Porter’s Five Forces Analysis of The Walt Disney Company
|The Walt Disney Company
|Media and theme Parks
|October 16, 1923
|Burbank, California USA
|$67.42 billion (2021)
|$2.51 billion ( 2021)
|Comcast corporation, AT&T Inc., Netflix Inc.
The Walt Disney Co. is a success story from a cartoon company to an entertainment conglomerate which currently owns world iconic brands e.g., Disney Princesses, Pixar, Marvel, National Geographic and ESPN and have central position in media industry.It operates through two major business segment: Media & entertainment distribution and theme parks and experiences. Media segment operates domestic and international channels through majority ownership in ABC network, National Geographic ,A+E Television Networks Sale of telivison and film contents and post production services and the Parks and experiences segment operates theme parks and resorts in USA, Hong Kong and china and licencing literary works and game developing. The Walt Disney foundation laid by Walter Elias Disney on October 16, 1923 and it is based in Burbank,USA
Porter’s Five Forces Analysis
Porter’s Five Forces Analysis, created in 1979 at Harvard Business School by Professor Michael E. Porter, is a widely used framework for analysing business plans in light of the industry in order to reduce competition and boost profits.
Disney Rivalry among Existing Competitor
Disney operates in two major segment ; Media with $50.86 billion revenue and theme parks with $16.55 billion revenue.Although major customer base exist in USA($68.22 billion in 2022) but compnay has presence in Europe($8.68 billion in 2022),Asia pacific($6.85 billion in 2022) and its revenue has been continuously growing accross all regions. Its revenu has grown from $6.11 billions in 1991 to $67.4 billions in 2021.Most affected segment from COVID-19 was Parks segment as its revenue reduced from $26.23 billions in 2019 to $16.50 billions in 2020 due to closure of theme parks and suspention of cruise ship sailings.However these operations resumed at reduced capacity in first quarter of 2021.Last two decades analysis shows continuous growth in revenue from $30.75 billions in 2004 to $67.42 billions in 2021 almost doubled its revenue and both segment revenue has been continuosly gowing even after impact of COVID-19. Further disney has lauched Disney+ in November 2019 a streaming service which has gain good subscriptions and growing rapidly , its main competitor in streaming is Netflix Inc,.
Comcast Corporation currently operates through five segments ; if we review these segments revenue ;cable communication(broadband services) account for 53%, Media(produce and distribute entertainment,news and sports e.g., NBC universal’s) account for 19% , Studio(produce and distribute films and telivsions)account for 8%, Theme parks(operate theme parks in USA, Japan and China)account for 4% and sky(these operate direct to home services through sattelites in Europe)account for 16%. It entered into direct competition with Disney through acquistion of NBCUniversal company(which have media and theme parks business segments) in January 28,2011 , the acquisition generated additional revenue of $ 19.26 billions in 2011 in addition to its existing cable communication segment.Since then this segment revenue growsalmost 76% to $33.96 billions in 2019 . At end of 2018 entity acquired Sky which is Europe leading entertainment company, it generated $19.22 billions revenue in 2019 and its revenue has gown in last three years to $20.26 billions. In 2021 Comcast Media and theme park revenue amounted to $ 54 billion, In theme park business it genereate $5 billion way behind from disney $16.55 billionbut in Media business $49 billion is very close to Disney’s$50.86 billion of revenue. Comcast corporation has consistent growth in last decades with revenue of $116.39 billion in 2021from $24.96 billions revenue in 2006.
AT&T Inc. Operates three segments ; communicatios (wireless services and equipment) 74% of revenue, WarnerMedia(develop and distribute films,televisions and gaming )23% of revenue and Latin america(wireless service in Mexico) 4% of revenue. Before acquisition of WarnerMedia it only operate communication segment. Its reveneue has grown to 168.86 billion in 2021 from 63.06 billions in 2006. It acquired WarnerMedia in 2018 when it accounted for 11% of revenue (generating $ 18.94 billions) but since then synergies enable its access to even greater audience and it has been able to generate $ 35.63 billion in 2021.
Netflix Inc. is a provider of streaming entertainment, Domestic DVD, International Streaming, and Domestic Streaming are the three divisions through which it functions. On August 29, 1997, Marc Randolph and Wilmot Reed Hastings Jr. formed the business, which has its headquarters in Los Gatos, California.In just 13 years since its founding, Netflix’s revenue increased from $1.36 billion to over $26 billion. Although the streaming giant has recently experienced losses in subscribers due to the lauch of Disney+ by the walt Disney co. in 2019. In the first two quarters of 2022, the subscriber count went below the 74-million-mark as a result of a saturated SVOD market with ever-rising expenses. Given these astounding figures, it might be difficult to imagine how other businesses could succeed in the subscription video-on-demand industry. However, Netflix rivals Hulu, Amazon Prime Video, and Disney+ have all successfully established themselves in the SVOD market.But Considering all these toghether Netflix Inc, revenue has been growing continuously $20.15 $25.10 $29.70 in billions from 2019, 2020 and 2021 respectively.
Disney Threat of New Entrants
Time to become establish: Major Players in Media and parks & theme industry take decades to become establish by providing services to large number of audience, Disney foundaiton in 1923 NBC Universal in 2004 WarnerMedia in 1972 shows how much time it took for them to be become established in the market to become biggest name in their industry.
High Capital Investment: Media and parks business involve huge capital invenst , in 2021 Disney total assets stands at $203.61 billions, so it is biggest barriers for new entrants ,however Big palyers and related industry can acquire its competitors to compete effectively as was the case of 2018 WarnerMedia acquistion by AT&Tand NBCUniversal by Comcast corporation in 2011 brings significant increae in the revenue of Media groups.
Government Regulations: The ability of the business to conduct particular operations, transmit particular types of information, and even hire particular personnel may be impacted by international and national governmental restrictions. Disney is also required to abide by antitrust, copyright, and privacy laws.
Disney Bargaining Power of Suppliers
To compete successfully Media industry create and acquire contents that best suits consumer preferences and taste, so competition is become high to acquire contents from third party, competition may further increased due to technological changes and cosolidation of suppliers. Competition in sports content is very high due to significant cost involvement. Although as Disney CSR report shows they have diverse suppliers base and have plan to spend $1 billion anuualy to incrase it further. These steps can bring suppliers bargaining power to moderate.
Disney Bargaining Power of Buyers
Disney being one of the main media brand globally, its brand value is $57.06 billion in 2022 Which was $51.24 billions in 2021, it owns brands like Mickey Mouse, Disney Princesses, Pixar, Marvel, Star Wars, National Geographic and ESPN so it has strong influence on its customemrs. Further even after the acquistiton of its main competitors that lead to their significant growth subsequentlye.g., NBCUniversal(owns brandsUCP, Peacock, CNBC and syfy) and WarnerMedia(owns brandsHBO max and Cartoon networks ) by Huge communicatiton industry Players e.g., Comcast corporaiton and AT&T , Disney revenue through all its segment has been constinously growing which shows confidence of its customemrs in brand. Disney revenue increased from$30.75 billions in 2004 to $67.42 billions in 2021.
Disney Threat of Substitute Products or Services
Due to high investment in R&D by the existing players and sofisticated branding and historical attachment with their customers and customers unique taste , threat from substitue product is very low , Revenue growth of big palyers shows that significant increase in revenue of particular group did not lead to decline in growth of other players , if we analyse Disnye, NBCUniversal and WarnerMedia , their revenue incased around 60 to 75 percent in last decades which show significant Media industry gowth and further potentional still exist considering further development of technology and contents.
- Forbes, The Walt Disney Company
- Forbes, Netflix,Inc
- Netflix – statistics & facts at Statista
- Annual Reports from 2004 to 2021 available atThe Walt Disney Company
- Revenue of the Walt Disney Company from 2010 to 2022, by region(in million U.S. dollars) available atStatista
- Securities Information available atThe Walt Disney Company
- Annual report 2006 to 2021available atcomcast
- Annual report 2013 to 2021available atAT&T
- Annual report 2002 to 2021 available atNetflix,Inc
- Brand value of Disney worldwide from 2020 to 2022(in billion U.S. dollars) available at Statista
- Warner Media official website available at WarnerMedia
- NBCUniversal official website available at NBCUniversal
- CSR report of Disney