Strategic Management

Individual Assignment

Critique on
Disney goes OTT: The launch that defined a major industry shift

Submitted by: Submitted to:

Shivam Tiwari (191153) Prof. Khyati Desai

MBA-FT (2019-2021)
Institute of Management, Nirma University
Date of Submission: 05/03/2020
 Table of contents

Introduction 2

Strategy behind this major Industry 3-5

Shift

Insights 5-6

Academic concept that can be linked 6

with Disney move to OTT service

Future Outlook 7

Page 1 of 7
 1. Introduction
Disney never steps back from taking risk, if we go way back in 1937 critics argued that
Disney has taken a huge risk by putting their reputation on line by producing a risky film
“Snow White” and even quoted this movie as “Snow White and the Seven Dwarfs” a movie
that no one would sit through. But in the end, Disney's gamble paid off. "Snow White," the
first animated feature in America, became a blockbuster that helped make Disney the
company it is today.

Eighty-two years later, Disney is about to unveil another risky innovation - one that could be
as vital to the company's future as "Snow White" was to its origins: the launch of Disney+.

For Disney, Disney+ represents a major shift in the company's business focus. Disney has
made it to the top of the media world over the last century thanks to its kingdom of record-
breaking blockbusters, theme parks, TV networks and Buzz Lightyear action figures.

So why would the most dominant media company in the world invest billions of dollars in
order to create a new unit in its already lucrative business? It's because Disney needs to adapt
to the rapidly changing media world. It is evident that the future of entertainment business
resides in streaming services and keeping this in mind Disney is fully committed to streaming
because they think that streaming is going to be at the core of the whole company going
forward.

Page 2 of 7
 2. Strategy behind this major Industry Shift

Capitalizing the brand value-

The one thing Disney has that few others do – the brand name conjures nostalgia and joy.
'Disney' evokes fantasy and a world of the imagination, and that's not easy to compete
against. Most of us have good memories growing up to classics such as Bambi, The Jungle
Book, The Lion King, High School Musical, Pirates of the Caribbean, and countless others.
Disney, the brand, embodies all that euphoria and magic.

Acquisition of FOX as a base to launch streaming services-

Their many acquisitions through the years, as if it was all part of a greater plan foreseeing the
probability of streaming. From networks – Fox, to sports – ESPN, franchises – The Muppet
Show, Animation Studios – Pixar, superhero conglomerates – Marvel with their universe of
blockbuster movies, to entertainment behemoths such as Star Wars, 21st Century Fox, and
National Geographic. The treasure-trove of all-time classics and hits.

With so much under their umbrella Disney+ has so much content to offer whether it is
animated biggies like Frozen, Up, Toy story, Finding Dory, etc for kids to offering contents
like superhero movies like Avengers, Star wars, Wolverine, etc which has a global reach ,
Disney+ has got it all and that too at a lucrative deal.

Page 3 of 7
Aggressive pricing

It's hard to imagine, but a product seemingly superior than the current monarch, kept its
pricing for all this at just $6.99, compared to the $12.99 for Netflix's popular plan. Offering

Page 4 of 7
services at lower price than Netflix price has worked wonders for Disney+ as on the first day
of launch it hits 10 million subscribers breaking all the expectations.

3. Insights
Disney+ is here, and it’s already beating expectations. Analysts projected it would take the
rest of 2019 – about seven weeks – for the new streaming service to reach 8 million
subscribers. It hit 10 million in one day. Disney’s unparalleled collection of IP, unique brand,
and superior content monetization capabilities give it a significant competitive advantage
over Netflix (NFLX) and every other content company.

Page 5 of 7
Disney stands to benefit as consumers become more overwhelmed by the amount of content
and gravitate towards familiar characters and franchises. No other company can boast the
familiarity or the same level of franchise IP. 

Disney Plus might be the new streaming kid on the block, but it's wasted no time in attracting
28.6 million paid subscribers. The company reported 26.5 million as of the end of its most
recent quarter. That may not seem like a lot when compared to Netflix's 167 million
subscribers, but to put it in context, Disney Plus has been around for less than three months,
while Netflix has been streaming movies and TV shows for 12 years.

Connecting with audiences has always been a strength of Disney, which is as good as anyone
at promoting its brands. Disney Plus gives it a powerful platform to showcase those brands,
including its classic animated films, Pixar, Marvel, and of course, the Star Wars universe.
Combining all of those into one service, instead of licensing them out to other platforms has
apparently paid off.

Disney hasn't shied away from spending on the new service either, reporting a $689 million
loss on $4 billion in revenue for all of its streaming services (which also include Hulu and
ESPN Plus). Disney's willingness to spend, combined with its massive built-in content
library, show exactly why Netflix should be worried about the success of Disney Plus so far. 

4. Academic concept that can be linked with Disney move to

OTT service
Disney’s move to launch its streaming service represents a major shift in the company's
business focus. It clearly shows Disney’s plan to diversify its business into streaming
services. Although it was projected Disney+ will suffer losses for 5 years but its aggressive
business strategy proved everyone wrong and within 3 months of launch it is already
threatening Netflix which is the market leader in streaming business. The academic concept
that can be linked with this is “Growth through diversification” wherein Disney eyes to
further grow its well-established business empire by moving into a completely different
industry.

Page 6 of 7
 5. Future Outlook
Disney plans a progressive rollout worldwide over two years. The company provided a
generalized timeline for when it'll expand the service to the world's major regions.

Disney Plus is slated to roll out in:

 Eastern Europe over the course of a year starting as early as summer 2020.
 Latin America over the course of three months starting as early as October 2020.
 Asia-Pacific over the course of two years starting anytime -- the company hasn't
specified.

As far as India is concerned Disney has plans for it as they will be launching Disney+
in India through Hotstar service on March 29. For Disney this as a great
opportunity to use the proven platform of Hotstar to launch the new Disney+
service in one of the most populous countries and fastest-growing economies in the
world.

Page 7 of 7