In-Depth SWOT Analysis of Disney | Strengths Weaknesses Opportunities & Threats
About Disney Corporation
The Walt Disney Corporation is a global American media and film conglomerate based in California. ABC Broadcast Network and many other cable television networks, including Disney Channel, ESPN, FOX, National Geographic, and others, are owned by the corporation. They also sell merchandise, publications, music, theaters, theme parks, Disney parks, etc.
In 1923, Walt Disney and his brother formed the company, which began as an animated film production company. Over the years, Disney has grown its business into various areas, allowing it to generate more sales and improve its position in the entertainment industry.
SWOT Analysis of Disney
#1 Strong brand reputation. Disney enjoys solid brand recognition, with an instantly identifiable name and logo. After acquiring other reputable companies such as 21st Century Fox, their brand name became even more dominant.
#2 Developing international presence. After the acquisition of 21st Century Fox, Disney has a strong international presence across the globe. They are estimated to have $321 billion in revenues in 2017.
#3 Strong credit rating. Their long-term debt ratings got upgraded by S&P when they acquired 21st Century Fox.
#4 High return on investment. Disney’s operations have proven that they can make a lot of profit, more than the company’s income.
#5 Team of highly creative people. The Disney creative team includes many well-known artists, story scriptwriters, and graphic designers, which is one of their most significant fields.
#6 Disney’s Valuable Assets. Disney’s parks and resorts are one of the most valuable assets on their balance sheet. They pay dividends and generate interest. They are very good at managing intellectual property. They have a strong brand that can be leveraged across many venues.
#1 Not so strong cash flow. Disney is not a cash cow. It has an annual operating cash flow of $17 billion in 2017 but still has to pay an astronomical amount for Fox’s shares.
#2 Declining market share at US box office. The market share of Disney’s box office tickets has steadily decreased as time goes by, especially in the US. They are projected to make a loss of $1 billion at the US box office in 2017.
#3 No strategic growth. The company is not planning to expand its box office at the moment; rather, they focus on acquiring other companies and improving their financial performance.
Financially they face the pressure of declining attendance at parks and resorts. Analysts project that this will eventually result in lower revenue
#4 Disney Debt. Some new investors are concerned about the amount of debt Disney has on its balance sheet. The company will need to rely on creative ways to raise capital to support its growth in the future.
#5 Customer segments. They are also worried that the parks and resorts segment is becoming increasingly dependent on non-US visitors, who pay higher prices for tickets than local visitors do. Disney’s streaming service has not been as popular as some were hoping it would be.
#6 Quarterly financial reports. Disney management announced that they would not be releasing quarterly financial reports, unlike other entertainment and media companies.
Many investors are concerned about this, as they have no way of knowing how the company is performing weekly or monthly. Some investors think that this type of change could be part of the company’s efforts to focus more on long-term growth than short-term gains.
#7 Success of Streaming Services. Back in November 2020, Disney Plus streaming surpassed the company’s initial subscriber target of 60 million to 90 million by 2024, prompting it to re-forecast. According to the company, Disney+ is now expected to have 230 million to 260 million subscribers by 2024.
#1 Highly profitable businesses. Disney has several profitable businesses such as ESPN, NBA, Capital One, and the National Hockey League. These businesses generate a lot of revenue and make Disney highly profitable.
#2 Expanding international presence. As time goes by, Disney is becoming more dominant in international markets. They are said to have the strongest global brand when compared to other media companies.
#3 Creating new entertainment content. Disney is planning to create new content in order to attract more customers. They are planning to introduce some new IPs and have already started developing them.
#4 Broadcasting on digital platforms. Disney will be able to broadcast their entertainment content on digital platforms like Fox and ABC, which is a great opportunity for them.
#5 Expanding digital presence Disney has been increasing its digital presence through ABC online videos and Facebook live streaming. They have started some live streaming and will be introducing more e-commerce services that are going to improve their customer base further.
#6 Streaming. With “Disney renaissance,” the company focuses on live-action films, a new streaming service for consumers, theme parks, and the acquisition of new intellectual property (IP). Disney’s parks and resorts segment is a leading attraction at all of their properties around the world.
#7 Winning streaming wars. Disney Plus emerges as an early clear winner in the streaming wars, with up to 260 million subscribers expected by 2024.
#8 Growth potential of ESPN, NBA, and NHL businesses. ESPN, the sports broadcasting company, is expected to grow steadily in the future. ESPN has a huge customer base, and it is one of the most popular brands of Disney’s all over the world. Its subscriber fee is also increasing as time goes by.
Under the umbrella of ESPN, some other profitable businesses like NBA and NHL benefit from this brand name.
#1 Competition. There is no reason why Disney won’t have any competition since they are spending money on buying other companies. Competition is getting more and more fierce as time goes by, and the entertainment industry will be able to generate enough profits in the future.
#2 Stagnant ticket sales at US box office. The ticket sales at the US box office have been gradually declining over the years, while they have been increasing in some other parts of the world. Currently, they are estimated to generate $1.5 billion at the US box office in 2017.
#3 Increasing expenses. Disney has a lot to spend on buying Fox, and they are increasing their expenses by paying to shareholders of Fox.
#4 Declining customer base for ESPN and other businesses. There is a probability that ESPN and other Disney businesses will lose customers in the future due to the emergence of new media technologies like social media, internet TV, smartphones, etc. Strong social media presence and the increasing use of smartphones can negatively impact Disney’s customer base in the future.
#5 ESPN is not doing that well, according to the current data. In 2018 ESPN lost about 8 million people in its domestic subscriber base while the revenue from advertising was also declining.