Disney is an emerging name in the entertainment industry and is changing the way the content is viewed by people on television. The company is also popular for its theme park named Disneyland. The popularity of the company can also be substantiated by the fact that it has been awarded as the top-ranked media and Entertainment Company. Besides, Disney is the 58th most valuable company in the world with a market capitalization of around USD 175.11 billion.
In this article, we delve into the internal capabilities of the company highlighting its strengths and weaknesses using the highly effective SWOT analysis model. Also, the analysis looks into the opportunities and threats prevalent in the external business environment of the company. Moreover, for gaining comprehensive knowledge about the SWOT Model, you can go through our elucidated SWOT Analysis Guide.
Table of Contents
An exegesis SWOT Analysis of Disney
Strengths of Disney
High brand value- Disney is a high-worth brand with a valuation of more than $407 billion and the brand ranks 10th in the top 100 global brands (Liu, 2021). The company has been able to establish such a high valuation because of the unique product and services and effective customer service which would ultimately be beneficial to the company for increasing its competitiveness in the industry. Also, Disney has a considerable presence in almost all the top economies of the world.
Diversified product and brand portfolio-Disney has expanded itself into many areas that include worldwide renowned theme parks. Alongside, the company is into media streaming services and has popular channels like ESPN, Fox Sports, National Geographic, etc. and it has a 50% stake in the A+E television network that has renowned channels like HISTORY, A&E among others.
Disney also has a stake in the popular direct-to-consumer streaming service named Tata Sky in India. Apart from this, the company has a significant presence in the emerging OTT industry with its platform named Disney+.
Diversified revenue models- Disney earns its revenues from a variety of sources that include affiliate fees from the video programming distributors for showcasing the content, advertising for other brands on its streaming service, fees charged from the customers for subscribing to the OTT service, and the company also earns through license fees by letting other production houses to use its platform to stream the content. The other source of revenue includes charging customers for theme parks, cruises, adventure expeditions, and licensing of the Disney characters, and trademarks.
Weaknesses of Disney
High attrition rate- Disney has a high employee turnover rate of 30%-40% and high turnover reflects poor employee practices that can pose a threat to the company’s sustainability in the long run because of dissatisfied employees (Roosevelt, 2018).
High losses- As per the annual report, almost all divisions suffered losses in 2021. Its content sales were down from $5.67 billion to $4.20 billion and also COVID had an impact on the theme park business, the sales for which declined by 3% from $17.03 billion to $16.55 billion. Further, there was a huge downfall in the free cash flows from $12.49 billion to $(1.95) billion. The company needs to limit its losses in order to sustain more in the business.
Employee discrimination- The employees working at Walt Disney have accused the company of not paying an adequate wage and as a result, the company has been recently sued by 25000 employees (Tremaine, 2021). Further, the working conditions for the employees are poor and the workers are not provided the basic facilities at many offices. The company must look to address the prevailing ethical issues in a conclusive manner.
Inability to manage data- The customer data at Disney has been breached many times by hackers and on one occasion, in the early days of its streaming services accounts of around 1000 subscribers got stolen and the customers were not able to access the accounts even after paying for the service (BBC, 2019). These types of incidents can cause embarrassment for the companies and can cause a loss of confidence among the stakeholders.
Opportunities for Disney
Global expansion of theme parks- Currently, Disney has just six theme parks located in 5 different countries that are US, France, Japan, China, Hong Kong, etc. Disney has great scope to enter into other markets like India where the amusement park industry is expected to attract a large number of 30 million people annually.
Launch of streaming services in more markets- Currently, Disney plus is available only in selected nations namely the US, Canada, UK, Australia, New Zealand, India, Indonesia, and numerous European countries along with Japan whereas its competitors like Netflix and Amazon Prime can be accessed throughout the world. Disney should try and venture into more markets to enhance its customer base and profits.
Threats for Disney
Stricter government regulations- AS OTT industry is still relatively a new industry compared to the other industries in the media, there are few government regulations and the governments are continuously launching new regulations day after another which can result in uncertainties and Disney may face difficulties in functioning efficiently.
Risk of hacking- Many customers have reported their accounts getting hacked and because of that, the company loses out on lots of revenue as people do not subscribe to their service and rather use hacked accounts to view the content.
To encapsulate, it can be concluded that Disney is quite popular which is evident from its high brand value. It also has ventured into various segments like sports and music. However, the company needs to keep a check on the high attrition rate of the employees and high operation losses as this can result in devastations going forward. The rising cases of hacking of customers’ accounts also need to be addressed through appropriate technology. Besides, in order to assess the company’s positioning as per external business factors, you can go through our coherent PESTLE Analysis of Disney.
BBC. (2019). Disney+ fans without answers after thousands hacked. Retrieved 20 April 2022, from https://www.bbc.com/news/technology-50461171
Liu, M. (2021). Happiness in a brand: Disney Brand Analysis. Retrieved 20 April 2022, from https://erwinsala.com/happiness-in-a-brand-disney-brand-analysis/
ROOSEVELT, M. (2018). Disneyland workers offer mixed reactions to the $1,000 bonus. Retrieved 20 April 2022, from https://www.ocregister.com/2018/01/24/disneyland-workers-offer-mixed-reactions-to-1000-bonus/#:~:text=Andrew%20Hagelshaw%2C%20a%20spokesman%20for,not%20just%20at%20our%20union.%E2%80%9D
Tremaine, J. (2021). 25,000 Disneyland employees are suing, alleging Disney doesn't pay a living wage. Retrieved 20 April 2022, from https://www.sfgate.com/disneyland/article/25-000-Disneyland-employees-are-suing-Disney-for-16355821.php