strategic-management

12 MERNOUSH BANTON
The second largest amusement park company after Disney is Six Flags, Inc., based
in Oklahoma City, Oklahoma, with 20 parks across the United States, Mexico, and Canada
and soon in Dubai and Qatar with more than $1 billion in revenue (2008). Six Flags
recently acquired Dick Clark Productions, which owns television hits such as the
American Music Awards, The Golden Globe Awards, the Academy of Country Music
Awards, Dick Clark’s New Year’s Rockin’ Eve, and So You Think You Can Dance.
Ocean Park in Hong Kong has been aggressively competing with Disney. Ocean
Park is a theme park that covers over 870,000 square meters and receives more than
5 million tourists each year. In March 2009, Ocean Park launched two new sightseeing
locations in Shanghai to attract tourists from regions such as the Yangtze River Delta.
Ocean Park has the advantage of understanding the local market because they have been in
business for more than 30 years. They offer a range of transportation facilities to link Hong
Kong with major cities in the Pearl River Delta. In 2008, Ocean Park established an office
in Shanghai. Ocean Park plans to complete construction of four new themed travel attractions
between 2010 and 2013. It also seems that the residents in Hong Kong are not very
impressed with the small version of Disney built there because many have visited
Disneyland in Tokyo or Anaheim, California. Disney in mid-2009 reached an agreement
with the Hong Kong government to enlarge Hong Kong Disneyland. That city government
owns 57 percent of that Disney theme park.
Competition: Studio Entertainment
The success of Studio Entertainment operations depends heavily on public taste and preferences.
Operating results fluctuate due to the timing and performance of releases in the
theatrical, home entertainment, and television markets. Release dates are determined by
competition and the timing of vacation and holiday periods. Many companies produce
and/or distribute theatrical and television films, exploit products in the home entertainment
market, provide pay television programming services, and sponsor live theater. Disney also
competes to obtain creative and performing talents, story properties, advertiser support,
broadcast rights, and market share.
Movies have historically been a reasonable priced entertainment for families, and
comprise more than $150 billion in revenues annually. The most important regions contributing
to this industry are the United States (49.8 percent), Europe (33 percent), and
Asia and developing countries (14 percent). Consolidation has been very common in the
movie and entertainment industry. As such, a few companies dominate the industry and
control the production and distribution of most movies, including: Warner Brothers
(17.10 percent), Walt Disney (11.70 percent), Twentieth Century Fox (10.3 percent),
Viacom (6.3 percent), and other (54.6 percent).
Competition: Consumer Products
Leading competitors to Disney in this segment are Warner Brothers, Fox, Sony, Marvel,
and Nickelodeon. Disney competes in its character merchandising and other licensing,
publishing, interactive, and retail activities with other licensors, publishers, and retailers of
character, brand, and celebrity names. Disney is perhaps the largest worldwide licensor of
character-based merchandise and producer/distributor of children’s film-related products
based on retail sales. Operating results for the licensing and retail distribution business are
influenced by seasonal consumer purchasing behavior and by the timing and performance
of animated theatrical releases.
Risk
A wide range of factors could materially affect the future and the performance of the
Disney, such as:
1. A prolonged recession in the United States and other regions of the world could
have an adverse affect on the company’s business.
2. The success of the business depends on the ability to consistently create and
distribute programs/products (movies, films, programs, theme park attractions,
resort services, and consumer products) that consumers want. As such, heavy