Five Forces analysis of Walt Disney Company
Disney is among the largest media and entertainment companies of the world. However, apart from that it is also a familiar name across the globe that has acquired immense popularity and particularly among the kids. The entire Disney experience is a unique experience in itself. Apart from its theme parks, Disney is also known for its movies and other merchandise. After Alphabet the brand that owns Google Disney is the company with second highest earning from media. Its media revenue alone was more than $22 billion last year. The best known of its TV properties is the Disney channel. However, it also owns the US national TV network ABC.
Apart from these things Disney has a 50 percent stake in Digital media company Fusion and a 33% stake in the video streaming platform ‘Hulu’. Disney has created a unique brand experience that has translated into brand loyalty. Here is a five forces analysis of Disney based on the famous five forces model developed by Michael E Porter. These five forces are important forces that determine the nature of competition in the industry and its attractiveness. These forces are every where in every market and industry.
Threat of new entrants: low
The threat of new entrants for Disney is low. There are several reasons. First of all to erect a brand like Disney, it takes a very large investment which is not possible for everyone. Apart from the substantial investment in infrastructure, skilled human resources are also required to run a brand of this size. Building a brand and brand loyalty are not easy and required both investment and time. All of these things are not easy for any small brand. Even if small brands enter the market, the competition from the big brands can be so intense that it becomes difficult to acquire a market share.
Bargaining power of suppliers: Moderate
The bargaining power of suppliers of Disney is moderate. Its suppliers include technology companies, media partners and the other vendors. Most of its suppliers are influential names like Nokia, Imax, Hulu, Tumblr, Philips and ESPN. Based on their brand names and influence these suppliers hold moderate influence on Disney’s business. Moreover, switching suppliers becomes difficult because the same options cannot be easily available from other suppliers. However, the smaller vendors do not hold as much clout and can be switched away from easily.
Bargaining power of buyers: weak
The bargaining power of buyers is weak because of the popularity of the brand and the unique experience it provides. the brand has created a quite unique experience that has helped it build impressive customer loyalty over time. Over time it has increased the admission fees for its theme parks without any significant loss in the number of customers. Moreover, Disney has focused on the quality of customer experience and customer service. All of these things have translated into high customer loyalty and popularity. Customers are willing to spend a little extra as long as the matchless Disney experience is available. These factors reduce the bargaining power of the customers.
Threat of substitutes: Low
The threat from substitutes for Disney is low. It is first of all because of the distinct brand identity and image that Disney has created for itself. Moreover, the influence of Disney is better and bigger than most of its competitors. Smaller theme parks and other similar businesses do not hold as significant influence or pose a challenge before Disney. When it comes to Disney every customer knows how famous it is and what it is famous for. So, overall the threat from the substitutes is low for Disney.
Rivalry among the existing firms: High
the rivalry among the existing brands in the media and entertainment industry is high. Several major names are Disney competitors. Apart from Universal and Fox Studios there are other studios as well as providers of amusement services and theme parks that compete with Disney. In this industry a lot depends on the customer experience and brand image. The better the brand image, the higher a brand’s popularity and customer loyalty. Still, there are several large and influential brands in the battle. This intensifies the competition in the industry.