Walt Disney Company 1995-2009Corporate Strategic CasebyDwi Joko Pramudito WASong 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 computer-

based 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

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