Walt Disney Company 1995-2009
Corporate Strategic Case
by
Dwi Joko Pramudito WA
Song Young Kang
Disney Growing Entertainment Empire
• Michael Easner, Disney’s former CEO built
Disney’s core strengths in the three areas of:
▫ Entertainment and recreation
▫ Motion pictures
▫ Video and consumer product
Entertainment and Recreation
• Disney’s top managers began by enlarging the
size and variety of its theme parks and other
entertainment properties
• In 1995, Disney announced it would build a
$500 million zoological park at Orlando in
addition to Disney World, EPCOT and Disney
• Another entertainment venture Disney finalized
was a revitalization of West 42nd Street in New
York
Studio Entertainment
• Through out 1990s, Walt Disney Pictures,
Touchstone Pictures, Hollywood Pictures, and
Buena Vista Pictures divisions continued to
increase the number of movies they produced
• Disney acquired Miramax Pictures
• By late of 90’s, Disney’s studios division had run
into hard times
• By 1995, Disney’s domestic home video division
reach a phenomenal sales of $ 2 billion
Consumer Product
• By 1995, Disney had opened 429 specialty
Disney Stores worldwide.
• Disney started a catalogue mail-order
• Disney’s publishing interests also increased
sharply, publishing more than 500 million books
a year
The Disney-Capital Cities/ABC Merger
• In 1995, Eisner announced that Disney would acquire
Capital Cities/ABC for $19 billion
• ABC’s poor performance in the following year, brought
its top management under intense scrutiny from Eisner
• Eisner had a very centralized management style and
expected all his top manager to craft five years and ten
years plans for their division
• At ABC, its executives used one year plan to guide their
choices for the next year’s programming
• It became clear that there was conflict between Disney
and ABC. In the fall 1995, ABC performance deteriorated
New Problem for Eisner and Disney
• The main reason for a major decrease in
Disney’s performance was that Disney’s
entertainment asset began to perform poorly
• Problem in Media Networks
 Problem in ABC continued to worsen in time
 By 2003, ESPN became a major contributor to
Disney profit
New Problem for Eisner and Disney
• Problem in Studio Entertainment
 The profitability of Disney’s movies continued to fall:
 Disney studio found it impossible to create new
blockbuster
 The shift to produce animated movies using computerbased digital technology
• Problem in Consumer Product
 Eisner bought two major sports team franchise (
Mighty Ducks & Anaheim Angels)
 DVD sales drop due to the lack of its new hit movies
 Eisner opened Disney Stores retail in 2000, and in
2003, Disney sold them to Children’s Place retail
New Problem for Eisner and Disney
• Problem in Theme Parks and Resort
 In the early 2000, Disney spent almost $5 billion
to build new rides and modernize its Anaheim and
Orlando properties
 External factor such as 9/11 attack and SARS
epidemic in Asia occored
Bob Iger Takes Over (Sept 2005)
• A new decentralized approach
 Disney under Eisner was too tall and bureaucratic
 Iger dismantled Disney SPO
 The result was it quickly let managers of different
business unit to generate and implement many
new strategies
New initiatives since 2005
• Media Networks
 The main source of revenue:
 Advertising revenues
 Distribution agreement with the major cable
companies
 In 2007, Disney spin off ABC Radio Holding
 In 2009, Disney merged ABC entertainment and
ABC Studios into ABC Entertainment Group
 Disney focused on the teen franchise to exploit
commonalities between business unit
• Studio Entertainment
 In 2006, Disney had a major
success when it released High
School Musical (HSM), followed
by HSM 2 in 2007, and HSM 3
in 2008
 Disney acquire Pixar Animation
Studios
 Cost cutting by reducing number
of movies produced each year,
and unify several marketing and
production division within its
TV and film operation
• Parks and Resorts
 Disney announced two major expansion would be
made to its Walt Disney theme park in Florida
 In October 2007, Disney also announced a $1.1
billion, five year plan to overhaul its California
Disneyland park
 Disney has also continued of opening new theme
parks abroad in Hongkong, France, China
• Consumer Product Division
 Enter the videogame business
 In 2005, Disney acquire many video
games developer
 Merchandise using Disney name
• Internet Entertainment
 Disney would buy a 30% stake in Hulu.com
 In January 2009, Disney announced an
agreement with Verizon wireless to catch
Smartphone‘s user by offering Verizon’s V CAST
video and mobile web customer full of a
comprehensive portfolio of Disney news,
entertainment, sports programming, including
full-length episodes of ABC TV show, news,
Disney Channel, and ESPN
 In 2007, Disney acquired Club penguin, one of the
leading online virtual world for kids
 Iger believed that internet entertainment unit will
enjoy the fastest growth during next five year.
Disney Future Prospect
• In 2007, Disney’s revenue were a record %35.5
billion, 5% hinger than 2006
• In May 2009, Bob Iger admitted for the first
time the shift of customer to use internet to
access digital entertainment was beginning to
impact the company’s business unit in important
ways
• The recession had also led to a 45% fall in
revenues from its park and resort unit
Suggestion
• As internet is becoming a new way on accessing
digital entertainment, Disney should continue its
expansion in internet entertainment unit
• Cross collaboration from videogame business
and programs of TV or Movie to attract
customer
• As the economic world is getting better, Disney
should continue its strategy on theme park and
resort to attract customer