assignment

Economic Analysis – Global Entertainment Industry- Walt Disney 1
Economic Analysis – Global Entertainment Industry- Walt Disney
Economic Analysis – Global Entertainment Industry- Walt Disney 2

Economic Analysis – Global Entertainment Industry- Walt Disney
Introduction
Entertainment is defined as the goods, services, or other activities that people pay for to
enjoy in their leisure time. The global entertainment industry is very large and among the fastest
growing industry in the world. In 2007, the industry had the total market value of $1.2 trillion
which rose to $1.54 trillion in 2011, an annual compounded growth of 6.4% since 2007. In
addition, with digitalization and spread of informational technology, the industry is expected to
grow very fast and is expected to achieve many milestones in terms of market value in coming
years. Entertainment as a product is very demanding in nature, people need it not only in their
distress time but also in times when they are happy and want to celebrate. Therefore the industry
has great scope for development and expansion.
Disney is a name which brings smile on the faces of people of all ages, Walt Disney most
commonly known as Disney is one of the world’s largest multinational media and Entertainment
Company with its headquarter in Walt Disney studios, Burbank, California, United states. Walt
Disney was founded as a cartoon studio on October 16, 1923 by two brothers Walt and Roy
Disney. (10-K, Walt Disney). The company operates worldwide and has many competitors such
as; Warner brothers, Fox entertainment, NBC Universal media LLC, each having/producing
differentiated products for the consumers.
Current CEO and chairman of Walt Disney is Robert A. Iger, Prior to his current post he
served as president and CEO from October 2000 – 2005. Mr. Iger has been named one of
Fortune magazine’s “25 most powerful people in Business” (2006, 2007). (Walt Disney
Company)
Lines of business and operations
Economic Analysis – Global Entertainment Industry- Walt Disney 3

Walt Disney is an MNC which operates in different lines of business, Walt Disney
majorly deals in five business segments i.e. media networks, parks and resorts, studio
entertainment, consumer products and interactive. (10-K, Walt Disney)
Media network: media segment includes domestic as well as international cable
television network, domestic television and radio stations, television production operations etc.
Media network has always yielded the maximum revenue for the Walt Disney among all the
business segments. The reason why Disney yields highest revenue is the number of subscribers it
have, for instance let us take an example,The total number of subscribers of Disney channel –
International (owned 100% by Walt Disney) reported a total of 155 million subscribers as on 29
th

September 2012, similarly in all other media networks owned by the Disney millions of
subscribers are there which continue to pay the for the entertainment they derive. (10-K, Walt
Disney)
Parks and resorts: Company offers various facilities to the people visiting its parks and
resorts such as hotels, dining and entertainment complex, conference centers, golf courses, water
parks, sport complex and other recreational facilities. These resorts and parks are a complete
holiday destination for families and tourists, this segment of business is second largest subsidiary
of Walt Disney in terms of revenue it offers. (10-K, Walt Disney)
Studio entertainment: This segment brings in revenue by producing animated motion
pictures, musical recordings, live stage plays and direct-to-video content. Company distributes
the content i.e. animated motion pictures etc. under the trade names such as Walt Disney
Pictures, Marvel, Pixar and UTV. The movies and other stuff produced in this business segment
are marketed all over the world and thus it is the third largest subsidiary of Walt Disney in terms
of revenue. (10-K, Walt Disney)
Economic Analysis – Global Entertainment Industry- Walt Disney 4

Consumer product: This division deals directly with providing various options to
consumers to buy different type of stuff that will also provide the leverage to other business
segments. Various products offered in this segment are toys, home décor, apparel, furnishing,
health and beauty, stationery, food, footwear, accessories etc. Company protects all its
intellectual properties by getting it registered, company provides licenses to use its intellectual
property against the fees which again bring revenue to the company making this segment as the
fourth largest subsidiary of Walt Disney in terms of revenue. (10-K, Walt Disney)
Interactive: This segment mainly deals with preparing games and various online services,
increasing craze of games and online media services has benefited this segment of Walt Disney a
lot, company is earning $1,000 million per year on an average from this segment which again
makes it as the fifth largest subsidiary of Walt Disney in terms of revenue. (10-K, Walt Disney)
Location and Market
Walt Disney is an MNC; its presence is all over the world ranging from developing
countries to developed countries. It caters people from all age groups with its main focus on
kids.To cater the needs of all subscribers, Walt Disney offers its services in different regional
languages. This helps Walt Disney to gain competitive advantage over its competitors. (10-K,
Walt Disney)
Presence of Walt Disney can be categorized in two dimensions one is physical presence
and another is virtual presence, physical presence exists mainly in developed economies such as
England, United States of America, Canada, Australia etc. whereas virtual presence exists all
over the world by the way of satellites and cables. (10-K, Walt Disney)
The global entertainment industry is full of many competitors but product produced by
each company is differentiated from each other. This product differentiation allows each
Economic Analysis – Global Entertainment Industry- Walt Disney 5

company (including Walt Disney) to have partial monopoly over the price of product or service
they provide. The industry can be characterized as having oligopoly market structure. This is
because there are few large sellers, each having significant market share, there are large number
of buyers, advertisement costs are very high, firms are somewhat...