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5. Localization of products through acquisitions

3.

Opportunities Threats

1. Growth of entertainment industries in

emerging markets

2. Expansion of movie production to new

countries

1. Intense competition

2. Increasing piracy

3. Strong growth of online TV and online

movie rental

Strengths

1. Strong product portfolio.Walt Disneys products include broadcast television network ABC

and cable networks such as Disney Channel or ESPN, which is one of the most watched

cable networks in the world. Combining the significant audience reach of these cable

networks, (ESPN has nearly 300 million and Disney Channel 240 million subscribers) and the

solid growth of cable television, Disneys product portfolio provides a competitive advantage

for the company over its competitors.

2. Brand reputation.Walt Disney brand has been known for more than 90 years in US and has

been widely recognized worldwide, especially due to its Disney Channel, Disney Park resorts

and movies from Walt Disney studios. The company is perceived as the primary family

entertainment provider and was the 13th most valuable brand (valued at $27.4 billion) in theworld in 2012.

3. Competency in acquisitions.One of the strongest sides the company has is its competency

in acquisitions. The Walt Disney Company has acquired Pixar Animation Studios in 2006,

Marvel Entertainment in 2009 and Lucasfilm in 2012. The former 2 acquisitions have already

proved to be very successful in terms of revenue and profit growth. The third acquisition is

expected to be just as successful because Disney has acquired rights to all of the Lucasfilm

previous works including Star Wars. Few other Disney competitors have had such record of

successful acquisitions.

4. Diversified businesses.The business operates five different business segments: media

networks, parks and resorts, studio environment, consumer products and interactive media.These companys segments are operated online and offline, in many different economies and

are generating their income using different business models. Due to such diverse operations,

Disney is less affected by changes in external environment than its competitors are.

5. Localization of products.Recently, Disney has started adapting its products to suit local

tastes. Besides the parks and resorts, companys movies and consumer products are

adapted for Chinese market to attract more visitors. This is rarely initiated by the movie studio

itself and is something that few other studios are doing.

Weaknesses

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1. Heavy dependence on income from North America.Although, Disney operates in more

than 200 countries, it heavily depends on US and Canada markets for its income. More than

70% of the business the revenues come from US alone, while the major Disneys competitor

News Corporation receives less than 50% of revenues from US, making it less vulnerable to

changes in US market.

2. Few opportunities for significant growth through acquisitions.The Walt Disney

Company is the largest entertainment provider in the world and has become so due to

acquisition of competitors. The last Disneys acquisition had to be approvedby Federal Trade

Commission so that the company wouldnt have to deal with antitrust problems. This means

that the size of the Disneys business has become a concern for the government due to

significant market concentration and that the company has very few opportunities to acquire

competitors. Otherwise, Disney may become a subject to antitrust laws.

Opportunities

1. Growth of paid TV industries in emerging economies.The Asia Pacific region accounted

for more than 50% market share of the world pay TV subscribers (394 million) in 2011. It was

expected to grow to more than 55% by the end of 2016, where China would account for more

than 27% of the market. The similar growth is expected in India as well. Disney Company has

already entered these markets and should continue to strengthen its position there to benefit

from such high industry growth.

2. Expansion of movie production to new countries.Disney has an opportunity to expand its

movie production to such countries as India or China, where movie production industries have

developed good quality infrastructure. This would result in lower movie production costs and

more localized movies for India and Chinas markets.

Threats

1. Intense competition.Disney operates in very competitive industries such as media, tourism,

parks and resorts, interactive entertainment and others. The competitive landscape changes

quite drastically in the media industry, where news and TV go online and new competitors

with new business models compete more successfully than incumbent media companies.

Disneys parks and resorts business segment also receives strong competition from local

competitors who can offer better-adapted product. This results in growing competitive

pressure for Walt Disney Company.2. Increasing piracy.The advancements in technology allow copying, transmitting and

distributing copyrighted material much easier. With an increasing number of internet users

and the speed of internet, this poses a great risk to Disneys income, as fewer people would

go to watch movies in a cinema or buy its DVD, when its freely available online.

3. Strong growth of online TV and online movie renting.Besides internet piracy, Disneys

media and movie production businesses may suffer from online TV and online movie rental

growth. Subscription to online TV streaming and movie rental websites costs much less than

to usual cable television providers. In addition, internet infrastructure is often managed by

different companies, thus taking the power away from cable network providers.