SWOT Analysis of Disney 2020


NameThe Walt Disney Company
IndustryEntertainment and Media
Founded1923
HeadquartersBurbank, California, U.S.
CEOBob Chapek
Revenues$69.6 billion (2019)
Profits$11.05 billion (15.9% net margin)
Leading CompetitorsWarnerMedia,Comcast NBC, ViacomCBS, Sony Pictures, AMC Networks, Universal Studios,Six Flags, Cedar Fair [3][4]


Company Overview

The Walt Disney Company is a leading global company engaged in family entertainment and media enterprise. The Walt Disney Company has the following business segments, namely: Media Networks; Parks, Experiences and Products; Studio Entertainment; and Direct-to-Consumer and International. The company’s media networks segment includes Disney, ESPN, Freeform, FX, and National Geographic, and other television stations. The parks and experiences segment include theme parks and resorts, the Disney Cruise Line, Disney Vacation Club, and others.

The products segment includes the licensed trade names of the company, the characters, intellectual properties, merchandise with their brand, and others. The company’s studio entertainment segment includes motion pictures, Broadways, stage plays, production of music, its distribution, audio, and visual effects. The direct-to-consumer and international segment include their branded TV networks and channels that are shown globally, streaming services like Disney+, ESPN+, Hotstar and Hulu, and the rest of their digital content distribution platforms and services. The company aims to provide entertainment, inform and inspire people all over the world by sharing stories, using their iconic brands, creativity, and innovation. As of September 28, 2019, The company already has 223,000 employees. This is the SWOT Analysis of the company.


Disney’s Strengths 2020:

  • Very strong brand Value.

    Walt Disney has been a highly recognized brand especially for kids over the decades when it comes to movies, iconic merchandise like toys and collectible items, magical experiences, and wholesome family entertainment. 
    The company is still ranked as among the biggest companies in the world in terms of market capitalization. The current market capitalization of the company as of November 11, 2020, is at 256.801 billion
  • High commitment to its social responsibility.

    The company takes pride in providing and maintaining safe, positive, fun, and inclusive experiences for their audiences, may it be adults or kids. They also advocate healthy living through their Nutrition Guideline Policy and Disney Check. The company stresses the value of diversity in its content as a crucial component of their growth and viability. The company also makes sure that the delivery of their marketing content follows all the guidelines of responsible marketing since children are among the viewers of those content.

  • Disney+ withstands the pandemic and is becoming the rising star of all the business segments.

    The company took a big hit following the pandemic but despite this, its Direct-to-Consumer and the International business segment were able to generate around 100 million paid subscriptions as of the 3rd quarter of 2020. This business segment has a reported 2% increase in revenues for Q3 of 2020.

  • The recovering trend of the stock price.

    Due to the success of Disney+, ESPN+ and the announcement of the company’s major reorganization strategy, investors’ confidence slowly recovered as can be shown in the 2020 YTD stock price data below. 

Disney’s Weaknesses 2020:

  • Closures of most of the company’s theme parks, resorts, theaters, and suspension of cruise ship sailings amidst the pandemic.

    These led to declining revenues from the 2nd quarter of 2020 up to the 3rd quarter of 2020. For the 3rd quarter of 2020 report, the company incurred a decrease of 2% to $6.6 billion in revenues in its media networks business segment. For the parks, experiences, and products, it was an 85% decrease to $1.0 billion in revenues for the quarter. For studio entertainment, the decrease in revenue was 55% to $1.7 billion.

  • More attrition due to closures and suspension of its key business segments.

    The company also had to let go of 28,000 of its theme park employees due to the pandemic. This was made known last Sept.28, 2020.

Disney’s Opportunities 2020:

  • Shift to streaming.

    The announcement of the company to shift its focus on the streaming aspect of the business, like Disney+, has been a positive factor in helping its stock price recovery in this latter part of the year. With this, they can take advantage of the quarantine which is also a key factor in the increase of streaming activities worldwide.

  • Shift to virtual reality theme parks, theaters, tours, and cruise ship experiences.

    In line with the new normal trend, another possibility is bringing the experiences to the customers virtually. The company can make use of its assets, technical resources, or existing partnerships to make this happen.


Disney’s Threats 2020:


  • Well-established competitors in the streaming business.

    Huge competitors of the company in the video streaming business are Netflix, HBO Now, CBS All Access and Showtime, and Amazon Prime Video as of the moment. As of October 2019, Netflix already has 60.6 million subscribers in the U.S. alone. HBO Now has 8 million subscribers also as of October 2019. CBS also has 8 million subscribers as of February 2019. Amazon Prime Video has an estimated 100 million subscribers already as of January 2019. 

  • The company’s yearly performance can be affected by the seasonality of its business segments.

    Activities are driven mainly by the seasons and these cause the variances in potential park attendance for the parks and experiences business segment. Currently, the reopening of the company’s theme parks will depend mainly on the regulations of each state or location where each park operates. This is the same for cruise ships and tours. Timing is also a critical factor for the releases in the studio entertainment segment and the direct-to-consumer and international segment.
  • The foreseen effects of the 2020 financial downturn to consumers, poor quality of broadband infrastructures, and foreign government regulations.

    These mentioned factors are considered by the company as potential risks for the direct-to-consumer and international segment. Lower financial capacity to pay for the services offered by this segment and a poor internet connection can be big challenges for the execution of the company’s direct-to-consumer strategy. Foreign government laws and regulations may also affect business segment operations.

References

  1. “ABOUT THE WALT DISNEY COMPANY.’’The Walt Disney Company, https://thewaltdisneycompany.com/about/#leadership.
  2. “Fiscal Year 2019 Annual Financial Report.” The Walt Disney Company, https://thewaltdisneycompany.com/app/uploads/2020/01/2019-Annual-Report.pdf.
  3. “The Walt Disney Company’s CompetitorsRevenueNumber of EmployeesFundingAcquisitions & News.” Owler, https://www.owler.com/company/thewaltdisneycompany.
  4. “ABOUT THE WALT DISNEY COMPANY.’’ The Walt Disney Company, https://thewaltdisneycompany.com/about/#our-businesses.
  5. Linecker, Adelia. “Disney Jumps Late As Dow Giant Says It Will Focus On Streaming.” INVESTOR’S BUSINESS DAILY, 12 Oct.2020,  https://www.investors.com/news/disney-stocks-jumps-late-dow-giant-to-focus-on-streaming/

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