SWOT & Analysis of The
Walt Disney Company
Ian Little
10/29/2013
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Founded in 1923 by Walt Disney, The Disney Company, and since 1986, The Walt
Disney Company has just reached its 90th year anniversary (Company Histories 2004). While
the length of a company's existence is not necessarily tied to a company’s success, it is difficult
for a media company to have such a long history and not have some kind of cultural impact. In
fact The Walt Disney Company has not been immune in its history to shake ups in the executive
positions, scandals, and economic downturns. Nonetheless, it is hard to imagine a world without
Mickey Mouse. The Walt Disney Company is a global juggernaut that extends far beyond the
reach of just its media holdings. Disney is an international brand, it is a household name. It is a
cultural icon. It is Coca Cola. It is ever present. With that said, it is a business, one capable of
bad decisions and mistakes.
Before discussing the financial situation of The Walt Disney Company, it is
important to understand the way the company is split up into five parts. Each of these five
sections of The Walt Disney Company brings different amounts of profits to Disney. The
following list has the media branches first, followed by the non-media assets. The five branches
are, Disney Media Networks, Disney Interactive, The Walt Disney Studios, Disney Consumer
Products, and Parks and Resorts (Disney Annual 2012).
The Disney Media Networks consists of The Walt Disney Company’s TV holdings. It
represents channels like The Disney Channel and its subsidiaries, aimed at children and tweens.
The American Broadcasting Network or ABC, aimed at US as a whole, airing news, original
programming and more. A+E which is a niche 18-35 year old channel. ABC family, which is
aimed at families and the ESPN networks, including ESPN1 and ESPN2 which are some of the
only major 24/7 sports networks on air in the United States (Disney 2nd Quarter 2013). The
Disney Media Networks are the backbone of Disney’s financial workhorse and though The Walt
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Disney Company is not associated with its television programming as much as some of their
other divisions, it is the key money maker for the company (Disney Annual 2012).
Disney Interactive is The Walt Disney Company’s gaming and online branch. The
majority of its interactive media is created as tie-ins to their TV and movie products, games like
“Brave: The Video game” and “Lego Pirates of the Caribbean.” They also have their hands in
just using licensed characters in games, like their toy selling machine “Disney Infinity” (Disney
Interactive). The game series of “Kingdom Hearts” is similar; Disney interactive doesn’t handle
any of the programming and merely license Disney characters to be used within the Kingdom
Hearts games. Lastly, Disney interactive creates media for the “casual crowd” like their MMO
game titles (Massively Multiplayer Online games, World of Warcraft is an example) like
“Toontown” and “Club Penguin” and mobile and social media titles “Nemo’s Reef” and
“Avengers Alliance” (Disney Interactive). With the acquisition of Lucasarts in 2013, Disney
Interactive also has control of all casual Star Wars games into the foreseeable future, licensing
off the hardcore titles to Electronic Arts (Disney Interactive).
The Walt Disney Studios is the film/theater/music wing of The Walt Disney
Company and arguably the face of the company. It is where the company’s roots lie as well as
where much of its future continues to be, even if it is not the most profitable division of the
company. Disney Studios produces films under many labels, Touchstone Pictures being one the
first and largest. It has recent acquisitions in Marvel and Lucasfilm (Disney 2nd Quarter 2013).
While known for their animation which is aimed primarily at children and families, including
films as early as “Snow White” and as late as “The Princess and the Frog” and “Tangled.” The
studio has also found recent ground with an older market, starting with their first PG-13 film,
“Pirates of the Caribbean” which exploded into a powerful multiplatform franchise (Numbers).
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The Walt Disney Company has continued targeting this older demographic releasing films like
“The Avengers.” It can also be seen in the plans to create over 5 new Star Wars films, including
a new trilogy to help reinvigorate the Star Wars franchise. While The Walt Disney Company has
matured, the purchases of Pixar animation studios and the funding of Dreamworks through
Touchstone pictures show that it is not a company interested in losing its family and child appeal
(Disney Annual 2012).
The music holdings of Disney Studios include Walt Disney Records which includes its
film soundtracks as well content on one of the Walt Disney Radio Stations, “Disney Radio.”
Hollywood records is where The Walt Disney Company produces for most of their famous
“child” singers, like Demi Lovato and Selena Gomez. Both music companies are touted as
“family friendly” but are aimed at different demographics. Walt Disney Records is aimed more
at entire families and young children, while Hollywood Records aims at tweens and teenagers
(Disney Music Group).
2013 deals with Netflix and Google have also allowed The Walt Disney Studios
to begin to stream most of their film library as well as the Disney Media Group’s television
programming (Disney 2nd Quarter 2013). This is done in large parts to help combat film rental
services and pirating by putting money directly into The Walt Disney Company’s pockets. It also
is a new platform for the Disney Studios and Media Networks to profit.
Disney Consumer Products and The Walt Disney Parks and Resorts branch don’t
create media but rather support it and are supplemented by it. While they may not create media,
these two branches are incredibly important to the success of the Walt Disney Company,
accounting for just under half of the company’s profit. These two branches were much more vital
in the 1990’s and 1980’s when the other branches, Notably Disney Studios and Media Networks
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were not performing at the level they are today (Companies Histories 2004). While neither of
these branches may produce media, they rely heavily on it. The Parks and Resorts cash off of
Disney’s many characters and franchises through rides and even just experiences on their cruise
lines and hotels. Disney Consumer Products produces almost solely media tie in items be it
clothing, toys, replica props, statues, food, and much more (Disney Annual 2012).
With the branches explained it’s time to look at the financial information regarding The
Walt Disney Company. The following table is The Company’s overall financial records of the
last five years.
2008
2009
2010
2011
2012
% Change in Five
Years
Revenues (Sales) (in
Millions of $)
37,843
36,149
38,063
40,893
42,278
+11.71%
Operating Profit (In
Millions of $)
7,404
5,205
6,456
7,726
8,763
+18.35%
Operating Profit Margin
19.57% 14.39% 16.96% 18.89% 20.72% N/A
Net Profit (in Millions of
$)
4,427
Net Profit Margin
11.69% 9.14%
3,307
3,963
4,807
5,682
+28.34%
10.41% 11.75% 13.43% N/A
(Disney Annual 2012)
Here is a three year breakdown by branch of The Walt Disney Company.
Disney Media Networks (In Millions of $)
2010
2011
2012
17,162
18.714
19.436
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Parks and Resorts (In Millions of $)
10,761
11,797
12,920
Disney Studios (In Millions of $)
6,701
6,351
5.825
Consumer Products(In Millions of $)
2,678
3,049
3.252
Disney Interactive(In Millions of $)
761
982
845
(Disney Annual 2012)
Lastly, the following chart shows expenditures of each of the 5 branches over a three year period.
2010
2011
2012
Disney Media Networks(In Millions of $)
5,132
6,146
6,619
Parks and Resorts(In Millions of $)
1,318
1,553
1,902
Disney Studios(In Millions of $)
693
618
722
Consumer Products(In Millions of $)
677
816
937
Disney Interactive(In Millions of $)
234
308
216
(Disney Annual 2012)
As can be seen The Walt Disney Company has not only managed to come back from a
slump but actually surpass its previous earnings and experience significant growth over the last
five years. Even its slump in 2009, which was caused heavily by the decrease in consumer
spending power from the housing crisis, was little more than a blip on Disney’s financial radar
(Disney Annual 2009). That’s not to say that the five branches have all grown in the five year
period though. Over the last three years the branches have stayed in the same order of total
income. Disney Media Networks has brought in the most income, followed by Parks and
Resorts, then the Disney Studios, and Disney Consumer products and Disney Interactive round
out the bottom. While Disney Media Networks and the Parks and Resorts have grown, The
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Disney Studios’ have actually brought in less revenue and have become MORE expensive
(Disney Annual 2012). So are the Disney Studios’ a liability to the financial health of The Walt
Disney Company as a whole? Not exactly. Here are a few examples of where Disney is making
and losing its money.
Firstly, The Disney Studios has not been a prime moneymaker for some time. For example, in
the 1980’s the Disney theme parks, Disneyland, Disney World and Disneyland: Tokyo, were
producing over 70% of the company’s profit (Companies Histories 2004). Even in the early 90’s
the parks accounted for more of The Walt Disney Company’s gross profit than their film
holdings (Companies Histories 2004). It’s hard to believe a studio putting out films like Beauty
and the Beast (making $218,951,625 in the box office, the third highest grossing film of 1991)
and The Lion King (making $422,780,140, the second highest grossing animated movie of all
time) (Numbers). This is evidence of a problem that the entire film industry is struggling in even
today, the high cost and relative low returns of anything but the most successful blockbusters.
Secondly, The Walt Disney Company often can produce something in one of its branches
and make it profitable in the other four, even if the branch that makes the product was made for
doesn’t actually make a profit on it. The purchase of Marvel for example has allowed Disney to
make profits off an animated show “Avengers Assemble” that airs on its media networks, the
film “The Avengers” which was produced by its studios, the social game “Avengers United”
from their interactive studios and action figures, toys, shirts, and more from the Disney
Consumer Products branch. While there is no Marvel ride YET in their parks, it would not be
surprising for there to be one later down the line.
This is an example of the cross media strategies that Disney uses for nearly ALL of its
media products. In many ways every creation by the Disney Studios and Disney Media Networks
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can create profits in all of the other branches. Some of Disney’s cross media has even started to
step into the realm of transmedia, like Pirates of the Caribbean, where the games and books build
off the stories of the film franchise, rather than just replaying the story or reusing characters in a
different setting. It is important to note that the Avengers example is still open to transmedia
storytelling but at the time The Walt Disney Company has just used the Marvel characters in
different ways through different branches. For example if Robert Downey Jr’s Iron Man
appeared in a video game as opposed to just “Iron Man” and it told a story that wasn’t present in
one of the Iron Man films, it would be transmedia. At the moment, this doesn’t exist.
The Walt Disney Company is also currently restructuring its internals for its Disney
Studios and Disney Media Networks. This is resulting in layoffs in both of these branches. While
the layoffs only constitutes to about 2% of the entire staff, The Walt Disney Company still has to
pay severance through its expenses even if the cuts were from a previous year (Mcarthy 2003).
Lastly, the Disney Studios had some flops in 2012, notably “John Carter” and The Disney
Studios direct to DVD films like “Beverly Hills Chihuahua 3: Viva La Fiesta!” have done rather
abysmally (Numbers). So far in 2013, Disney Studios has not fared better with “The Lone
Ranger” except this time they don’t have “The Avengers” to pick up fiscal slack (Numbers). In
theory this should lead to less “creative” films and fewer chances by studios but both these box
office flops were rather by the numbers blockbusters. It remains to be seen what Disney Studio’s
strategies to revitalize their films will be. In the meantime, their Marvel films, Pixar films and
future Star Wars films should allow them to continue to make profits.
The other four branches are a little more stable. ABC has three shows that are currently
doing well in “Revenge,” “Once Upon a Time,” and “Castle.” Most importantly these shows can
continue for multiple seasons. ESPN is also releasing a new channel in 2014, the SEC network
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that will draw even more viewers to their stations. Parks and Resorts has two new cruise lines as
well as new rides annually that continue to bring record numbers of visitors. Plans for more
parks, focused in Europe are also on the horizon. New Stars Wars games being released between
2014-2015 as well as “Kingdom Hearts 3” has Disney Interactive poised to grow as well (Disney
annual 2012).
So what else has contributed to The Walt Disney Company’s explosion in the last
decade? One word, acquisitions. Be it buying Fox Family from and turning it into ABC family in
2001 or The Muppets in 2004 to its large acquisitions like Marvel in 2009 and Lucasfilm in 2012
The Walt Disney Company has been buying like mad. In the early 2000’s Disney was buying
from competitors, like Fox and Time Warner to help combat the competition. The recent
acquisitions though are all about being able to create more content, across more platforms than
the competition. So far the strategy has worked out but in many ways it is hard to tell if ALL of
the acquisitions will end up paying dividends (Disney Annual 2012).
A second reason is that The Walt Disney Company has changed and improved with the
times. While they may not be on a level above their competitors on media convergence ideas like
using tablets as second screens for television programming, they haven’t been left behind. They
have managed to get their media on the major streaming hubs without trying to create their own
streaming service (like Time Warner) and having to syphon off users from Amazon Prime and
Netflix. The Walt Disney Company’s ESPN app manages to stream live sporting events across
multiple devices including phones, tablets and even gaming consoles while keeping users up to
date on all vital sports information. While they may not be the first to use a new media
technology, The Walt Disney Company has embraced new techs with open arms and quick,
seamless adoption (Disney 3rd Quarter 2013).
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So with their success what would it take for The Walt Disney Company to fail? Quite a
lot. The Walt Disney Company is deeply entrenched within the media market and has a very
strong global presence. Its films and TV channels are distributed worldwide, its consumer
products sold on every continent and its 6 main Disney branded parks (with more on the way)
crest the globe. Financially, there is no competitor close. Time Warner, one of the Walt Disney
Company’s chief rivals brought in 13,529 million less dollars than the Walt Disney Company in
2012 (Time Warner Annual 2012). News Corp brought in 8,572 million less than Disney in 2012
(News Corp Annual). These are staggering figures. While it may seem like financials only tell
one story they highlight the main point of trying to compete with The Walt Disney Company. It
is too big to fight. While Time Warner competes very well with Disney’s TV, film and music
Disney still makes millions in its parks. The Walt Disney Company has its hands in EVERY
proverbial pie. It can afford to fall behind in one of its branches and still maintain a profit. They
can release record breaking box office flops and not have to close their Studios (in fact they are
expanding them!). The phrase “Too big to fail” was often used to talk about the housing market
in 2008 right before its collapse but the phrase is a very apt description of the Walt Disney
Company.
Looking at all the data it’s hard not to imagine The Walt Disney Company continues to
grow. They have film plans for Marvel all the way to the year 2021; they have a new Star Wars
Franchise to build that includes 5 movies that have already been announced (Disney 3rd Quarter
2013). Their TV holdings continue to expand as their ad times growing more expensive. More
video games are coming, more merchandising to be sold. The only question is where does The
Walt Disney Company stop expanding? At what point will it be unable to purchase more licenses
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and rights? While that day may come, The Walt Disney Company is not poised to slow down for
the next 5 to 10 years. (Disney Annual 2012).
The following SWOT report is in many ways a brief summary to the rest of this report. It
summarizes many of the key facts and changes within the country to easy and workable bullet
points.
Strengths
1. Product plans over a long stretch of
time
2. A diversified income stream
3. It is a global brand
4. Quickly diversifying target
demographics
Opportunities
1. Recent media acquisitions
2. They can continue to tap into the global
market
3. Use of emerging technologies to sell in
new markets
Weaknesses
1. Main target demographic is still
children
2. It has created a high standard for its
products
3. Much of the recent success has been
due to acquisitions.
Threats
1. While no single company threatens the
Walt Disney Company on all its fronts,
it faces heavy competition at each one
2. Consumer interests are unpredictable
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Strengths
1. Product plans over a long stretch of time: The Walt Disney Company has
planned film releases until the year 2021 as well as TV changes in 2014, as well
as future rides, and parks. This leads to stability, economically and otherwise. It
also gives shareholders ideas about where the company is going.
2. A diversified income stream: Having the company in five distinct parts that
focus on different revenue streams helps create a company that can handle failures
in certain areas while still being able to stay financially stable. For example, the
box office failure of “John Carter” was protected by the large revenue of the
Disney Parks and Resorts branch.
3. It is a global brand: The Walt Disney Company is known worldwide and is
capable to selling to many very different cultures. Its long life has let it create a
staying power in the global cultural consciousness.
4. Quickly diversifying target demographics: ESPN, ABC, A+E and the Disney
Channel all have very different target demographics and that’s just some of the
channels within Disney’s media networks. The Walt Disney Company has
multiple branches that all reach multiple demographics. They are quickly
outstripping the idea that they are only for children while still being able to retain
the child demographic.
Weaknesses
1. Main Target Demographic is still children: The child demographic is rather
unstable; children can quickly go from loving a product to becoming bored with
it. Although The Walt Disney Company has had great success within the
demographic for most of its existence, this doesn’t mean that it will continue to
have success.
2. It has created a high standard for its products: The Disney brand has a
standard to be upheld and products released under that standard are held to intense
scrutiny. In many ways it represents how The Walt Disney Company is a victim
of its success.
Opportunities
1. Recent Media Acquisitions: The Walt Disney Company has recently acquired
Marvel and Lucasfilm and is set to be able to create long lasting franchises. These
purchases have the possibility of raising the revenues of all five branches of the
Walt Disney Company.
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2. They can continue to tap into global markets: The Walt Disney Company
brand is known everywhere but can still be known by more people. New parks
opening in Europe can spread the brand farther and wider as well as attempts to
take its National TV brands international.
3. Use of emerging technologies to sell in new markets: ABC putting episodes of
its shows on their websites has created more areas for advertisements to be sold.
Deals with Netflix and possible other streaming sites could help solidify and
regain the profits lost by piracy and rental services.
Threats
1. While no single company threatens the Walt Disney Company on all its
fronts, it faces heavy competition at each one: Time Warner and Fox produce
strong competition against The Walt Disney Company’s Media holdings, this in
effect can hurt them in other branches as all of their branches are derived from
media.
2. Consumer interests are unpredictable: While Marvel films may be guaranteed
profits at the moment. Who is to say they will be in 2016? 2021? What consumers
want now, they may not want later, and there is no guarantee that Disney is able
to evolve with consumer interests.
Finally this report comes to a question that can’t be answered neutrally, would I like to
work for this company? As all the information stands, yes I would like to work for this
company. It’s profitable, successful and offers very diverse work. I could transfer from
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one branch to another and be doing something completely different all within the same
company. It seems to be growing and expanding. Sign me up.
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Works Cited
"Disney Interactive Media Group." Disney Interactive Media Group. Walt Disney Company, n.d.
Web. 28 Oct. 2013. < http://news.disneyinteractive.com/web/homepage/default.aspx>
"Disney Music Group." The Walt Disney Studios ». The Walt Disney Company, n.d. Web. 28
Oct. 2013. < http://waltdisneystudios.com/corp/unit/72>
News Corp. Annual Report: News Corp Annual Report 2012. News Corp, 2013. 21st Century
Fox Annual Reports January 2013. October 28th 2013<
http://www.21cf.com/Investor_Relations/Full_List_of_Annual_Reports/>.
International Directory of Company Histories, Vol.63. St. James Press, 2004.
Mcarthy, Michael. "USATODAY.com - War of Words Erupts at Walt Disney."USATODAY.com
- War of Words Erupts at Walt Disney. USA Today, 02 Dec. 2003. Web. 26 Oct. 2013.
"Movies Released by Walt Disney." The Numbers. Nash Information Services LLC., n.d. Web.
28 Oct. 2013.
Time Warner Incorporated .Annual Report: Time Warner Annual Report 2012. Time
Warner, 2013. Investor Relations. Janurary 2013. October 27th 2013 <
http://ir.timewarner.com/phoenix.zhtml?c=70972&p=irol-reportsannual>.
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The Walt Disney Company. Annual Report: The Walt Disney Company Reports Third Quarter
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