Disney SWOT 2024 | SWOT Analysis of Disney

Company: Walt Disney
CEO: Robert Chapek
Year founded: 1923
Headquarter: Burbank, California, USA
Number of Employees (2022): 220,000
Type: Public
Ticker Symbol: DIS
Market Cap (Feb 2023): $204.19 Billion
Annual Revenue (FY2022): $82.72 Billion
Profit | Net income (FY2022): $3.15 Billion

Products & Services: Television Programs | Motion pictures | Plays | Musical Recordings | Books | Magazines | Video Games | Toys | Apparel | Accessories | Footwear | Home Décor | Cosmetics | Consumer Electronics | Stationery | Radio Networks | Radio Stations | Resort Vacation Club | Cruise Lines | Theme Parks | ABC | ESPN
Competitors: CBS | Sony | Comcast | Viacom | Time Warner Cable

Fun Fact:

Did you know that Walt Disney’s first original character was a rabbit named Oswald?

An Overview of Disney

When it comes to entertainment production for cartoons, Walt Disney Studios is one of the most successful and most recognized companies in the world. Currently, Disney Studios has an Umbrella Corporation, which has grown exponentially in the past nine decades. Disney Studio’s magical vision was idealized by two brothers, Walt Disney and Roy O. Disney.

They have also been recognized with titles like Walk Disney Productions. Walt Disney is responsible for some of the most iconic stories like The Lion King and Alice in Wonderland.

In this post, we will highlight the Walt Disney SWOT Analysis, providing insights into Disney’s major achievements, goals, and current conditions.

The report covers Disney’s strengths, weaknesses, opportunities, and any current or potential threats.

Disney SWOT Analysis Report

The SWOT Analysis of Disney is given below:

Disney’s Strengths – Internal Factor

1. Reliability – Disney has strong ties with its suppliers who provide high-quality raw materials for the company’s production line.

2. Large Cash Flow – Disney has a very strong cash flow system that allows the company to make additional investments in other regions of the company. As of fiscal 2021, they had a total operating cash flow of 5.5 billion. At the fiscal 2022, Disney had a total operating cash flow of 6.02 billion. [1]

3. Strong Negotiation Skills – The Company has established strong networks and negotiated deals to set up distributors and dealers throughout the United States.

4. Proficient Team – Disney has some of the most creative teams that consist of artists, story scriptwriters, and graphic designers. The qualified teams are a mix of experienced professionals with extensive years of experience in the mass media industry.

5. High Brand Value – Disney’s brand name and their logo are easily recognizable. All movies and products that are introduced to the public, usually have the “D” symbol somewhere to show that it’s from Walt Disney Studios, Production, or Company. According to Forbes world’s most valuable brands list, Disney is ranked at number 7 position and its brand value is estimated to be $61 Billion.

6. Diversified Offerings – Most players in the entertainment sector operate in specific niche only, for instance, Netflix focuses on streaming services. In comparison, Disney offers a wide variety of products and services through its operations under several business segments like media networks, studio entertainment, direct-to-consumer, and parks, experiences, and products. Disney caters to the needs of all consumers regardless of age. They can enjoy the indoors with Disney+ streaming services and the outdoors by going to movie theatres or visit Disney’s theme parks. [2]

7. Impressive Portfolio – Disney has impressive brands under its portfolio that include Miramax, ABC, ESPN, Starwave, Infoseek, Lucas Film, Pixar, Hulu, Marvel, 20th Century Studios, Searchlight Pictures, and many others. More brands under its portfolio increase revenue streams. [3]

Disney’s Weaknesses

1. Sky-High Attrition Rate – Walt Disney Company has spent enormous amounts on training and grooming their employees. It has still not improved its high attrition rate.

2. Poor Financial Planning – In 2018, Walt Disney reported a loss of over $ 1 billion due to its investment in Hulu and BAMtech streaming technology. In 2019, Disney had agreed to acquire 21st Century Fox for $52.4 billion but later increased its bid to $71.3 billion to fend off a counter-offer from Comcast. The owner, Rupert Murdoch, was selling Fox because it could not compete in the digital streaming revolution. Disney failed to see this logic and now its billions are stuck in Fox. It cannot get it back because Fox cannot compete against streaming services like Netflix. [4]

3. Vulnerable To Competitors – The lack of marketing and promotion could leave Disney vulnerable to competitors. The only time they use ads is when they are introducing another movie or toy. Apart from that, most marketing is done visually, through cross promotion. 

4. Insufficient Product Demand Scaling – Disney product designers have poor judgment for the “next-big-idea,” which leads Disney to lose many opportunities compared to its competitors. Whenever there is a serious demand, companies take advantage by coiling up a campaign in relevance. However, Walt Disney fails to take advantage of such opportunities.

5. Burdening Acquisition – Some acquisitions can catalyze growth while others can lead to long-term financial turmoil. Disney’s high profitability has been devastated by the recent events and the financial burden from its acquisition of 21st Century Fox. It is projected that the damage from the acquisition of Fox will negatively affect Disney’s financials for years to come. [5]

6. Allegation of Racism – Disney came under fire for after it emerged that Barbara Fedida, a top executive at Disney’s ABC News, had a long history of making racist comments and engaging in other racially insensitive and inappropriate behavior. The backlash and anger directed at Disney prompted the company to place the accused executive on leave while it investigates her conduct. With the widespread protests against racism, racist execs is a major weakness. [6]

7. Negative Publicity – The reputation of the company was tainted recently after over 700 Walt Disney World performers filed a grievance after they targeted for demanding a safer working environment. Disney retaliated against the performers over their demand for tests and safety protocols due to recent events. [7]

Disney’s Opportunities – External Factors

1. Gear Up for Marketing – If Disney decides to make a change in investing in marketing, it could change the many opportunities that they have missed, and possibly stir up new prospects.

2. Core Competencies – With Disney’s expertise in the mass media industry, their set of skills can help innovate technologies and other relative aspects.

3. Big Names Are Worth It – Disney is the number one company for a lot of children and adults who grew up during the Walt Disney era. Disney alone is a perfect branding source that can be used as an alternative to promote further and market a business. Partnering up with Walt Disney Company is a beneficial move that any company can make.

4. Disney’s online streaming service: (Disney+) – Disney is developing a new Direct-to-consumer (DTC) service “Disney+” that will feature all Disney, Marvel, Star Wars, and Pixar movies. Disney+ is expected to launch in the US market in late 2019. The service could potentially give a tough fight to Netflix with its massive collection of movies and shows. Additionally, Disney+’s basic subscription plan starts at $6.99 per month compared to $8.99 for Netflix. Overall, it is good for consumers because we will have more options and competition may bring the prices down. 

5. Build New Theme Parks Globally – Outside the US, Disney theme parks are located in Tokyo, Hong Kong, Paris, and Shanghai. It can expand this service further by opening new Disney-themed parks in emerging economies to exploit the rapidly growing middle-class and improved economic situation. [8]

6. Global Expansion – As of May 2020, Disney+ had attained 54.5 million subscribers worldwide, which equates to a revenue of about $3.7 billion annually. If Disney focuses on expanding Disney+ into developed and emerging economies globally, it can potentially grow and nurture the streaming service into a $30 billion giant. [9]

7. Strategic Acquisitions – Disney has made several strategic acquisitions like Marvel, Pixar, Fox, and so on, which enabled the company to expand and exploit the opportunities in different sectors and niche within the entertainment market. Disney can make other strategic acquisitions in the future and catalyze its growth. [10]

Disney’s Potential & Ongoing Threats

1. High Expense Toll – Disney has always spent large amounts on their workforce, employee development, and training. Currently, the average salary offered for a beginner at Disney is $15 an hour. Salary wages around the globe are continuously increasing. With salary wages rising by the country’s law, Disney could end up with lower profits when it comes to paying off their external workforce in foreign countries.

2. Isolation in America – Due to the many ongoing issues with other countries, most of the administration is trying to pull out of international contracts. It includes many manufacturers. A portion of Disney’s manufacturers are in foreign countries, if the isolation phase continues, Disney could be under pressure to gain sufficient profits.

3. Better Products & Technology – Since they are kings in mass media production, the technology could be beneficial for them. Disney isn’t a technology or a software house and therefore cannot make technology to work specifically for them. As technology progresses, the use of viewing entertaining content has become accessible through smart devices, which is something that Disney lacks in. The only way they can retain a safe zone is to design an application that would provide Disney content only through subscription.

4. Increase in Piracy – The widespread adoption of streaming services have bundled movies, TV shows, and other content together. But, customers don’t want to pay for all the content offered by a streaming service like Disney+. They only want their favorite shows, which has led to an increase in piracy using peer-to-peer sharing solutions. The increase in piracy threatens Disney’s revenue and profitability. [11]

5. Tighter Regulations – In the US, the Justice Department announced that it seeks to revise specific regulations like Consent Decree. Revision of this decree can change the relationship between Hollywood studios and movie theaters, which can eliminate the monopolistic advantage held by major production houses like Disney. [12]

6. Increase in Hacking – Streaming services like Disney+ have soared in popularity with the increase in the number of viewers as people are forced to stay indoors due to recent events. Hackers have also turned their attention to streaming services to capitalize on a large number of users. Hacking of Disney+ subscribers’ accounts has increased in the recent past. [13]

7. Economic Uncertainty – Walt Disney’s earnings for the 2020 was devastated by pandemic and global lockdown. The uncertainty in the market led to sudden drop in net income from $11 billion in FY2019 to $-2.8 billion in FY2020. [14]

Conclusion

Disney was established in 1923 and is still standing strong. They started with a vision to provide wonderful classical content in the form of 2D cartoons. Over a period of 95 years, they have become an iconic company, reaching out to the hearts of billions.

It is unlikely that Disney will vanish anytime soon. They are in high demand for their products and especially their animated movies. Disney has acquired enough companies and has enough cash flow to sustain their company for the years to come.

 References & more information

1. Macro Trends (2020). Disney: Cash Flow Statement. MacroTrends
2. Johnston, M. (2020, April 1). 5 Companies Owned by Disney. Investopedia
3. By Brooks Barnes, B. (2020, Jan. 17). Disney Drops Fox From Names of Studios It Bought From Rupert Murdoch. The New York Times
4. Neal, A. (2020, May 26). Disney’s Purchase of 21st Century FOX Explained. The DIS Insider
5. Tully, S. (2020, May 10). Disney’s biggest financial problem has nothing to do with the coronavirus. Fortune
6. Coster, H. (2020, June 16). Walt Disney’s ABC News suspends top executive over allegations of racist comments. Reuters
7. Coster, H. (2020, July 9). Union files grievance against Walt Disney World ahead of Saturday reopening. Reuters
8. De Maeyer, M. (2020, June 8). Disneyland Paris: International expansion in theme parks. Theme Park Café
9. Del Vecchio, G. (2020, May 11). Disney Plus Has The Potential To Become A $30 Billion Giant In Only 5 Years. Forbes
10. Mendelson, S. (2020, Feb. 28). From Pixar To Fox, Bob Iger’s Disney Legacy Is Rooted In Acquisition. Forbes
11. Feldman, B. (2019, June 26). Piracy Is Back. Intelligencer
12. Zeitchik, S. (2019, November 22). Streaming explosion sparks calls for new government regulations. The Washington Post
13. Muncaster, P. (2020, April 22). Hackers Target Netflix and Disney+ with #COVID19 Phishing. Infosecurity Magazine
14. Vengattil, M. (2020, May 5). Disney takes $1.4 billion coronavirus hit, sets date to reopen Shanghai park. Reuters

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