Walt Disney's financial performance and corporate challenges

Walt Disney

There is a lot to love about Disney as of late. Their revenue is taking an upward motion over the last three years as is their stock price. Their debts are rising but not more sharply than their revenues. They have strong cash flow as well. Further, they have a wide array of services and options. These would include the receipt acquisition of the Star Wars brand name, its possession of power networks ABC and ESPN and its wide array of animated and real-life features like the ubiquitous Frozen. However, there are some threats and problems that need to be addressed and those will be discussed within this report. While Disney is doing quite well with its current array of assets and plans, they still do need to evolve.

Analysis

As noted in the introduction, Disney is actually doing quite well financially and they have some major assets to their name that will help them in the long haul (Yahoo, 2014). Further examples would include that ESPN, their sports network, has no real competitor to speak of and they do quite well in the child entertainment industry. However, Disney is going to realize (if they do not already) that their marketing and financial plans need some tweaking, at least in the estimation of the author of this paper. To prove this, one need look no further than Best Buy, McDonald's and Wal-Mart. All three are the giants in their industry but they are having some issues with flailing revenues and brand images. For example, McDonald's is far and away the biggest fast food retails with their closest competitors not even close to them in revenues. However, the younger demographics clearly favor other restaurant brands like Chipotle, Five Guys and Panera. Other issues that could hurt Disney are its history, rumored or otherwise, of anti-Semitism and being shunned specifically because they are the "big dog" in the yard. Indeed, NBC/Comcast is getting criticized for much the same reason right now and this could extend to Disney sooner or later.

The anti-Semitism thing is not on most people's radar and most of the source material that gets people going about that is from yesteryear. For example, Walt Disney associated himself with Leni Riefenstahl and the Motion Picture Alliance. Both Leni and the MPA were widely known to be anti-Jewish to the point of being bigots and racists. This has even been confirmed by a grand-niece of Disney (Greig, 2014). Leni was a propagandist for the Nazi party and the MPA was widely known to be anti-Semitic. However, this has not apparently hurt the Disney all that much in the current day and indeed Walt Disney is no longer alive and this has been the case for nearly half a century.

However, the words about Disney's corporate future should be taken seriously. The times are changing for the entertainment industry. While Disney is probably safe to presume that their theme parks will remain popular is safe, the same cannot likely be said about their movies and shows. Disney, of course, has been notorious for releasing and then pulling their movies over time to get, so they say, a bang for their buck when the goods are for sale. However, the days of that working all that well is basically over and for a few reasons. First, the resell market is much more expansive and if Disney is not selling a DVD or Blu-Ray at a given time, the ability to get it somewhere else and in good shape is fairly easy. Second, Amazon and Disney have partnered to sell digital copies of movies and this is a very good idea. However, the price points of these movies are a little high. Disney movies are in demand but that fact should not be abused as the customer will revolt. The same digital technology that has allowed Disney movies, even including old favorites like Mr. Boogedy and others, also allows people to rip or download those movies for free and there is little that can be done to quell enough of that activity to matter. The behavior is especially rampant in China and other nearby countries where even the government is pervasively involved with stealing secrets and trampling on trademarks (Hughes, 2014). Given all of that, it would be wise of Disney to make sure they get their profits but at the same time not alienate people though high-end price points.

As for solutions to the above, Disney can and probably should do a few things. First, given that they are very entrenched with Amazon and given that Amazon's reach in terms of free and for-charge content far exceeds that of any other service, Disney should open a "Disney store" under the Amazon nameplate. They should still give some titles to Netflix and others, but it should be the more dated ones and those that are less in demand. They are basically doing the latter already. However, if they were marketed more prominently with Amazon, they could charge lower prices (especially for Amazon Prime members) but still make a lot of sales. While Disney corporate is surely having some success with their ABC and Disney streaming options, they are not going to usurp Netflix or Amazon anytime soon. As such, they should partner with firms that can get them more exposure and thus it can be a win for both of them. After all, the physical media is going to go away eventually, at least for most people. Bandwidth for internet services is literally growing by the day with Google offering 1 gigabit download speeds in some parts of the United States (Google, 2014).