Project Report Disney Plus PDF

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This a project assignment for OM 3010 where you have to forecast a future project coming out into the market. We did Disney plus. ...

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Walt Disney California State University, Stanislaus Spring 2019 Operations Management (OM 3010) Jingyun Li

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Abstract: The Walt Disney company founded in 1923 by Walter Elias Disney and his brother Roy started in a small studio in Hollywood, and now they are all over the world. It operates in more than 40 countries making it the world's leading media enterprise and entertainment company for over 90 years. They went on to make cartoons, movies, TV shows, music, to building theme parks and resorts around the world. Their media networks consist of television networks, cable channels, associated production as well as owned and operated television stations like Walt Disney Television and ESPN. Currently, the Walt Disney Corporation led by CEO Robert Allen Iger and a team of executive leadership have been driving long-term value for its shareholders and the company. Moreover, they continue building the company's success by delivering new quality entertainment like Disney Plus, a streaming channel that will be launched in late 2019 and will give customers access to all Disney films and TV shows from the classics to the newest programming. Despite the flooding market with TV streaming services it is likely to gain popularity due to its affordable streaming plans and prominent strategies. They have been focusing on competitiveness for their organizational structure to stay on top of the market and gain managerial control of their product and services; to do this, they have been working with the following segments of organizational strategies: Business Type Segments, Functional Groups, and Geographical Divisions. These strategies have helped the company to grow its profits and to expand globally. Also, Walt Disney uses operational procedures like Michael E. Porter's model and product differentiation to maintain its competitiveness and keep delivering superior experiences and products to its consumers.

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Table of Contents Abstract……………………………………………………………………………………....2 The Walt Disney Company………………………………………………………………......4 Disney Plus…………………………………………………………………………………..5 Organizational Strategy……………………………………………………………………...6 Organizational Strategy……………………………………………………………………...7 Operational Strategy………………………………………………………………………....8 Operational Strategy………………………………………………………………………....9 Forecasting…………………………………………………………………………………..10 Conclusion…………………………………………………………………………………..11 Graphs and Images………………………………………………………………………….12 References ………………………………………………………………………………….13 References……….………………………………………………………………………….14

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The Walt Disney Company: The Walt Disney Company has been successful and profitable for over 90 years. Walter Elias Disney, one of the first founders of Walt Disney, was one of five children born in 1901 and died in 1966 (Disney History, 2019). His father was Elias Disney, and his mother was Flora Disney. Walter went on to studied at the Art Institute of Chicago, but it was not long before he left to join the Army. In 1919, he moved to Kansas City with the hope of starting a career as a newspaper artist, but instead, he opened his own animation business (Disney History, 2019). Walt and his brother Roy O. Disney co-founded the Walt Disney Company in 1923 (Disney History, 2019). Walter was in charge of creating ideas, and his brother Roy handle the business finances. The company was initially named The Disney Brothers Studio where Walt developed characters like Mickey and Minnie Mouse, as well as the first successful animated film “Snow White and the Seven Dwarfs.” Later Walt came up with all characters like, Cinderella, Dumbo, Pinocchio and many more that helped build their company's success. Walter and his brother Roy were able to expand and diversified the company globally, and now it operates in more than 40 countries ( Disney History, 2019). The company went from producing cartoon films to television shows, to music, to opening amusement parks all over the world. Today The Walt Disney Corporation is led by a team of executive leadership. Also, Robert Allen Iger is currently, the CEO and President of Walt Disney Productions (Bob Iger, 2019). It has been under his leadership that Disney franchise has continued to expand in the making of more theme parks, films, television shows, and consumer products. Walt Disney is now a prominent leader in the media and

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entertainment industry due to its innovative developments making it the best and largest production company in the world.

Disney Plus: The Walt Disney Company will be launching a new streaming channel called Disney Plus. Disney Plus is set to launch on November 12, 2019(Marshal, Rick). This streaming channel will give their customers access to Disney movies, originals, shows and Pixar movies. Disney has announced that there will be about seven thousand episodes of Disney original shows and somewhere between four-hundred and five hundred Disney movies. Disney plus will have the most popular Disney shows and movies available such as; Frozen, Wreck it Ralph, Phineas and Ferb, however, the newest movies will not be added to Disney Plus until a little after a year from the release in theaters (Jasinki, Nicholas 2019). Disney Plus will contain original content made and aired strictly on their channel. Disney Plus has stated that they are working on making original shows from popular Marvel characters, as well as Star Wars. Not only will there be original content, but remakes of popular classics such as, “Father of the Bride, Honey, I Shrunk the Kid,” (Marshal, Rick 2019) and many more. Disney plus will also include Pixar, Marvel, Star Wars, and National Geographic in its content. Disney Plus will be launched into a dominated market by Netflix, Hulu, and Amazon Video, all with very affordable prices. The very limited Disney content available in the competing services will be kept there and will not be on Disney Plus. However, all of the rest will be available on Disney Plus, as long as it is categorized as G, PG, and PG-13, any movie that is rated R will be shown on other streaming channels mainly Hulu. The starting price will be $6.99 per month(Janinski,Nicholas 2019), making it one of the most affordable online streaming services.

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Disney plus will also offer a yearly subscription of $70, saving families money and making it the cheapest online streaming at just $5.83 per month, if broken down.

Organizational strategy: The Walt Disney Company has been focusing mostly on competitiveness for their organizational structures. They know what they have to deliver and who their competitors are. Some of the competitors are Comcast Corporation, Time Warner Inc., and CBS Corporation, these are the main firms that Disney has to compete with. In order for Disney to stay in the marketing game, they use what is called the cooperative-M, which stands for Multidivisional, it involves related constrained diversification (Williams, 1). Disney focuses on being quite diverse which allows them to grow drastically within their customers. They embark a great number of cultures and traditions into their movies or projects that they produce. The company also involves in centralization in Disney headquarters. They centralize in having a disciplined managerial control when it comes to social media, theme parks, and entertainment. There are three segments of organizational strategies that Disney Company uses to maintain its reputation and know how to work with their competitive advantages. One is Business Type Segments, which allows the main focus on a certain type of business or industry (Williams, 2019). Since Disney has the theme park and also the entertainment production. They make sure to have management separately for each of their businesses. This is where centralization comes in hand because they focus on a specific production rather than both the theme park and entertainment. They have them divided into the Media Networks, Park and Resorts, Studio Entertainment, and Consumer Products and Interactive Media (Williams, 2).

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The second strategy they use is Functional Groups, they focus on multidivisional strategies by using centralized control (Williams, 2019). When new characters and movies are put into the theme parks or merchandise, this is where functional groups come into hand by creating interdivisional cooperation. The third strategy that Disney company uses is Geographical Division, focusing on geographics of local, domestic, and regional markets (Williams, 2019). They take in mind the media, entertainment, and parks when it comes to the geographic and how it can improve competitiveness within their Company. Because of this strategy, Disney Company has been able to expand through the United States, Canada, Europe, Asia, and even Latin America.

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Operational Strategy: Disney works a lot different in terms of operational strategy since they have a lot of assets across different services. Some may say it’s a generic strategy since they use their competitive advantage in most products, they offer such entertainment, amusement parks, and mass media. The strategy they used is known as Michael E. Porter’s model which states offering unique products offered in many market segments. Disney’s strategy to maintain its competitiveness in the market by making their products differently than their competitors also known as product differentiation.(Williams,2019) With this strategy, Disney can develop more products that will also help them keep their competitiveness. For example, Disney Plus is a new product by Disney that will have video streaming of their past work. Using already marketed and successful products to develop a new product expands into new markets. Since they can use their brand is already ahead of the competition in terms of recognition.(Ali, 2015) Another example is there theme parks that have gotten really big over the years, as they expand people have trouble going through all the rides, so they made the “FastPass” which allows customers to skip the lines or have a really small waiting time for the next ride.(Ali, 2015) With this strategy in place, they have done a lot over the past years and will continue to do so.(Williams, 2019) On the other side, Disney has a lot of stake in the media world owning ESPN, ABC, and just recently the acquisition of fox. With these media outlets, they are able to get affiliate fees from the cable providers. With owning these networks they also have access to even more content that they get money for example DVDs for something that was made by Fox now goes to Disney.

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Having a big media presence is how they make a lot of the revenue for example in 2014 43% of their total revenue came from media networks.

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Forecasting: J.P. Morgan has made a forecast on Disney Plus ensuring the investors that this new strategic move will rise the price of Disney’s stock. J.P.Morgan is very confident making a prediction that Disney plus will surpass the top streaming channels in no time. According to J.P.Morgan, they project that Disney Plus can reach up to 160 million subscribers, that is 21 million more than Netflix’s 139 million subscribers(Owusu, Tony). Disney Plus is expected to to have around 45 million subscribers nationally and 115 million internationally(Owusu, Tony). They have made this forecast based on Disney box office sales and a census conducted by J.P. Morgan. Our projection is that Disney Plus will be an asset to the company. Using this operational skill of launching a new streaming service will raise the stock price of Disney. We predict that Disney plus is going to increase the net income yearly for Disney. Looking at the past five years net income for Disney we have predicted that the net income of Disney for the year 2020 will be 10.2 billion. Our second prediction is with Disney’s stock price, our forecast is that by January 2020, the stock price will be $105.06. We also predict that they will gain millions of subscribers per year, but it will take a couple of years to catch up to Netflix.

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Conclusion: Overall, the Disney company is going to launch Disney Plus and the price of the membership will be $6.99 monthly or $69.99 annually. It will include original shows and somewhere between four-hundred and five hundred Disney movies. Disney Plus will have also Pixar, Marvel, Star Wars, and National Geographic in its content. Disney Company in general for the organizational strategy, were the strategies to be diverse for the customers. They also use a geographical strategy where they use to locate their theme park and this plays a role in their competition. For their operational strategy, they focus on coming out with new products to keep up with the competition. For example, Disney Plus is one of the products that they are about to launch. The prediction is that this channel will increase the net income of the Disney Company. The stock price for the company is also predicted to increase with the launch of Disney Plus.

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References: Ali. (2015, Dec 9 ). Making Dreams Come True…With Operations Management. Retrieved from https://rctom.hbs.org/submission/making-dreams-come-truewith-operations-management/ Bob Iger. (2019, May 06). Retrieved from https://en.wikipedia.org/wiki/Bob_Iger Disney History. (n.d.). Retrieved May 6, 2019, from https://d23.com/disney-history/  How Disney Makes Money? Understanding Disney Business Model Core Elements. (2019, April 15). Retrieved from https://revenuesandprofits.com/how-disney-makes-money-understan ding-disney-business-model-core-elements/ Jasinski, Nicholas. (2019, Mar 06). How Many Streaming Subscribers Can Disney Get? More Than Netflix has, Analyst Says. Retrieved from https://www.barrons.com/articles/disney streaming-subscriber-forecast-51551900213 Marshall, Rick. (2019, April 23). Disney Plus Will Have Less than 20% of the content available Netflix. Retrieved from https://www.digitaltrends.com/movies/disney-plus-streaming service-news/ Owusu, Tony. (2019, Mar 6). Disney’s Streaming Service Could Reach 160 Million Subscribers, JPMorgan Says. Retrieved from https://www.thestreet.com/investing/stocks/disney-strea ming-service-projections-14888651 The Walt Disney Company Announces Strategic Reorganization. (2018, June 27). Retrieved from https://www.thewaltdisneycompany.com/walt-disney-company-announces strategic-reorganization/ Williams, Alex. (2019, Feb 28). Walt Disney Company’s Organizational Structure for Synergistic

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Diversification. Retrieved from https://panmore.com/walt-disney-company organizational-structure-synergistic-diversification

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