into serious problem as it will then have to spend a handsome share of their revenues to comply with the rules which consequently could impact the profitability of the company.
Summing up, Walt Disney Company strongly relies on funds generated from the theme parks, cable TV operations. The concentration in the northern world is not going to work for the company in the long run, its high time for the company to expand to the African and Asian economies. However the current strategies are acting well for the company and the management needs to be consistent and tactful at the same time to cope with the changing scenario of the entertainment industry.
Annual Reports. The Walt Disney Company. Retrieved from. http://thewaltdisneycompany.com/investors/financial-information/annual-report
The Walt Disney Company. Retrieved from. http://www.reuters.com/finance/stocks/overview?symbol=DIS.N