The Position of the Walt Disney Company - Essay Example

?A Brief Historical Summary The Walt Disney Company or Disney as it is normally called is an American conglomerate with diversified business interests in movies, theme parks, cable television, publishing and range of other businesses. Formed as Disney Brothers Cartoon Studio by Walt & Roy Disney in 1923, it soon become the leading animation companies in America and further expanded into other areas of the business over the period of time. On October 16, 1923, Walt Disney signed its first contract with the M.J. Winkler to produce Alice in Wonderland and develop a series over the period of time. However, the independent work of Walt Disney started during 1927 when it produced independent animation cartoons and thus formally started to play a lead role in the animation industry. Walt Disney died at the age of 65 in 1966 and hence the company started its new face and a transition towards more aggressive acquisition strategy wherein the firm focused upon diversifying the business into other related areas and geographically spread the business. (Barrier, 2007) Disney started during the era of silent movies however; gradually it expanded into other businesses including T.V. live action film production, media, theme parks, cable television and range of other diversified businesses. The current name of the firm was taken during 1986 when it formally became the Disney Corporation. The current range of offerings includes theater, radio, online media, music, publishing as well as the theme parks. It has also created divisions within its business to actually generate more mature contents which can address the needs of a diversified range of customers belonging to all ages. There are five primary divisions or segments of the business which are being controlled by the Disney as a corporation. Over the period of time, these five business divisions grew through organic as well as external acquisitions. Disney has been active in the acquisition of smaller players in some of the segments of the business to expand itself into a diversified range of businesses. Currently, Disney is expanding into emerging markets such as China where it is expecting a higher level of growth. List of Competitors 1. Twenty First Century Fox Inc. 2. Time Warners 3. NBC Universal Media Company’s Position within the Industry Walt Disney is the largest conglomerate in the world in the entertainment and media industry controlling some of the largest media and entertainment outlets. Some of the holdings of Walt Disney include ABC Network and the 10 broadcasting stations whereas it also owns 80% of the ESPN- one of the premium sports channel in the industry. In order to assess the competitive position of Disney from a conglomerate point of view, it is clear that Disney is a leader in entertainment industry. However, at the individual business level, the competition and its nature may relatively change. Major competitors in the entertainment and film industry include Sony Entertainment, Twenty-First Century , Time Warner’s etc are significantly larger players with the penetration in the relevant segments of the business. In the entertainment and media segments, Disney is more akin to dealing with the market which is relatively young i.e. children whereas other studios cater to the needs of the relatively mature audience. This change in the market therefore critically suggests that the overall competition at the individual business units may be relatively tough for Disney as compared to its competition at the larger industry wide level. The overall competitive strength of Disney is based upon its brand image as well as the large portfolio of the licensed characters as well as the large network of television channels making it the leading conglomerate in the world. (Kotler, 2008) One of the key reasons to maintain this top level position within the industry is due to the slow-cycle market nature of the industry. In slow cycle markets, it is relatively difficult to imitate and it requires a lot of time to actually achieve the current position. Considering the history of Disney and its rich corporate history, it has been able to achieve this position in the market. Walt Disney Corporation has been able to develop the characters such as Mickey Mouse, Minnie Mouse and Goofy which are relatively old and have a history of development. These characters have evolved with the generations and therefore are considered as household names. Such historical development of the characters and development of businesses around the same concept has given Disney a unique position in the market. Its competitive position in the market therefore is costly to replicate and difficult to understand also. Recent Developments in Company and Industry The recent focus of the company is on expanding into Chinese and other developing and emerging markets. The firm has opened Disneyland in Hong Kong during 2005 and is planning to open a second Disneyland in Shanghai China. This expansion into the region suggests that the firm is actively pursuing growth opportunities in its non-traditional markets and is entering into those markets which remained historically not catered by the company. There is also a drive towards using the latest technology including that of the use of 3D technology to produce motion pictures. There is therefore a complete change in the way technology is being used in the industry and the way it will dominate the industry in future. The recent development in the company also indicates that Disney is actively involved in the acquisitions of the new and established businesses to further penetrate into the market. It recently acquired Lucas Films and also released the latest movie in the Star War series. This therefore critically suggests that there is an increasing trend towards the further consolidation in the industry wherein larger players are acquiring smaller players to further consolidate their position in the market. During 2011, the ground breaking ceremony of Shanghai Disney Resort was performed thus formally kick starting the company’s entry into the Chinese market. At the global level, industry is therefore moving towards finding its place in the emerging markets such as China as growing income levels within the country offer lot of promise for the firms. Future Directions There are three important and significant issues which may determine the overall course of the industry and company in the future. There is a rapid change in the technology which is being used in the production and movie business. There is a growing emphasis and use of the 3D and IMAX technologies besides the use of high tech and sophisticated animation tools and techniques. There is a potential advancement towards a future scenario beyond 3D to offer a unique and different experience to the consumers and as such firms with robust technology adaptation can definitely win the future. Secondly, there is a consolidation taking place within the industry as larger players are acquiring smaller players. These trends may suggest that the bigger players like Disney will grow further into the size and achieve geographical diversification. (Marich, 2013) In order to take advantage of the opportunities arising within the market, Disney therefore needs to focus more on the development of technology besides improving its overall portfolio. It can focus on acquiring all the major entertainment brands and focus on consolidating the same under one roof to offer a comprehensive range of entertainment to the audience. So far, Disney has been focused on delivering major contents which are aimed at children however, with aggressive acquisition strategy and focus on further consolidation, Disney can actually expand its overall portfolio and develop and deliver mature contents which can deliver a comprehensive experience to consumers belonging to all ages. It is also critical to note that there is an increasing trend of using the mobile based equipment for the entertainment purposes. Games, videos, music, pictures as well as other parts of the life have completely been digitalized now and consumers expect to have more technology oriented products in future. Disney therefore has to focus on developing products and services which can cater to the mobile needs of its consumers. (KOHLER, 2012) Internet TV is considered as the future of the entertainment industry and a move towards this can really help Disney to achieve better diversification in its media related businesses. More and more studios prefer to release the movies through DVDs rather than through the traditional cinema release. (Cohen, 2013). This can create future challenges for the management of Disney as its still serving the entertainment industry through its traditional methods. There is a greater need to focus on the new technology oriented manifestation of the products rather than consolidating in the traditional markets. Other Issues One of the key criticisms of the contents produced by Disney is based upon the assumption that the contents which are being produced for the children also carry the sexual references hidden in them. As such, it is suggested that the parents may not be comfortable having their children being exposed to the sexual contents. Since Children are the major viewers of the Disney contents and visit the Disney Lands, as such there may be certain ethical issues which may arise due to this. Disney also needs to focus on the development of the changes in the income levels within certain countries. With economic conditions worsening in developed countries, new markets such as China as well as Brazil and India can offer lucrative alternatives for the firm to pursue new avenues. As such there are two different options available to Disney i.e. whether it invest massively in technology to allow it to tap into new avenues such as internet TV or it can expand into the new emerging markets. Conclusion Disney is the largest conglomerate in the entertainment industry with diversified interests in TV, films, theme parks, sports channels and music businesses. Over the period of time, Disney grew organically as well as through acquisition of small as well as larger players in the market. It acquired different businesses such as Pixar and Lucas Films besides acquiring the rights of different movies. The current strategy of the firm indicates that the Disney has been focusing on entering into new markets such as China and Hong Kong. Besides, there is an increasing level of penetration being observed in the existing markets by acquiring new movie studios. However, Disney needs to focus more on the new technological changes as there is a new shift towards internet TV and mobile forms of entertainment. Disney therefore needs to invest into the development of new and unique technological products and services which can cater to the growing needs of the new customers which are increasingly mobile and need entertainment on the go. Bibliography Barrier, M. (2007). The Animated Man: A Life of Walt Disney. California: University of California Press. Cohen, D. S. (2013, June 12). George Lucas & Steven Spielberg: Studios Will Implode; VOD Is the Future. Retrieved from Variety: http://variety.com/2013/digital/news/lucas-spielberg-on-future-of-entertainment-1200496241/ KOHLER, C. (2012, October 16). How Videogames Are Changing Disney. Retrieved from Wired: http://www.wired.com/gamelife/2012/10/disney-videogames/ Kotler, P. (2008). Principles of Marketing. New York: Pearson Education. Marich, R. (2013). Marketing to Moviegoers: A Handbook of Strategies and Tactics. New York: SIU Press. Read More