strategic-management

The company also has been hosting VIP tours (additional fees applies), offering
added-value services such as number of attractions being covered along with personal
guide tours, preferred seating, and front-of-line access to rides. The company also offers
package deals for major corporations and schools.
Disney has plans to change its concept of the theme parks from the masses to a more
concentrated perspective. This move allows Disney to offer more stand-alone theme parks
and resorts in cities and beach resorts, as well as Disney-branded retail and dining districts,
and smaller and more sophisticated parks. This permits the company in using the Disney
brand name to expand in other areas of the travel business. The company has built timeshare
vacation homes in popular places in the United States. Some of the challenges in this
marketing strategy have been tailoring the niche attractions to the local markets while
keeping the Disney brand reputation. However, there is a challenge of avoiding
cannibalization of existing parks and attractions. The goal would be entering into new markets
without harming or cannibalizing Disney’s brand.
Studio Entertainment
Disney produces live-action and animated motion pictures, direct-to-video programming,
musical recordings, and live-stage plays. Disney motion pictures are distributed under the
names Walt Disney Pictures and Television, Touchstone Pictures, Hollywood Pictures,
Miramax Films, and Buena Vista Home Entertainment International, which includes Walt
Disney Records, Buena Vista Records, Hollywood Records, Lyric Street Records, and
Disney Music Publishing. Disney owns Pixar, a computer animation leader, and produces
feature animation films under both the Disney and Pixar banners. The company also produces
stage plays, musical recordings, and live entertainment events. As of September
2008, Disney had released 928 full-length movies, 80 full-length animated features, and
546 cartoon shorts. Product offerings include Pay-Per-View, Pay Television, Free
Television, Pay Television 2, and International Television.
Consumer Products
The Consumer Products segment includes partners with licenses, manufacturers, publishers,
and retailers worldwide who design, promote, and sell a wide variety of products
based on new and existing Disney characters. The product offerings are Character
Merchandise and Publications Licensing, Books and Magazines, Buena Vista Games,
DisneyShopping.com, and The Disney Store. Products include books, interactive games,
food and beverages, fine art, apparel, toys, and even home decor.
In 2008, the revenues from this segment increased 26 percent to $2.9 billion. Sales
growth at the Disney Stores was due to the acquisition of the Disney Stores North
America. Sales growth at Merchandise Licensing was driven by higher earned royalties
across multiple product categories.
Operating income of this segment increased 14 percent to $718 million, mostly due
to growth at Merchandise Licensing partially offset by a decrease at the Disney Stores due
to the acquisition of the Disney Stores North America. In April 2008, Disney acquired
inventory, leasehold improvements, and certain fixed assets of the Disney Stores North
America for approximately $64 million. The acquisition included the assumption of the
leases of 229 stores.
Competition
Disney’s competitors differ in each segment of business. Time Warner is a major competitor
to Disney and is composed of five divisions: AOL, Cable, Filmed Entertainment,
Networks, and Publishing. Time Warner owns Time Inc., AOL, Warner Brothers, and TBS
Networks. Walt Disney generally is classified as Entertainment-Diversified, which directly
competes with Time Warner, Inc. (as shown in Exhibit 11).
CBS Corporation and News Corporation directly compete with the Walt Disney
Company in the Media Network segment, but they are not rivals in the Consumer Products
and Parks and Resorts segments. CBS Corporation was a part of Viacom, Inc., but now
operates independently under CBS Corp. News Corporation is a diversified international
media and entertainment company that operates in eight segments: Filmed Entertainment,
CASE 1 • WALT DISNEY COMPANY — 2009 9