JAVIER CABALLERO POSADAS

Company Overview

The Walt Disney Company (DIS) is a world leader among family entertainment and
media enterprise companies. It was founded on October 16, 1923 by brothers Walt
Disney and Roy Disney as the Disney Brothers Cartoon Studio.

According to their website, their mission is to be one of the world's leading producers
and providers of entertainment and information. Disney Company seeks to develop the
most creative, innovative and profitable entertainment experiences and related
products in the world.1

The Walt Disney Company has grown and diversified into four divisions:

 Studio Entertainment: Also known as The Walt Disney Studio. It is the first
division that began with Disney and is responsible for the creation and distribution
of animated films. This division includes Pixer Animation Studios, DisneyToon
Studios, Miramax Films and other companies owned by Disney.

 Park and Resorts: This division includes five resorts locations, eight vacation
clubs and 11 theme parks on three continent.

 Disney Consumer Products: Disney distributes products that extend from

apparel, toys and books to foods, art, interactive games, etc. To accomplish that
Disney has different lines of businesses like Disney Food, Home and Disney
Stationery, and others. Disney products are also available at disneystore.com
which is the official shopping portal.

 Media Company: This division includes the company´s television and Internet
operations. It covers a wide range of broadcast, radio, cable, publishing and
internet companies. Some of this companies are: Disney-ABC Television Group
(which includes ABC Family, ABC News, and other divisions), ESPN Inc., Disney
Channels, Radio Disney Network, Hyperion.

This paper report is going to focus on the media business, but not forgetting the
potential synergies between all businesses.

Disney´s Strategy

Target Market

Disney´s strategy for expanding has been for many years targeting children up to
twelve years and considering their parents opinion (they are the ones with the money),
this has also made Disney have a good reputation among parents.

This children focused strategy has lately changed and now they are trying to reach
other segments like teenagers and even adults. In order to change their strategy they
have to adapt to teenagers and adults consuming behavior and design specific ways to
deal with it.
Nowadays teenagers have grown with internet in their houses and Disney is aware of
that, therefore their marketing strategy tries to reach them offering a “modern face”
while growing their child stars with their audience and finding synergies between their
game, internet, toys and media businesses. An example of this is Hanna Montana.

Hanna Montana´s character has changed as it has grown and become a teenager.
Disney has marketed Hanna Montana beyond the TV series in an interactive way,
producing a TV game show that tries to find Hanna Montanna´s number one fan.
Besides that, Disney sells albums, magazines, books, and even a karaoke game to
reach their fans.

Disney is also trying to reach parents on the internet, they´ve launched a website called
Family.com that tries to be a site for parents with articles related to food, education,
and answers to all kind of questions that parents may have while raising their children.

This teenager and adult strategy is also seen in their latest acquisitions, Marvel,
Playdom and Tapulous Inc. With the last two acquisitions they are trying also to have a
bigger presence in the gaming industry, and they will also be able to use their
synergies by developing teenage star related games.

Disney understands internet and gaming not as second businesses, but as equally
important businesses than TV shows or movies. This way, the idea is to focus on
products that can be profitable in all areas.

Strategic Growth

In the other hand, U.S. media market saturation has made Disney to design a growing
strategy by seeking licenses in foreign markets and acquiring controlling stakes in
foreign media companies and networks like Asia, Eastern Europe, etc. ESPN for
example has captured more of the UK sport markets from BSkyb. Disney has also
acquired Hungama TV (Indian children´s channel, Jetix Europe and a 32% of UTV
Software Comm. (major Indian media company.

New technologies strategy

Disney understands that new technologies are key to continue growing and to maintain
a leader position. Consumer behavior is changing and Disney is adapting to their
requests by establishing new ways of delivering their products:

Video on Demand (VOD)

Disney-ABC Television group is available via video on demand on several cable and
telco television systems in the U.S and Europe. There is currently a subscription VOD
available to Cablevision iO customers. Disney also licenses all the theatrical products
of the Walt Disney Company in VOD through cable MSOs, Verizon, Movielink,
CinemaNow and Hulu.

Broadband
Disney is delivering full length episodes of several ABC primetime series online at
ABC.com, free of charge to customers, they´ve also created ABC.com´s online video
player which allows for ABC content to be played off of ABC.com and can be used by
affiliated portals, social network sites, and video aggregator sites. Disney is also
delivering true definition of series such as lost, desperate housewives, grey´s anatomy
and ugly betty, and full-length episodes of Disney Channel and Jetix series.

Their strategy is not focusing only on delivering online TV content, but also on
interactive media, Playhouse Disney´s Preschool Time Online is a subscription
broadband product that offers fun learning activities for preschool-age children.2

Portable Media

Disney-ABC Television Group was the first company to make programming available
through iTunes. They´ve developed games and applications that are available at the
AppStore.

Disney launched in 2006 Disney Mobile in the United States but ceased operations in
2007.

Mobile Agreements

Disney announced an agreement with Sprint in 2007 to provide content on demand via
three linear mobile channels. Disney is delivering full length episodes of known series
through mobile.

Disney provides ringtones, wallpapers, and diverse material for mobiles in order to be
in constant contact with the consumer. Their webpage Disney.com is also available on
mobile devices and they actualize the site weekly with videos and games.

HDTV

Disney was the first major broadcast network to begin broadcasting in HDTV with Good
Morning America. It has also been the first player to broadcast HD format in China.

SWOT Analysis

STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
• Leader • Difficulty to adapt due to its size
• Target different customer segments. Entertainment
•• Intense business is affected
competition
• Strong Corporate Brand Name
• Use of new technologies (mobile, by crisis more
• Changes than other
in technology andsectors.
• Strong Aditional Brand Names
internet, etc.) Product portfolio
• consumer behavior still focused mainly
(ESPN, Pixar, Miramax, …)
• Expanding into developing countries. in children.
• Changes in consumer taste
• Geographycally expanded
• Use of social networks. Highdifferences
•• Law investmentinneeded for
different
• Diversified Business synergies
• Cost cutting in new technologies changes.
countries.
• Popular Characters
• Outsorcing • Audience fragmentation
• Distribution Channels
• Grow with customers and maintain • Economic crisis
• Marvel Aquisition
their interest. • Monetize online investments.
• Piracy
 Competitors and Industry Data

According to Fortune 500 webpage, the main competitors of the entertainment industry
are: 3

Revenues Profits
Fortune 500 %change % change
Rank Company rank $ millions from 2008 $ millions from 2008 Employees
1 Walt Disney 57 36.149,0 -4,5 3.307,0 -25,3 144.000,0
2 News Corp. 76 30.423,0 -7,8 -3.378,0 -162,7 55.000,0
3 Time Warner 82 28.842,0 -38,6 2.468,0 NA 31000
4 Viacom 170 13.619,0 -6,9 1.611,0 28,8 11200
5 CBS 177 13.014,6 -6,7 226,5 NA 25580
6 CC Media Holdings 376 5.551,9 -17,9 -4.034,1 NA 19295
Live Nation
7 Entertainment 490 4.232,0 -2,2 -60,2 NA 4300

In Nielsen´s 2010 Media Industry fact sheet we can see how people behaves and
watches television, online, mobile, radio, books and music. There is a continuation in
consumers behavior that is going to connect more and watch more TV.4

Some interesting numbers of US market are:

• TV: 115 M homes with at least one TV. 50.9 M with digital cable. 32.7 M with
satellite. Americans watch 31.5 hrs of TV per week in average. Kids between 6-11
watch 28 hrs of live TV a week.

• Mobile phones: US mobile phone users: 223 M. mobile Web users 60.7 M. 18% of
mobiles are smartphones. 8% streamed audio and 7% streamed video.
• Internet: Internet users in US: 195M. Unique viewers ov video: 138.4M. Avg. Time
spent viewing online video per viewer monthly: 200 min.

• Social networking: Facebook users: 56% of US internet users. Average use of

Facebook: 6 hrs/month. Twitter grew 500 % year over year. Time spent on social
networking sites has increased 277% last year.

• Video Games: 54% of households own a videogame console. Active female

gamers. 45%. Female owners of Wii and PSP. 49% and 52%.

Recommendations

 Consumers are each time more fragmented and the way they consume media is
changing very fast. Disney has to find ways to follow those changes and adapt to
new technologies. Cutting costs will be crucial, new technologies require smaller
workforces so I would recommend to make a move in that direction.

 There are two ways of converting to new technologies, one is buying companies that
are already there (like they did with playdom) and the other is outsourcing and
maintaining their costs variable. I would recommend to outsource whenever the
technology is not proven and they are not certain of the way is going to behave in
the future.

 Find ways of monetizing their online products. Offering a freemium content may
work as their “TV stars” like Hanna Montana and Jonas Brothers have very loyal
fans.

 Advertisement in media industry is changing fast. Marketers are also developing

their own media assets and not buying media companies. Disney´s brand and
unique position can be a good incentive to attract marketers and offer them a value
proposition.

 Consumer’s behavior data is more available than ever on the internet. There is an
opportunity to deliver more consumer targeted content. The study of its needs will
be a way of finding additional businesses and ways of monetizing products.

 Social networks are gaining importance year by year. The acquisition of Playdom
tells us that Disney is aware of that. But Disney could still take profit of their
synergies by building an online community that could attract users from one
business to another.

 Disney´s partnership with Apple is a good way of being ahead of competitors in

mobile strategy. Disney has to be aware of changes and become very active to be
on top of consumers demands.

 Change management is the key issue in this environment. Until the industry finds its
way Disney has to be a Giant with fast feet in order to not fall from too high.
1

References / Webpages consulted:

 http://corporate.disney.go.com/careers/who.html

2
Disney´s Digital Media Fact Sheet

3
http://cnnmoneycontrol.com/magazines/fortune/fortune500/2010/industries/145/index.html

4
Nielsen 2010 Media Industry Fact Sheet.

 The Walt Disney Company Fiscal Year 2009 Annual Finnancial Report and Shareholder Letter

 The Walt Disney Company. Henry Fund Research. Iowa University.

 Booz&Co 2010 Media Industry perspective.

 The Walt Disney Company. Danjel Lessard & Lauren NorthcuttBusiness 308: Principles of Marketing

 http://www.wikiwealth.com/research:dis

 http://www.diszine.com/content/category/disney-media

 http://www.markramseymedia.com/2010/03/strategy-the-disney-way/

 http://www.proactivereport.com/c/social-media/disneys-content-strategy-to-reach-moms-online/

 http://www.clickz.com/clickz/news/1725337/disney-buy-playdom-latest-sign-its-social-media-embrace

 http://www.mobilemarketer.com/cms/news/media/4964.html

 http://corporate.disney.go.com/corporate/overview.html

 http://land.allears.net/blogs/michaelbachand/2010/10/ready_what_should_disney_do_wi.html

 http://www.thewrap.com/media/article/playdom-disney-makes-social-media-land-grab-19672