Here’s what you’ll learn from Disney’s strategy study:
- How long-term clarity builds tenacity and fosters innovation.
- How focusing on moon shots in the short-term can hurt you in the mid-term.
- How to make huge business deals based on honesty and trust.
- How your brand can become a powerful strategic enabler.
- How to develop deeper relationships with your customers at scale.
- How to use data to innovate at a business level.
- How to embrace disruptions and make them part of your strategy.
- How to take care of your people as an international entity.
The company's trajectory has fluctuated through its long history, but at its highest points, it has left its mark in more than one way. The Walt Disney Company has earned multiple times the leading position in animation. Still, it has transformed into a global behemoth with a more than substantial presence in numerous industries, from theme parks and cruise lines to live-action film production to consumer products. Disney is an excellent example of a company that is more than the sum of its parts.
Very few organizations worldwide can boast numbers better or even close to those of Disney:
- Revenue of $82.7 billion in 2022
- Brand value of $60.5 billion in 2022
- Total assets of over $200 billion in 2022
- Number of employees: 220.000 as of 2022
- Disney has 12 theme parks around the world, 9 Disney Resorts and 5 cruise ships (with 2 more en route)
- The Disney+ streaming service reached 161.8 million subscribers in Q1 2023
The Humble Beginnings of a Magical Imagination
Today his name is recognizable globally, and mentioning it awakens feelings of joy and wonder to adults and children alike. Walt Disney and his older brother Roy founded the Disney Brothers Cartoon Studio on October 16 of 1923, the entity that was destined to become the colossus known today as The Walt Disney Company.
Walt Disney was born in 1901 in Chicago, Illinois, and developed an interest in art and drawing from a very young age. When he was 4 years old, his family moved to a farm outside of Marceline, a place where young Walt was exposed to nature, animals, and the small-town life that sparked his imagination and allowed it to expand and run wild.
Pursuing art and entrepreneurship
At just the age of seven, he sold his first drawings. Due to financial troubles, two years later, he started helping his father deliver newspapers. However, he continued honing his drawing skills and developing his art education.
At the age of 18, he had his first encounter with animation in Pesman Art Studio, where he met a fellow artist named Ub Iwerks. Disney and Iwerks soon had a failed attempt at creating their own commercial company, and later on, Disney founded another company, a film studio, where he employed Iwerks, among others, as an animator.
In 1923 Disney had to declare bankruptcy due to high costs, resulting in his second entrepreneurial attempt. Nevertheless, his work in the animation industry didn’t go unnoticed, earning him a contract that led to the Disney Brothers Cartoon Studio’s first production, a series named “Alice comedies” which mixed live-action motion-picture photography with cartoon animation. One of the first such productions.
Disney worked on the series until 1927, with his friend and former partner Iwerks producing more than 50 films. His next creation, “Oswalt the Lucky Rabbit”, was produced for Universal Studios and was a hit. However, during negotiations, he realized that he had painted himself to a corner, signing away all of the rights for Oswalt when he accepted the contract and losing all of his animators, except for Iwerks, to Universal Studios.
Disney and Iwerks went on and created Mickey Mouse as an answer, retaining all the rights this time. Disney lent his voice to Mickey and Iwerks drew him. Together they created the first cartoon with synchronized sound, the short film “Steamboat Willie”, which was the first film with Mickey that had a distributor and was the start of the mouse’s exploding career. Actually, the film was so successful and significant as an innovation that in 1998 was added to the National Film Registry by the United States Library of Congress.
Walt Disney's vision and innovative spirit were demonstrated in 1937 when the first feature-length animated film premiered, “Snow White and the Seven Dwarves.” The film took three years to complete and was nicknamed “Disney’s Folly” by industry insiders due to its revolutionary nature. The risk for the company, now called “Walt Disney Productions,” was great since it exceeded four times its initial budget and had more than 300 people working on it.
In complete contrast to all the naysayers, the novel experience that Walt Disney had created with this film, which elicited the full range of human emotions, was an absolute success. Its release was received with immense praise by critics, audiences, and magazines, granting its creator an honorary Oscar. Financially, not only did it cover its budget, but it also generated enough profit that Walt Disney built a new studio in Burbank, California, and an exemplary corporate culture. The company’s headquarters are still there to this day.
Flexing in the pursuit of the vision
Walt Disney had a vision. He wanted everyone to share the wonder and excitement he experienced when he was a little boy in Marceline. And with that in mind, in 1952, although his company was quite successful and profitable, Walt Disney put everything on the line selling his shares, liquidating his assets, selling off property, borrowing against his life insurance policy, going to great lengths to gather as many resources as he could the one thing that would advance his vision.
Disneyland, his greatest achievement, opened its doors in 1955, and it was a theme park like no other before it. Contrary to the theme parks of the time, Walt’s Disneyland was a safe place, clean and untouched by unlawfulness. It had a coherent story throughout the park, and it was an immersive experience for adults and children, a place where, with Walt Disney’s words, “Here you leave today and enter the world of yesterday, tomorrow and fantasy.”
The park recorded revenues of more than $10 million and 3.6 million guests during its first year of operation. Its success holds today, as it is constantly expanding with new attractions being added regularly. Before his death in 1966, he started working on a second theme park, the Walt Disney World, but he didn’t manage to experience its opening.
Disney holds the record for most individual Oscar wins with a staggering 22 wins. In addition, he was presented with the George Washington Award and the Presidential Medal of Freedom. Along with his brother Roy, they helped establish in 1961 the California Institute of the Arts.
Key Takeaway #1: A clear vision drives perseverance and innovation
The Walt Disney Company’s international and intergenerational success didn’t occur by accident. Its founder’s clarity of vision and unrestful spirit drove him to take multiple risks in his career and achieve some of the greatest innovations of his industry.
His failures and setbacks, though many, didn’t extinguish the flame of his creativity. His best creations came after his biggest failures and he never sacrificed his freedom to pursue his cause for a safer and easier future. Although he made many mistakes, he was constantly exploring new ways to advance his vision and supply the world with wonder, magic, and unique and safe experiences.
The Walt Disney Company didn’t grow to its current enormous size overnight. Since the opening of Disneyland in 1955, the company has made numerous strategic moves to expand its parks and resorts and its services and assets. Among others, it increased its distribution capabilities, obtained media assets, increased its channels, and widely diversified its activities.
Although Disney had produced and aired many shows, films, and other television content, it always did so through other, already established networks. It wasn’t until 1983 that the company launched its own premium channel and used it as a content distribution platform to promote other activities and events like the openings of its new theme parks.
Shortly after that, Disney expanded its audience, launching channels in Taiwan, the United Kingdom, and Malaysia. There was a specific reason that Disney needed to expand its media reach to foreign markets and develop its audience. Once it had attained a baseline of viewers, it could then advertise the new rides of its later installed theme parks.
In the following decades, various moves were made to expand internationally, but at best the penetration to foreign markets was decent. Despite major moves that increased its reach in the US market, it wasn’t until much later, after 2005, that serious effort was made for deeper international market penetration.
However, the biggest transformation of the company's media segment happened in 2019, when Disney made the massive acquisition of 21st Century Fox for more than $71 billion, the biggest acquisition in its history. From that point on, Disney became mostly a media company concerning its assets.
The Death of the Founder: Did he take the company’s creativity with him?
However, since the death of Walt Disney in 1966, the company suffered in the animation industry, failing to reproduce massively successful productions. That lack of memorable films and characters was felt across its theme parks, as well.
Disneyland parks have relied heavily on the local population to stay profitable. Thus, to attract nearby residents, they require regular reinventions of the performative content inside the parks and the additions of new and exciting rides. The lack of successful films and recognizable characters had provided only minor updates to the park since 1964.
Nonetheless, some of the most extraordinary expansions happened during the first decade of Michael Eisner’s tenure as CEO of The Walt Disney Company, which in total lasted 21 years (1984-2005). As the head of Disney, he was bold and calculated, making strategic moves that increased the company’s international reach and even carried Disney through some tough times.
The Disney Renaissance Period
Since Michael Eisner headed Disney, he and Frank Wells, president and later COO of the company, found, to their amazement, a mountain of dusted material and assets that had a remarkable potential for the future of the company. They were excited and eager to exploit every last one of them. And so they did.
Eisner was very aggressive in expanding the parks, adding new resorts, and adopting a more profitable pricing strategy. He disagreed with the notion that when Walt Disney left this world, he also took with him the soul of Disney and the possibility of making it again the leading producer of original and timeless animation films.
Hence, he put a considerable focus on making quality, new animation films. Successful in his endeavor, he produced movies like “The Little Mermaid”, “Beauty and the Beast” and “The Lion King” that sparked what was later called the Disney Renaissance period. Now he had original Disney characters to promote and populate the parks.
Under Eisner’s guidance, Disney opened seven new parks around the world including “Disney’s Animal Kingdom”, “Disney’s California Adventure”, “Disneyland Paris” (initially Euro Disney), “Hong Kong Disneyland” and one of the best Disney parks, “Tokyo DisneySea”. Eisner encouraged and approved ambitious new rides and shows for both existing and new theme parks alongside the new parks.
These moves contributed greatly to the international expansion of Disney.
He didn’t stop there, however. He wanted to activate all of Disney’s assets and make them profitable. The Disney channel got new productions, aiming at claiming higher Saturday-morning numbers with cheaper animation. He cooperated with big names in the film industry to produce, act and perform on new products.
One of the most cash-producing decisions that the company made under Eisner was the release of its animated classic feature films on video. This unexpectedly lucrative decision was, in essence, tapping into an underutilized market and took advantage of a fascinating habit, persistent to this day, of young kids to watch animation movies a nightmarish (for their parents) amount of times.
Disney Stores, Cruises, and Lifesaving Moves
These successes fueled the expansions of the theme parks and drove significant profits with their physical products. With some service-oriented moves that made the client experience uniquely enjoyable, Disney nearly doubled their stores and even introduced their first one in London.
The initial fear that the increase of stores would compete with other retail outlets that sold Disney-licensed products was quickly busted, since instead of driving their sales down, every new Disney store increased the sales of Disney-related products of nearby stores, too.
In 1996 an original and highly profitable segment of The Walt Disney Company was established, the Disney Cruise Line. The experience in a Disney cruise was designed to offer a sense of luxury of a bygone era coupled with modern amenities. The first two ships, “Disney Magic” and “Disney Wonder” are still active to this day, underscoring their lovable and flourishing voyages.
As profitable and treasured those moves may have been, the one that provided the most invaluable assets to the company was arguably the acquisition of Capital Cities/ABC Inc. in 1996.
Buying a network was in Eisner’s plans for years, and even though a few other networks besides Cap Cities were considered, conversations about ABC were happening years before. Disney tremendously increased its distribution power with the acquisition, being the first company with a major presence in filmed entertainment, broadcasting, cable television, and telephone wires. This proved lifesaving in the following barren decade.
The price of success
In spite of all the success in the 80s, the late 90s and early 2000s were not a good time for Disney. The expansion had taken a toll on the company. During the Renaissance Period, every single project that Disney undertook was always exceeding the initial budget.
Disneyland Paris, originally Euro Disney Resort, went more than a billion over its budget and struggled for many years to become profitable. Its opening day was a disappointment. Key decisions regarding Europe’s cultural habits and based on overly ambitious projections almost closed the park’s gates forever.
On the creative side, Disney strayed from its path and target audience. It produced films and music that were inappropriate for families and young children. In its pursuit of global domination and higher profits, the company made mistakes of arrogance, got involved in many unpopular stories, and damaged its brand.
Internally, people felt they were treated unfairly, and the company's structure became so centered that Disney became rigid and no original ideas could be developed.
Key Takeaway #2: There is such a thing as going too fast
A few years after the death of its founder, Disney went through a rough patch. However, its leadership was determined to conquer new mountain tops and not let the past glories be the highest point in the company’s history.
Pursuing moon shots and pushing a company to its limit is admirable and often leads to innovative new ideas. Nonetheless, sacrificing the brand or the culture and the people of the company in the process is not sustainable in the long run. It needs exceptional skill to balance the pursuit of moon shots and long-term sustainability.
Lack of Creativity and Bob Iger’s First Big Move
As Animation goes, so goes the company
Bob Iger was working for The Walt Disney Company since 1996 before he became CEO and was quite familiar with its history. He recognized that the company’s performance was tightly bound to the animation industry and its ability to create great animated films. In his own words to his board “as Animation goes, so goes the company.”
In the era from the ‘20s to the ‘40s and the success of movies like “Snow White and the Seven Dwarves,” “Pinocchio,” “Dumbo,” “Cinderella,” and all those great animated movies that Walt Disney built, the company prospered. Even later on, in the Disney Renaissance period when Michael Eisner had taken over the company, The Walt Disney Company created excellent animated films like “The Little Mermaid”, “Beauty and the Beast”, “Aladdin”, “The Lion King” that restore the company’s leadership role in the animation industry.
Nevertheless, when Bob Iger’s tenure started in 2005, he knew that Disney Animation was performing poorly and was overall in a bad shape for the last decade. He realized that Disney’s near future and his own as the head of The Walt Disney Company were hanging on his ability to revitalize the company’s animation productions.
Disney's Top Three Strategic Priorities
Bob Iger became the head of Disney with three clear priorities in mind. The first was the creation of exceptional branded content. His understanding of the market was that brand perception would guide people’s choices, so he had decided to invest most of the company’s capital on this.
His second priority was exploiting technological advancements to aid the creation of exceptional content and staying relevant in its distribution. He sensed that consumer behavior was changing, and he believed it was imperative to commit to the pursuit of technological innovations.
The third priority was international expansion. Disney was present in many markets but with superficial penetration. For example, China and India, two of the most populous countries in the world, were underutilized. He believed that the opportunity that was lurking in those markets was significant and Disney should tap into it.
His decision to rejuvenate the brand and Disney Animation was in complete alignment with his strategic priorities. The need for a solution to the creative stagnation of the company was urgent and echoed throughout all of its businesses.
The only source of talent and innovation
Iger quickly came to the conclusion that reviving Disney Animation meant finding the best, most talented animators and leaders in the industry. And so his gaze immediately turned to Pixar, the leading animation company of the time. On his second day as CEO, he presented his radical and, as time proved, outstanding idea of Disney acquiring Pixar.
The first and biggest challenge that Iger had to face before that idea could ever become a reality was the disdainful attitude towards Disney of Pixar’s controlling shareholder, Steve Jobs.
Pixar and Disney were already doing business together for some time with Disney co-funding, co-owning, marketing and distributing many of Pixar’s films. However, their partnership came to an abrupt halt due to numerous disputes in 2004. Steve Jobs concluded that Disney had become too process-oriented with excessive bureaucratic procedures and a lack of collaborative spirit.
Since all of the talent and leading creative minds in animation technology and storytelling were concentrated in Pixar, Jobs had all the leverage in negotiations.
Pixar’s invaluable assets and Bob Iger’s irresistible trait
Unexpectedly though, when Jobs forced Iger to share his “crazy idea” over the phone on a warm October evening, Iger’s sweaty proposition was met with recipience. When discussions on the matter started, Jobs brought forth his main concern and biggest fear: Disney would obliterate Pixar’s culture. He believed the creativity and innovation that Pixar had demonstrated over the years was attributed to its collaborative culture more than anything or anyone else.
Inside Pixar technology was inspiring new storytelling techniques and art was pushing the boundaries of technological possibilities. Those were cultural aspects unique to Pixar and, in Jobs' mind, what enabled the company to technologically and artistically pioneer in the animation industry
Thus, his primary goal during the negotiations was shielding Pixar’s culture from what he viewed as a destructive and sterile culture in Disney. Pixar was bringing such originality that each movie always seemed like a huge risk in terms of storytelling. Imagine pitching their movies, for example, a clownfish loses its father, and the father teams up with another fish that has memory problems to find his son. Not so inspiring.
In essence, nobody knew or could guarantee whether the next Pixar movie would be a massive success or a total flop. An aspect that made the investment extremely risky. Disney was conservative, and Jobs feared that Disney would prevent such risks and thus kill the innovative ideas that would come out of the Pixar movie.
On the other hand, Disney was in desperate need of new ideas, people brave enough to take risks, and the technology to bring those ideas to life. Iger needed to revitalize Disney Animation and the best people who could do that were Pixar’s visionary leaders John Lasseter and Ed Catmull.
It was Bob Iger’s uncommon career experiences that made the difference. Twice during his career, the company he was working for was acquired by another. First, it was ABC from Capital Cities, and the second was Capital Cities/ABC from Disney. This firsthand knowledge on the impact on the culture of a company that acquisitions bring and the candor that Steve Jobs and Bob Iger’s relationship was developed on allowed the latter to persuade the former that Pixar’s acquisition by Disney would leave its culture intact. And so it did.
On January 24, 2006, The Walt Disney Company bought Pixar Animation Studios for $7.4 billion and allowed the studio to create great films while its leaders refreshed Disney from the inside. Since then, Pixar has earned more than $11 billion at the global box office and even more through Disney’s other assets such as theme parks and physical products.
Key Takeaway #3: Crazy ideas need respect and candor to become reality
Pixar’s acquisition story reveals that every new and radical idea needs more than just determination and hard work to be realized. Bob Iger had clear strategic priorities when he became CEO, but also had the prudence to respect the unique cultural qualities of Pixar.
He was able to recognize that the value of Pixar was in its people and their ways of collaborating. The sincerity and openness that both Jobs and Iger demonstrated laid the grounds for fertile conversations which resulted in the merging of two companies and the birth of a new one that leveraged each other’s strong assets while mitigating their greatest vulnerabilities.
The Brand of Disney
One distinctive and powerful strategic move that Disney did from very early on, was to separate its brand from its marketing. Instead, it made brand a strategy function, a decision that influenced the company’s trajectory immensely. The addressing of its brand as a strategic variable led to many of the competitive advantages that Disney achieved over the years.
The Walt Disney Company has evolved over the years, expanding its operations, but always remaining an entertainment and content producing company at its core. All of its expansive and evolutionary moves were successful only when they were aligned with its brand. Disney achieved a unifying approach to its brand experience that echoed through all of its core businesses.
Disney’s vision is to become the preeminent leader of family entertainment. And this vision is reflected in its brand attributes. The promise that Disney makes to its customers is of a fun, magical experience that everybody in the family can enjoy. In Walt Disney’s own words: “I do not make films primarily for children. I make them for the child in all of us, whether he be six or sixty.”
This is the promise Disney strives to keep with all of its interactions with its customers. It promises to nudge and excite the child inside every person. And more often than not, it succeeds.
Indeed, whenever the idea of acquiring Marvel fell on the table (it did multiple times in different times in the company’s history), the main question that accompanied it was whether it would benefit the Disney brand. Did those two brands share enough attributes that it would make sense to merge them?
This was a tough question to answer, and before Bob Iger’s era, it had a negative answer. However, Iger thought differently. Consistent with his top priorities, he believed that Marvel could add extraordinary value content-wise to Disney. Although it is common knowledge today whether Marvel and Disney would be a successful pair, it was neither evident nor a certainty back then.
The storytelling opportunities that Disney observed and ultimately emerged through Marvel’s characters were unparalleled, despite having licensed many of them to other entities. As a result, its collection of over five thousand characters was a priceless treasure for the content-hungry company.
The overwhelming success of movies like “Captain Marvel” and “Black Panther” proved that not only were there a massive and starved audience for original storytelling, like female-led superhero movies and black superhero movies, but that, if done correctly, these films could be hugely profitable as well.
Disney is associated with joy and playfulness. Conflict still exists in Disney storytelling, but violence is something that only villains do and that with great restraint. Marvel’s storytelling, on the other hand, is centered around superheroes, and violence is a common occurrence. Acquiring Marvel and associating Disney with such themes could irreversibly damage the brand and distance people who expect their experience with Disney to be free of negative elements.
Upon closer inspection, Bob Iger and his team found out that the two brands shared many attributes in their storytelling and, if managed properly, they could coexist and blossom under one hood. This meant that Disney shouldn’t sanitize Marvel and decrease its brand value or betray its own brand value and take a more edgy path.
There was a great deal of risk involved in merging the two brands and by no means was its success assured. Finally, on December 31, 2009, Disney acquired Marvel for $4 billion and reinvented the film industry, and created another novel Disney experience.
Key Takeaway #4: Brand is a strategic function
Brand is usually ill-defined and thus crudely managed. The first mistake is considering it only as a concern of the marketing department. That’s a deadly mistake.
Brand should always be considered when developing a strategy. Every decision either adds or subtracts from your organization’s brand. The unfortunate trait of brand management is that it can effortlessly go wrong and cause lasting damage.
The fortunate trait of brand management is that it creates priceless opportunities and works as an exponential multiplier to every other aspect of the business if it is carefully handled and nurtured. From talent acquisition to customer satisfaction.
Disney’s Marketing Strategy: Innovating With Fans and Stories
Disney invests a lot of money and resources in marketing and advertising. Even though the company offers experiences for the whole family, it doesn’t target the whole family at the same time. Instead, it segments its target audience and uses different tactics.
For example, they promote new park rides to children to create demand (or indirect pressure on the parents), while at the same time promoting a limited time offer for the parents to create a sense of urgency.
At Disney, they have a plethora of channels to market their endless products and experiences, from social media accounts with millions of followers to television channels and radio. They strategically choose the content and the channel depending on the audience they wish to address and the feeling they wish to trigger.
The power of nostalgia
In the last decade, Disney has started capitalizing on nostalgia. It recognizes that their once upon a time young audience has now grown up, having its own kids and family. Parents remember the feelings of excitement and joy they experienced when they were watching Disney’s animation films as young children and want their kids to have the same experience.
Over the last years, Disney understands this and has proved it, developing live-action movies of their old and popular animation films targeting the parents more than the children. The success of that tactic is evident in movies like “The Lion King” which grossed over $1.5 million in 2019.
Technology today offers an unprecedented opportunity to remake old classics into live-action adaptations with stunning visuals and incredibly realistic CGIs. And Disney still has a lot of content in its library to use and exploit the feeling of nostalgia.
Retelling old stories and making monumental successes out of them is one of Disney’s magic recipes.
Disney’s digital marketing campaigns
Disney has a massive presence in social media, with countless accounts from its collection of brands. The number of followers across all platforms and accounts adds up to hundreds of millions.
That massive followership makes Disney’s presence a valuable asset to its advertising campaigns since it can inform and interact with its audience or make its announcements.
However, the incredible value from social media is generated by Disney’s fans. People love to share their experiences, findings, and stories on their social media profiles. At the time of this writing, #disney has over 80 million photos on Instagram, with the vast majority of them being fan-generated.
The company knows the power of its fans and doesn’t shy away from making full use of it. Disney always urges people to take photos or generate all kinds of content and share it in their personal social media profiles. It’s not unusual either to partner with celebrities and influencers to promote certain events or products or to simply drive engagement.
The #DreamBig campaign
In 2017, Disney partnered with 19 female photographers and the United Nations Foundation program “Girl Up” to launch the #DreamBigPrincess campaign. Its thematic purpose was to empower young girls to go after their dreams, no matter how big they are, by showcasing remarkable stories of girls and young women who achieved their dreams.
Disney highlighted the most powerful traits of its princesses, promoting the aspects that are making them worthy role models. The campaign was widely successful.
In just 5 days, Disney met its $1 million pledge of donation when the photos reached 1 million shares and the Girl Up program saw amazing growth and support.
Although Disney didn’t directly promote any of its products or movies, it certainly increased its brand awareness by associating it with a positive and inspiring message. It’s undeniable that many girls around the globe were meaningfully impacted by that campaign and attribute it to Disney.
Disney never leaves a good anniversary or significant achievement to go to waste. Every year the company finds a reason to celebrate and promote its collection of brands.
In 2018, Disney celebrated its 100.000th wish granted in partnership with the Make-A-Wish Foundation by launching the digital campaign #ShareYourEars. It invited Disney fans to create and share pictures wearing their own, creative Mickey Mouse ears, donating $5 for each post to Make-A-Wish. Again, the response was excessive, motivating Disney to double its initial pledge to a $2 million donation.
The whole month of August 2020 was dedicated to Pixar, marking the 25th anniversary of Toy Story with Pixar Fest. The company released plenty of new content in the Disney+ platform including animator masterclasses and quizzes. It was, once more, in support of another charity: MediCinema.
We are sure that all kinds of plans are already brewing for the coming 100th birthday of the company in 2023.
How Disney products tell stories
One of Disney’s major revenue generators is its physical products. The company advertises its products in all the traditional ways that other companies do as well, but it has one enormously advantageous leverage.
Instead of building stories to surround its products and then try to sell them by promoting the stories, as most businesses do, its products sprung out of the stories. First comes the story and then the products.
The success of the story in the first place creates a healthy or sometimes overwhelming demand for physical products. Then, capitalizing on the popularity of the story, they supply their already pumped-up audience with their branded merchandise.
And they can charge a premium price for them. They’re not just selling toys; they are selling the opportunity to be part of the story, take the characters home, and relive their adventures with them. Again, they’re selling the Disney experience.
This reverse marketing has its risks, though. If the stories (read movies) are not so successful or cute characters feel forced, their merchandise sales take a serious toll.
For example, Star Wars had a huge boost in merchandise sales in 2015 due to the first movie's release after 10 years, but in the following years, the sales moved downwards. Disney’s failed attempt at a Star Wars spinoff movie seriously impacted its product sales.
Theme parks marketing
Disney is the theme park industry leader with a higher annual attendance than the next two corporations together. This is no small feat.
Disney’s theme park depends a lot on the attendance of the local population. For that reason, every new ride and show is heavily promoted in the local channels to attract repeat customers and offer them fresh experiences.
The company follows a different tactic to attract international visitors. Its marketing campaigns of the theme parks aim at placing them as ideal traveling or holiday destinations. They promise a novel, all-inclusive experience that provides solutions to almost any concern of the potential guests.
But advertising doesn’t stop once the guests enter the gates of a park. Every theme park experience is carefully designed to be immersive and urges the guests to make it memory tokens by taking pictures and videos and sharing them online.
Through the excitement and the joyful participation, Disney makes micro advocates of its brand out of its guests. Simply put, people love sharing and telling the world how awesome their Disney experience is. And Disney compels them to do it.
Key Takeaway #5: Engage your customers and develop meaningful relationships
All of Disney’s interactions with its customers aim at creating or enhancing the relationship between the brand and its customers.
Arguably, media and entertainment companies have more opportunities to engage and foster relationships with their customers. However, purposefully engaging with customers is imperative for every organization that wishes to have loyal and high-quality customers. Producing value and being relevant are today’s most important marketing traits.
Disney's innovation strategy and technological capabilities
Disney has entered, disrupted, and innovated in a number of industries. What is driving all of Disney’s innovative initiatives is its intense focus on the customer. It’s impossible to overstate this fact. Excelling at customer experience is what sets Disney apart.
Reinventing the cruise experience
When Disney decided to enter the cruise industry, few believed in its success. The truth is, to this day, Disney hasn’t achieved a penetration larger than 3% of that market. That’s a poor indicator of its influence. Since Disney entered the world of cruising, it has never been the same.
Disney took the traditional cruise experience and flipped it on its head. In what was a primarily adult-designed experience, Disney shifted its focus on the children. They made their ships particularly family-friendly.
Disney reinvented cruising by designing its ships from scratch. They don’t buy ships and remodel them to fit their standards; they build them from the beginning with their customers in mind.
The ingenuity that went into crafting the cruises was evident in two elements. The customer service and the ship design.
Disney achieved the impossible. It translated the theme park experience to the cruise experience. The company built rides inside the ship, shows, and performances and every single place had a theme attached to it. From pirate nights to Star Wars bars.
And the design is accommodative for the whole family. There are places exclusive to children and others exclusive to adults. Everything and everyone inside the ship aims at making life easier for the parents and joyful (and safe) for the kids.
Living inside the ship is beyond relaxing and comfortable, it’s a Disney adventure. Sometimes people choose not to go to the private islands that Disney has included in the cruise route, just to spend more time inside the ship. They made their ships the destination.
The influence that Disney has in the cruise industry is monumental.
Imagineers: Disney’s most important team
From the early days of the company, the founder established a team, called “Imagineers”. They were responsible for building and bringing the vision, dreams, and plans of Walt Disney and the company into the real world.
Behind the design of every theme park, ship, and attraction is this team. Today this team has evolved into the R&D department of The Walt Disney Company. Walt Disney's obsession with quality and exceptional customer service had spoiled the team, which never stayed within budget when it came to their projects.
This later led to complications and disputes within the company, contributing to its financial difficulties when Disney wasn’t performing well. Like every organization, Disney struggled to balance pursuing innovation and having efficient processes.
In all accounts, Disney's R&D arm is responsible for stacks of technological and design advancements throughout its history, helping the company to pioneer and stay ahead of its competition.
Since well before 2000, Disney had established a world-class analytics department and in the following years kept investing in it, trying to take advantage of its capabilities as much as possible. The primal focus is the customer. Every analysis and insight aims at optimizing the customer experience and improving every single interaction with the brand.
The $1 billion solution
The problem today with companies is not gathering the data, but the analysis and use of it. Disney faced several problems early in the last decade, where guest satisfaction in its parks suffered due to high attendance. In the pursuit of a solution to numerous logistical problems, Imagineers came up with an innovative and widely applicable solution: the MagicBands.
Initially, a bracelet and recently redesigned to fit several other accessory roles, MagicBands include multiple functions that make the guests’ experience frictionless and playful. However, the easily noticeable improvements to customer service were only the tip of the iceberg of the invention’s efficacy. Its most meaningful impact was occurring behind the scenes.
With the data collected from the bands, Disney solved or improved countless operations and logistical nightmares, which impacted not only the cost of operations but guests’ experience as well. There was one advantage that Disney’s obsession with quality and creating an immersive experience made that investment payout so well. The sense of safety and lack of harmful, ill-intentioned situations within the parks.
People felt comfortable sharing their data within the park’s compounds and resorts, knowing they’re safe from all the negative exploitations and content that platforms like social media can’t mitigate.
Though the capabilities of smartphones quickly outmatched the technology of the MagicBands, Disney had developed elaborate systems and processes to track and analyze all kinds of data from them.
That way, it was relatively an easy matter to incorporate technological advancements into the company’s processes. The $1 billion investment in the development of the MagicBands enhances Disney’s data capabilities in the long term.
Key Takeaway #6: Hardcore customer-centric data analysis in the heart of modern innovation
Disney conquered and influenced a number of industries with its obsession with customer experience. It didn’t achieve that by passively brainstorming new ideas. Instead, it created outstanding analytics programs that connected all of its processes from customer knowledge to financial information.
Raw data is worthless if it can’t be analyzed or connected to the right information. A strong analytics department can lead to insights that create competitive advantages.
Disrupting Disney From Within: How Disney Developed The Best Streaming Services
Technological advances have profoundly impacted the media and entertainment industry. If companies are to survive the disruption, their leadership should always have their eyes on the future and the company's foot in it. That’s Bob Iger’s view.
Consequently, sensitivity to changes in an industry or consumer behavior becomes necessary. ESPN was the first to signal those disruptive effects to Disney, since people were finding alternative means of entertainment, affecting the business extensively. Cable television was dying, and ESPN was going down with it.
Disney’s leadership heard the signal loudly and clearly. Instead of just accepting the industry's changes and passively watching the decline of ESPN, Disney decided to ride the wave of disruption.
Acquiring the technology to go direct-to-consumer
After analyzing the scenery and the effects on their various businesses, the verdict inside Disney was unanimous: they had to pivot early and quickly. So, they swiftly forged a direct-to-consumer strategy.
Since time was of the essence, they couldn’t afford to build from scratch a technology platform to take advantage of the changes in consumer behavior.
So Disney started examining potential acquisitions. Twitter ended up drawing their interest, and if it wasn’t for Bob Iger’s last-minute change of heart, there might have been a multi-billion Disney-Twitter deal. But Iger was deeply concerned about the damage of Disney’s brand from the challenges that Twitter would bring along, like handling hate and uncivil speech, rage, issues with freedom of speech, and generally all the negative aspects of a social platform that families – or anyone in that matter - should never have to put up with.
Instead, in August 2016, The Walt Disney Company acquired BAMTech for $1 billion, and the next year, Disney raised its stake to a controlling 75% with an additional $1.58 billion. BAMTech had developed a user-friendly streaming technology that offered a great opportunity to monetize the content and create a valuable relationship between Disney and its audience.
The approach to delivering their content in a direct-to-consumer manner wasn’t limited to ESPN. Disney decided to turn the whole company towards the direction of over-the-top services going beyond their established ways of content distribution.
Out of that decision, ESPN+ and Disney+ were born with the latter being a platform that utilizes and delivers the content of all the major brands that Disney owns: Marvel, Pixar, Star Wars, National Geographic, and of course Disney.
Internal disruption: Innovation isn’t cheap
Investing in those new services meant sacrificing significant short-term capital. For example, to be competitive in the streaming industry, Disney, like any other player, needed exclusive and original content in its platform. Over the years, Disney and its collection of brands had developed an abundance of high-quality content that was distributed mostly through third parties, like Netflix. Pulling out Disney’s content - so the company could distribute it itself - and breaking up the contracts entailed fees worth hundreds of millions of dollars.
In addition, the company had great creative potential that Iger wanted to tap into with the purpose of generating original content specifically tailored to the newborn distribution platform. He simply didn’t want to hire external production or create another studio to populate the platform. He had complete confidence in the existing studios and their abilities to deliver content with specific specifications. They had been successful after all in the traditional ways of content creation.
However, his ambitious approach put a significant strain on the studios and its senior executives. They essentially had to juggle new responsibilities and divert a significant part of their attention and resources from their currently successful businesses to meet the demands and goals of the Disney+ project.
They were competitive people with sometimes unaligned interests and were asked to put aside politics and work together for the success of the company. To avoid failure and also to impose a sense of urgency, Iger had to restructure the internal incentive and rewarding system to align it with the company’s priorities.
Innovation requires sacrificing short-term profits to potentially build a future strategic advantage.
Current status of Disney’s streaming services
Disney has caught on with the notion that people are enjoying the control that the new streaming services are offering. They can decide for themselves not only what they are going to consume, but also the time and the place they do it. And Disney is determined to offer the best solutions on the matter.
Even though ESPN+ isn’t contributing directly to the company's international expansion, it is once again highly profitable with over 12 million US subscribers in early 2021. On the contrary, Disney+ is currently available in over 50 countries with plans to expand by the end of the year (2021). By 2023 it is estimated that Disney’s international streaming service will go toe to toe with Netflix, having already exceeded the 100 million subscribers mark. Hulu, the third streaming service of Disney after the acquisition of 21st Century Fox, is available in the US and Japan, reaching nearly 40 million subscribers.
Key Takeaway #7: Don’t fight disruption, embrace and ride it fast.
Leaders should always develop a futuristic approach when considering their strategy. Having open and sensitive channels permits early detection of disruptive tendencies within their industry. Once those tendencies have been detected, it takes great courage to accept them and leave behind the old ways of doing business.
However, those who take advantage of the opportunity and flex reap great rewards, and those who don’t get to watch their business slowly die out.
People Appreciate Breaking the Status Quo the Right Way
The Walt Disney Company includes a tremendously diverse bundle of businesses, so it makes it hard or, more accurately, pointless to try and define one specific audience that Disney is targeting throughout its businesses. Maybe the best (or frankly the only) term we can use to approximate it is “families”. “Families” in the broadest possible definition of the word and beyond.
What is making Disney uniquely appealing is the remarkable trait of its products to be enjoyed by almost the whole range of ages. Its animation movies may be targeting young children, but they are far from a drag for their parents to watch them together – at least for the first couple of times, after the 100th, it becomes unbearable.
Disney takes the training of its employees very seriously. From very early on, Disney realized that the first and biggest champions of their brand should be the people working for it. The first Disney University was created in 1962 at Disneyland to train new employees and with an extensive preparation process to introduce them to the Disney culture, its ways and traditions, and the communication and collaboration practices of the park.
A fun fact about Disney is that the company doesn’t refer to its park’s employees as employees, instead, they are called “Cast Members” that wear “costumes” instead of uniforms and entertain “guests” instead of visitors.
This reinforces the idea that cast members are entering a stage when they come out and perform their roles. That way the magical experience that guests are invited to have is deeply immersive and exciting.
Since 1962, Disney has opened several facilities near its biggest theme parks with the same name and purpose while expanding its activities digitally with online courses. However, there is one common experience that every cast member goes through on their first day of work called “Traditions”.
The class is a welcoming ceremony and highly emotional, where new cast members learn about the legacy of Disney and their responsibility towards it. In just a few hours, they get the first real glimpse behind the scenes, are inspired, surprised, and taught about the new culture they are becoming a part of.
People working in Disney have many opportunities to get training and propel their careers forward. Even though Disney University is not an accredited institution, it includes highly valuable courses that experienced professionals teach.
Hiring, Diversity & Inclusion
Disney has a variety of programs and processes when it comes to hiring new people or offering internships. However, because of its massive size and diverse segments, the company has created a website to guide, inform and facilitate the process.
Over the last few years, Disney has demonstrated an impressive attempt to create products and tell stories that accurately represent the vastly diverse human world. This is evident in Disney’s storytelling, where fresh, inspiring, and modern messages are depicted and inside their culture.
Inside the company, there is a growing intention of leveraging the reach of the brand by welcoming and including people with various backgrounds and cultural traits. They make public statements of their support of communities like LGBTQ, offer internal cross-cultural mentoring, and take important initiatives.
For example, since 2012, Disney has established a program called “Heroes Work Here” dedicated to offer opportunities and help their reentrance to the society of returning veterans.
Another display of the company’s commitment to the promotion of aspirational themes and underrepresented or even forgotten communities, Disney+ has inserted advisories to certain titles that appear before them. The message is shown below
Although Disney has still a long way to go to become a brand and company reflective of humanity's multilateral and terrifyingly flavor-rich realm, it has displayed serious effort to advance in that direction.
Key Takeaway #8: Honoring the responsibility of international brands means focusing on the people
Disney recognizes its ability and responsibility to shape cultures and opinions and has started taking them seriously and handling them with great maturity. It’s not easy to transform an organization the size of Disney and make it an exemplary brand, yet they are determined to pursue it actively.
Maybe the company’s nature and size enable this process or maybe not. But, the truth is that seeing this honest and efficacious attempt to tackle important issues and provide a serious focus on people and culture has an inspiring effect. It sends the message that inclusion is possible and the differences that people bring into the room are not obstacles to overcome, but rather blessings that, if utilized, introduces precious qualities that can’t be bought another way.
Final Thoughts and Key Takeaways
Disney is a multifaceted corporation. It offers unique experiences and stories. It is a very rare kind of organization, because of the strong correlation between its segments. Its separate business influences the other and works as a multiplier. The brand equity of The Walt Disney Company increases the aggregated value of its part, making it significantly more than their sum.
Recap: Growth by the numbers
The ultimate list of strategic takeaways:
Though few companies have the diverse assets of Disney, there are still many tactics and strategies that can be adopted by studying the company.
- A clear vision drives perseverance and innovation
- There is such a thing as going too fast
- Crazy ideas need respect and candor to become reality
- Brand is a strategic function
- Engage your customers and develop meaningful relationships
- Hardcore customer-centric data analysis in the heart of modern innovation
- Don’t fight disruption; embrace and ride it fast.
- Honoring the responsibility of international brands means focusing on the people