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Executive Summary
Our group of analysts have been able to identify various
strengths and opportunities for Disney to exploit while creating
and expanding their bundled SVOD services. The final two
countries our group decided to look at for expansion were India
and Mexico. Based on our PESTEL analysis, our group finally
decided on Mexico, as Disney’s best country to expand to.
Given the level of competition in India combined with a
significant language barriers, our group decided India was not
an ideal candidate country at this time.
The current reality for Disney, is that they are far behind on
entering the SVOD market, strategy wise and technology wise,
compared to the their competitors- Netflix and Amazon.
Currently Netflix and Amazon both operate all over the world
including Mexico. Furthermore, Netflix has proven to be
Disney’s primary competitor in Mexico. Competitive strategies
our group has identified to go up against Netflix is two-fold.
First, Disney will rely on building their services- Disney+,
HULU, and ESPN. Essentially customers will be paying one low
price, receiving three different platform channels. Second,
Disney, along with bundling, will employ a competitive pricing
strategy, undercutting Netflix’s prices.
Disney has high revenue streams from other Lines of
Businesses, including their parks, cruises and hotels segments.
Disney will be able to use these high revenues to build up their
SVOD services, maintain them, fund more original content
creation and help undercutting Netflix’s pricing. This leads into
Disney’s second business strategy, which is to focus on more
original content creation. Currently Netflix is the king of
creating sought after original content internationally. If Disney
wants to be considered a major competitor in Mexico, Disney
will have to develop more Spanish language and culture shows

and movies original content.
The entry vehicles this paper will focusing on is- Internet based
entry and partnering with local smart phone providers. SVOD is
reliant on internet connection, so naturally we will focus on
internet based entry into the Mexican market. An internal
partner Disney will be relying on is Bamtech. Bamtech is a
technology company that specializes in creating SVOD services,
and studying and collecting customer data for marketing
purposes and campaigns. Like HULU, Disney acquired a
majority of shares in Bamtech, in order to help Disney adapt to
the new and changing SVOD market. The second entry vehicle
we will be discussing is partnering with local smart phone
providers, to provide access to a Disney+/HULU/ESPN
application. Partnering with local smart phone providers like
Telcel, will allow Disney to reach more customers. Since smart
phone usage has continued to rise in Mexico, it is predicted
smart phone usage will only keep increasing in the future.
Partnering with local smart phone providers will be crucial for
Disney in the long run.
The advantages of using Bamtech and Telcel as entry vehicles
are clear, however, there are some disadvantages to take under
consideration. Currently, smart phone usage is expensive, which
can ultimately drive down demand for SVOD services via their
mobile devices. Adding to this, some parts on Mexico have
unreliable internet infrastructure. Disney currently has a
technology gap, and their recent majority of shares acquisition
of Bamtech was meant to alleviate this gap. Disney will have to
play catch up using Bamtech as their entry vehicle. While
working with Bamtech, Disney will have to address ad blocking
and cybersecurity concerns related to their upcoming new
Disney +/HULU/ESPN application platform. With Disney’s
current technology gap, they will be completely relying on
Bamtech for these solutions.
Finally, this paper will discuss how the organization needs to be
re-structured in order to enter into the SVOD Mexican market.
After appointing presidents of Disney+, HULU, Content

Marketing and Latin America, Disney will have to employ a
team of web developers, marketers, original content creators,
software engineers, customer service specialist and other
administrative positions. This re-structuring should allow
Disney to optimally run and support their bundled SVOD
services.
Business Entry Strategy
Table Contents
1. Expansion Goals

2. Competitor Strategy Summary
3. Business Strategies
4. Entry Business Structure 1- Internet Based Entry
5. Strategic Partner and Its’ Value
6. Entry Business Structure 2- Entering the Mobile Market
7. Advantages and Disadvantages
8. Recommended Entry Vehicle
9. Resources
Expansion Goals
Currently, the Walt Disney Company is in position to expand
their streaming services, Hulu and Disney+, into the global
market. Ten countries from the BRICS and Next Eleven groups
were analyzed to determine if their markets will provide an
economic environment for Disney to begin their global
expansion.
After analyzing each country, Mexico and India were chosen to
be looked at more in depth based on the results of their PESTAL
analysis. Both countries are currently having an established
market and buyers for entertainment streaming services which
provide subscription video on demand (SVOD). PESTEL and
SWOT analysis are conducted in order to determine which
country is best suited for Disney to begin its global expansion.
After examining the current opportunities and threats associated
with entering the VOD markets in Indian and Mexico, Disney
will pursue the expansion of their streaming services in Mexico.
Both countries would provide Disney with an ideal setting to

launch as well have enough opportunities to succeed. However,
through the PESTAL analysis of both countries, the threats were
used as the deciding factor in the selection of Mexico as the
target country. India’s threats in particular could make the
launching of Disney+ and Hulu very difficult for Disney.
Notably, the amount of other streaming services in India would
be a harder for the market entry than Mexico. Currently, Netflix
is the leading streaming provider in Mexico and there are
currently not many other major competitors. Disney will be able
to compete with Netflix in Mexico through brand loyalty with
content on Disney+ and through original content created by
Hulu. Additionally, while Mexico is not one of the largest
countries or economic markets in the world, they do boast a
growing SVOD market that is projected to generate $2.9 billion
in revenue with a total user population of 390.8 million
(Statista, 2019). As a result, Disney should expect to quickly
build its user population in Mexico due to its content and
subscription price. Since Disney will offer a lower price point
for their services and will also bundle package for both
services, they will be able to attract users quickly.
Competitor Strategy Summary
The recent decision by Disney + to expand its global coverage
leads to the need to determine its competitive advantage. For
years, the company has based its operations on the production
and distribution of content using conventional methods. Current
technological trends force it to adopt SVOD which both Netflix
and Amazon have embraced. The ongoing analysis of the best
strategies to enter the Mexican market require thorough analysis
of the SVOD market and factors that will support a smooth
entry.
The Mexican market offers a huge opportunity with a large
subscription base of approximately 9 million. The number of
subscribers is bound to increase over the next five years by
10%. The expected increase in SVOD market aligns with the
global market which continues to quickly adopt to the
technological changes. Currently, the Mexican market has four

major competitors, Netflix, Amazon Prime, America Movil, and
Blim. Netflix enjoys the largest subscription base in the country
with a 63% of the total subscribers (Martinez, 2018). Netflix
has an upper hand over the local competition due to the volume
of content it has. ESPN, Lucas Films, National Geographic,
Pixar Studios and 21st Century Fox among others Disney
Companies (Aguilar, 2019). This gives Disney the same
competitive advantage that Netflix has in the country as it will
be offering subscribers a variety of content to choose from. Its
recent acquisition of Hulu gives it even more competitive
advantage over other companies that will be competing for the
same market. Other advantages include its good reputation and
financial abilities.
The best competitive strategy for the company is bundling. As
stated above, Disney + already owns a number of content
producing companies. These companies will give the company
and target market the required diversification. The acquisition
of Hulu enables bundling to become Disney +’s best weapon.
Bundling is also its best weapon because the diversity and
amount of content that both Disney and Hulu has increases
options for its potential customers. In addition, the acquisition
of Hulu gives Disney an advantage of acquiring two markets,
potential subscribers in Mexico and American locals of Mexican
descent. This niche allows the company to determine their most
profitable bundles and lower their operational costs.
The target market, Mexico, offers a huge opportunity to the
company. Based on price, the company has a large pool of
content to offer its customers. Pricing becomes easy for the
company due to its financial stability. Through bundling and
offering content at low prices, the company is bound to attract
customers from the target market. The biggest challenge in
pricing is the lack of payment mechanisms in the country since
only 18% of the population own credit or debit cards. Based on
quality, the customers can choose from a wide variety of
content that the company offers. The acquisition of Hulu makes
the company more attractive. Approximately 82.5 million

people in Mexico use the internet. The company can acquire
subscribers from this huge customer base. Also, 30% of
Mexican households will have become SVOD subscribers by
2025 (Roshan, 2017).
For successful entry into the market, Walt Disney will have to
use the Penetration Pricing Strategy. The strategy states
stipulates that a company offers its products at a lower price
than its competitors to rapidly attract customers and market
share. The financial stability of the company makes it easy for
the company to lower its prices. Also, the company is already
planning to lower its prices in the American market. Lower
prices will guarantee the acquisition of a large market share.
The stable financial background of Walt Disney will allow it to
sustain the high cost of content which has been the reason for
the increase in subscription prices over the last three years by
companies like Netflix.
Despite having Netflix as the largest competitor, Walt Disney
stands to attract a large customer base in Mexico. The company
will use a best-case strategy where the company can offer their
premium service and access to content at a lower price point
than their other international competitors. Additionally, the
company will utilize their ownership of both services as an
incentive for customers to join through a bundling package of
the two at a discounted price point. As a result, Disney will
need to capitalize on their expansion by implementing
penetration pricing for both services and the bundles. A price
point that is similar to local competitors for international
content will draw more interest and investment from customers
to begin to gain a loyal consumer base.
Business Strategies
Some of the major threats that Disney will face while entering
the Mexican SVOD market, will be able to be mitigated through
the implementation of Disney’s strength. One of the largest
hurdles will be for Disney to catch up to the pace that Netflix
and other competitors are releasing original content. Netflix is
the global leader in original content by SVOD providers,

however it is extremely costly to produce content at such a high
pace. While Netflix and other providers must solely rely on
subscriptions as their primary revenue and funding source,
Disney has an extremely large portfolio and multiple business
segments which each generate a large amount of extra cash. As
a result, Disney will have an easier time dealing with the
financial impact that creating original content for Disney+ and
Hulu will create than its competitors. Additionally, this will
allow Disney to offer both of its streaming services for a lower
price than its international competitors. By offering both
services at the same price as the local competitors, Disney will
have an easier time attracting new customers and will be able to
mitigate the level of risk associated with entering an already
populated market.
The final major risk that Disney will be able to use its strengths
to help mitigate is related to the political corruption in Mexico.
Due to Disney’s prior relationships with the Mexican
government when building and opening Disney Mexico Pavilion
in Epcot, the company has already been able to go through the
growing pains companies will initially face when entering a new
country.
One of Disney’s largest current weaknesses is the amount of
original content their services have compared to their
competitors. As the leader in original content production,
Netflix has set the standard for the SVOD market as well as
capitalized on creating new trends within content genres. For
example, the company has recently expanded to creating
original reality content which includes dating shows to further
expand their target viewers. In Mexico specifically, Netflix will
be filming 50 different series and movies in the current year. In
order to capitalize on their entry into Mexico’s SVOD market,
Disney cannot just rely on their brand loyalty as the sole
attraction to gain subscribers. Instead, Disney must use their
brand loyalty in combination with original content production.
Hulu already has many original content series which are known
globally, including The Handmaids Tale, however Disney

should explore creating content specific to Mexico through Hulu
to compete with the Netflix Mexican productions. Additionally,
Disney should begin creating original series and movies for
their Disney+ brands such as Marvel and Star Wars. Both of
these would be a big draw to consumers that are fans of that
content. In order to truly succeed and capitalize on their
opportunities within original content, Disney must ensure that
they do not identically mimic the strategies that their
competitors such as Netflix follow. Instead, the company must
implement a blend of what their competitors execute while also
staying on the same level as Disney’s overall mission. As a
result, the company should use Hulu as the platform that
implements similar strategies as Netflix, while Disney+ creates
original content under the company’s major brand labels.
Entry Business Structure 1- Internet Based Entry
For this section, we will take a close look at Disney’s entry
vehicle using Direct Investment. Disney will rely on internet
based entry. Since Disney is planning on starting their own
SVOD service to couple it with HULU, internet based entry
makes sense. In order to access this product, customers will
need an internet service. The internet is a relatively new
avenue, where existing companies can expand their customer
base or where new companies can start with a fully online store,
with little up- front cost (Friesner, 2014). Before the invention
and use of the internet for ecommerce and other advanced
services, companies needed some expertise in exporting and
expanding their business to other countries (Chen, 2003).
Without this international experience, it was highly unlikely
companies were able to expand other foreign countries. Now,
with the invention of the internet and ecommerce, very little
prior international experience is necessary to expand to other
countries, if entering the market using the “internet only entry
vehicle”. Furthermore, it allows businesses expand customer
base on an international scale (Chen, 2003). Keep in mind, this
does not mean a company does not have to research, when
entering a foreign market, they still do, if they want to succeed.

One of the first companies to experiment and excel in
ecommerce using the internet was Amazon. Amazon started a
garage business selling and delivering strictly books all over the
country and even internationally (Armstrong, n.d.). With
continuing success, Amazon eventually branched off into selling
movies, music and now even have their own SVOD services,
with many of their services being offered on an international
scale (Armstrong, n.d.). Even Chen (2003) points out that
Amazon grew very quickly via internationalization via the
internet, by expanding to the UK, Japan, Germany and Canada
within in their first few years.
As we established, internet based entry allows companies to
expand their customer base to other parts of the country and
other foreign countries (Chen, 2003; Freisner, 2014; LaMarco,
2019). Furthermore, it allows Disney to diversify the current
status of their company, which reduces business risks
(Competing in International Markets, n.d.). First, Disney is
diversifying by adding a new SVOD service to their portfolio,
and second they are expanding to Mexico.
Initially, the cost for starting up SVOD services was a costly
endeavor (Tuchman, 2017). Back then, the technology was at
the beginning stages, technology was glitchy etc. However, as
technology has excelled in recent years (regarding SVOD
technology), it is easier than ever for companies like Disney to
create their own SVOD service. According to LaMarco (2019),
not only is it easier for larger companies to get into SVOD, it
also helps reduce overall and overhead costs by creating their
own SVOD services. Furthermore, for Disney, their transition
into the SVOD market is further softened by their acquirement
of majority shares in Bamtech, a tech company that specializes
in “direct-to-consumer streaming technology and marketing
services, data analytics, and commerce management (Bamtech
Media, 2018)” Disney has already used their acquisition on
Bamtech to improve their SVOD services for ESPN and plan on
using the same technologies to create and bolster Disney+
(Bamtech Media, 2018). Bamtech will be discussed in more

detail in the next section.
Disney, currently is has two primary disadvantages/weaknesses-
1. The multitude of current competitors in the SVOD industry
within and outside the United States; 2. Technologically,
Disney is very far behind. Adding to this, Netflix currently has
63% of all subscribers in Mexico (Martinez, 2018). In other
words, Disney has a lot to catch up on in the United States,
Mexico and the rest of the world. Assuming Disney’s
acquirement of Bamtech alleviates these
weaknesses/disadvantages, Disney could still face other
disadvantages.
There are also a few pitfalls Disney needs to take into account
when starting their SVOD service and expanding it to Mexico.
They need to focus on their major brand recognition, originality
content and ability to be unique. Trying to copy Amazon or
Netflix too much, will not create uniqueness, driving down
demand (Ooyala Sales, n.d.). As discussed in our groups overall
literature, Disney currently operates the old-fashioned way of
business, whether it be licensing or franchising their brand. In
order for Disney to diversify into the SVOD market, they will
need to significantly re-structure how their company will work
and run their SVOD service. Maintaining their old market
structure will not work here (Ooyala Sales, n.d.). This is why
Disney’s acquisition of a majority of shares of Bamtech is
important. Lastly, Disney must be willing to experiment with
new ideas and implement them (Ooyala Sales, n.d.). This mainly
pertains to Disney continuing to create more original content to
compete on Netflix’s level. These are all
weaknesses/disadvantages that Disney must consider when
implementing their own SVOD service. It is important to note,
that DC shows are popular in Mexico (Parrot Analytics, 2019);
if Disney utilized the Marvel brand correctly, they can be
considered a major competitor to do DC comics shows.
Strategic Partner and Its’ Value
As we touched on in the previous section, Disney is still
operating within their old business structures. Operating under

their old business structure will create challenges for Disney to
create and implement their own SVOD service. First they will
need funding, next they will need expertise in this area. This is
why Disney has been on a buying spree, buying everything from
other media companies to content. This is what makes Disney’s
acquisition (of the majority of shares) of Bamtech crucial for
success in the SVOD market (Bamtech Media, 2018). For this
part of the paper, we will consider the acquisition of Bamtech
and internal partner or ally for Disney’s mission of creating
their SVOD service. As mentioned earlier, Bamtech is a leader
in building “direct-to-customer streaming technology, marketing
services, data analytics services, and commerce management
(Bamtech Media, 2018).” If we take a close look at all of those
services, Disney seems to have invested in a goldmine of
expertise, know-how, and ability to help them create an SVOD
service. Per Robert Iger, Chief CEO of Walt Disney, the
acquisition of Bamtech will allow Disney to be flexible and
adapt to drastically changing markets, thus allowing Disney to
grow their SVOD services overall (Bamtech Media, 2018). This
deal was valued at 1.58 billion dollars for Disney to acquire a
strong majority of Bamtech (Bamtech, 2018). This is further
supported by their use of Bamtech in creating their SVOD
service of ESPN (Bamtech, 2018).
On top Bamtech being able to assist Disney in creating their
own SVOD service, Bamtech can also support Disney’s
flexibility to adapt to market changes as they happen with
Bamtech’s marketing services, data analytics series and
commerce management services. Not only can Disney rely on
these services to support their SVOD services, but they can also
use them to help Disney to expand into other new markets as
they arise, with research in hand. According to Hemsworth
(2017), with Bamtech, Disney will be able to “monetize
advertising while providing more insight into user data”. So not
only is Disney getting expertise in creating their own SVOD
services, they are also getting plenty of support services to
further their SVOD services and other lines of businesses they

choose to pursue. With Bamtech as their internal partner,
Disney will be able to fulfill multiple required supporting
services as well, besides SVOD development and services.
Entry Business Structure 2- Entering the Mobile Market
Disney+ and Hulu streaming service is planning to enter a new
foreign market in Mexico. One of the strategies is to promote
their streaming service by partnering with local cellular
providers like Telcel to attract more subscribers. According to
a statistic report, Mexico will have a larger mobile phone
internet use from 2017 to 2023. In 2017, 43 percent of the
population users accessed the internet through their mobile
device. This figure is projected to grow to 59 percent by 2023.
According to Statista Research Department, statistics show
leading wireless operators in Mexico in the fourth quarter of
2018, by market share. In the presented period, Telcel held a 64
percent share of wireless subscribers in Mexico. Almost half of
population in Mexico use their smartphone to access online
content. Now a days, everyone prefers to watch their online
content on their smartphones rather than on TV’s because of the
convenience. SVOD (Subscription Video on Demand) is not a
new concept in Mexico. Mexico’s younger generation is more
demanding and is driving mobile and internet economy towards
digital platforms for messaging , social media, and SVOD
services. The ability of entering Mexico’s SVOD market for
Disney+ depends on effectively executing digital transformation
strategies that will be essential for success. Cellular service has
become a global marketplace, in order to attract more Disney+
SVOD subscribers , partnering with cellular companies like
Telcel is a strategic investment. Mexico may be in an attractive
position to benefit from these activities with the right strategic
development and growth plan. The SVOD market is strong in
Mexico. According to Statista data there are about 19.5 million
subscribing households. Mexico local major cable companies
Televisa owns izzi Telecom which is one of the largest VOD
providers. Even though subscribers still watch traditional TV
services, but as time spent viewing content increases, OTT and

mobile industries will continue to see significant usage growth
rates.
For now, Netflix is in the lead. Netflix has a 70% market share.
However, it is no longer the only major player, as Televisa’s
Blim has increased its market share from 1.5% in May 2016 to
17.5% (Statista Research Department, 2018). Disney+ has
bigger and has better content and can bundle their service which
will successfully beat out their competitors.
According to Statista, SVOD revenues for 2016 were $218
million USD, which is in stark contrast to the $2.9 billion USD
spent on TV ads in Mexico for the year. However, the Mexican
SVOD streaming industry grew 39% year over year in 2016, due
to increased broadband and smartphone usage. SVOD revenue
is projected to increase to $500 million USD by 2020. Disney+
should also adding local favorite Spanish program as part of the
global entry strategy by adding localized original content
production to attract subscribers and stake claim to a large
market share of Mexico’s OTT landscape.
The Mexican cellular phone market has become a rapidly
growing internet entry point for users. As of 2016, Mexico has a
69% mobile phone penetration rate with projected growth to
84% by 2020. More than half of all mobile customers have a
smartphone currently, which should increase to 70% by 2020.27
Two-thirds of the entire Mexican population should have mobile
internet access by 2020.(Statista, 2016). All of this growth
should lead to more SVOD subscribers. The growth in the
mobile market will continue to drive opportunities for digital
platforms and distribution. 68% of internet users, use their
mobile phone to access the internet While mobile internet usage
is on the rise, laptop connectivity is dropping.
Another benefit to partnering with a local cellular company
Telcel to use for an alternative payment method. One of the
limitations to Over the Top (OTT) growth in Mexico is the lack
of credit and debit card usage. For SVOD services, credit card
payment method is the easiest way to pay for the recurring
subscription fees. According to the Global Findex survey, credit

card usage is extremely low in Mexico, registering less than
half the cards per person than Brazil. According to a PwC
report, there were only 18% of the population had a credit card.
Partnering with Telcel would solve this payment issue.
Disney has invested a multiplatform content producer to help
them reach millennials in the digital age for a total of $400
million. Disney has also invested $1 billion into BAMTech to
help them better navigate the OTT distribution industry. In both
cases, Disney is looking forward at the digital landscape and
positioning itself to stay relevant as consumer demands for
content and distribution change.
Expanding the SVOD service in Mexico looks very bright, with
better broadband technology development and the growing
competitive landscape. Partnering with Telcel as a legitimate
wireless company in Mexico and taking advantage of using a
SVOD bundle with mobile phone plans is a strong strategy. It
is important to continue to monitor the trends and content
trends within and outside of Mexico, and using the right
strategy and execution plan, Disney+ streaming expansion in
Mexico would put them in good position.
Advantages and Disadvantages
Disney is crafting is own rival to Netflix, where you'll be able
to stream all things Star Wars, Pixar, Marvel and more. Here's
everything we know about Disney Plus. Disney is betting big on
its 2019 streaming service called Disney Plus, the future home
for streaming almost all things Disney. We will look at the
possibility of Disney merging with other companies in Mexico
to become the overwhelming streaming company in Mexico
(Disney Plus) as an upcoming over-the-top subscription video
on-demand service owned and operated by Walt Disney Direct-
to-Consumer & International.
Telcel have harnessed the forces of globalization to transform a
Mexican-based company with a few international operations
into one of the largest global companies in our industry.
Advantages of merging with a Mexican company like Telcel
Partnership. Telcel (Mexico) uses 2 GSM bands, 2 UMTS

bands, and 1 LTE band. Find out if your unlocked phone or
mobile device will work with Telcel (Mexico).
• The Telcel offering will be run on mobile phones on the
Telcel wireless network. Telcel is Mexico's leading provider of
wireless communications services with approximately 75
percent market share and a network reach of more than 740 of
the country's cities.
• The competitive advantage of Disney will be the high
number of contents currently produced under Disney and owned
production companies.
• Disney would have a huge impact if it transferred its
various content to their own streaming platform to Telcel.
• Disney can offer Telcel the various packages for example
sports through ESPN to the sports fans and action movies for
those fans that enjoy actions movies.
• Disney has its own contents due to the originality of the
products, it can share a number of production ideas to Telcel to
be more successful.
• Disney streaming platform would have a huge impact on
the market since the subscribers who initially used other
platforms to access the Disney produced contents would shift to
Disney’s platform so that they can continue enjoying their
products and services.
Telcel is pay-as-you-go, with no bills, coverage charges, or
activation fees. Telcel also provides voicemail, caller ID, and
call waiting at no additional cost. There are disadvantages that
Disney and Telcel will face as a company that are trying to
merge.
• Mexican companies are at a competitive disadvantage
because of expensive and low-quality telephone and Internet
services.
• Telcel need to improve its telecommunications by making
better use of a government-owned fiber optic network and
opening up the fixed-line sector.

• Businesses in Mexico are paying more money than they
need to for telecom services.
• Telcel phone is a wireless mobile telephone; therefore, it
does not work exactly the same as your landline telephone, and
you may have an occasional service interruption. Your phone
will work well in town, but in some rural areas you may have an
occasional service problem.
Although slow to react, Disney (NYSE:DIS) has recognized the
strategic importance of building its own streaming platform.
Disney is now building three streaming services and intends to
compete directly against Netflix. The Walt Disney Company
announced that it has agreed to acquire majority ownership of
Bamtech, LLC and will launch its ESPN-branded multi-sport
video streaming service in early 2018, followed by a new
Disney-branded direct-to-consumer streaming service in 2019
(WaltDisney).
Bamtech advantages
• BAMTech Media gives fans the freedom to access content
on their terms across any connected device, time, or location.
• BAMTech Media aspires to become the leading distributor
to direct to customer live entertainment and the premier
provider of video streaming solutions globally (Bamtech
media).
• Disney controls the subscription streaming platform
Bamtech as the foundation for its online sports and
entertainment future (Noam, 2018).
• Disney announced that it would introduce two subscription
streaming services, both built by BAMTech. One, focused on
sports programming and made available through the ESPN app,
would arrive in the spring. The other, centered on movies and
television shows from Disney, Pixar, Marvel and Lucasfilm.
• BAMtech is already running ESPN+, and it appears to be
doing a great job. On its Q1 2019 earnings call, Disney noted
that BAMtech was able to handle half a million customers
signing up for ESPN+ in the same day. On that same call, CEO

Bob Iger praised the platform's stability.
The real winner is the consumer. Disney and many other media
players are stepping up their game by investing more money in
high quality content than ever before. However, everything
comes with a cost when you are building to be the best
streaming company. Disney will have to face some
disadvantages with BAMTech as they move forward to being the
streaming giant in Mexico.
BAMTech Disadvantages
• Disney has a vast content library, it has a technology
disadvantage compared to Netflix.
• To address its infrastructure needs, Disney acquired a
majority stake in BAMTech, which forms the technology
backbone of Disney's streaming services. The BAMtech
acquisition was a smart move because it would have been
extremely difficult to build the technology infrastructure from
scratch.
• People can access your personal information through
unsecured connections or by planting software for their
benefits. Another feature that Disney will have to address
within the infrastructure needs.
• Enhanced resiliency to ad blocking vulnerabilities.
Recommended Entry Vehicle
Due to the overall size of the company and business segments it
currently has in place, the Walt Disney Company already has a
business segment and infrastructure in place for its expansion
into Mexico’s SVOD market. Currently Disney’s fourth primary
segment is their “Direct-to-Consumer and International”
segment. This portion of the business is centered primarily on
Disney’s two major streaming services, Disney+ and Hulu, as
well as their international television channels (The Walt Disney
Company, n.d.). Each of the primary segments of the company
has its own chairman that reports directly to the CEO of the
company Robert Iger. As of 2018 Kevin Mayer was named as
the chairman of the Direct-to-Consumer and International
business segment (Spangler, 2018). Within Mayer’s

organization structure falls a number of different presidents for
the segment’s divisions including for Disney+ and Hulu.
Both of these divisions for each streaming platform already
have an extremely large organizational structure which will be
the primary support for both the streaming platforms regardless
of which country each service is being used in. However, in
order to ensure the company’s entry into the Mexican SVOD
market is successful, Disney should hire additional staff for
both streaming services as shown in Figure 1.
Figure 1 – Disney Direct-to-Consumer and International
Segment Organization Chart
Each service should hire their own web developer, software
engineers and administrative workers to aid any issues that arise
during the expansion. The primary role of the web developers
for each streaming service would be to maintain and edit the
user interface as well as ensure content is correctly pushed to
the interface. Meanwhile, the software engineers would be
responsible for making enhancements to the software which
drives the interfaces. This includes making the interface
language options and allowing each service to be accessed
throughout Mexico based on user IP addresses. Finally,
administrative roles would include customer support and
support of day to day operations.
In addition to those new roles within both Disney+ and Hulu,
Disney must also further add staff to its Content and Marketing
division. This division will oversee the content, both original
and standard, that is offered on both streaming services. In
order to truly cater to the company’s audience within Mexico’s
market, Disney must hire additional staffing to this division
including marketers and content specialists. Marketers will
develop strategies to best advertise the perks of being a
subscribers to either or both services. Content specialists will
exclusively focus on the content that is available to the Mexican
population. This includes both the standard content as well as
original content that is available on each streaming service

platform. Disney should also utilize its already established
Latin America division as a resource as it begins its expansion.
The Latin America division oversees all Disney owned
television within the region and will know the consumer
demands and viewership trends within the market. This will aid
Disney+ and Hulu to provide content that will maximize their
subscriber base. Additionally, the Latin America division can
assist the Content and Marketing division with creating original
content that will most likely appeal to customers as well as the
best marketing strategies to reach them. In total, it is estimated
that the creation of these additional positions will cost Disney
$1,270,000 in salaries each year which is broken down in Table
1.
Table 1: Staffing Costs
Job Title
Quantity
Salary per Employee
Total Cost
Web Developer
2
$90,000
$180,000
Software Engineer
6
$75,000
$630,000
Administrative
4
$55,000
$220,000
Content Specialist
2
$65,000
$130,000
Marketer
2

$55,000
$110,000
In order to operate successfully in Mexico, Disney will not need
to open any large headquarters within the country. Since
Disney+ and Hulu are online services, they just need to be
deployed and made available to subscribers based upon IP
addresses. The most effective way in doing this is to begin
working with Internet Service Providers (ISP) to ensure the
service is made available to the public. Once an established
relationship is achieved with the major service providers in
Mexico, Disney can further enhance their quality of service by
continuing their usage of Amazon Web Services (AWS) as their
primary cloud computing service. By using AWS Disney will be
able to ensure that “all of the logic of the application interface,
the content discovery and selection experience, recommendation
algorithms, transcoding” is consistently maintained so that
Disney+ and Hulu can optimize their streaming performance
(Florance, 2016). Due to the already established relationship
between Disney and AWS, the costs associated with the cloud
services should not be added to the expansion into Mexico’s
SVOD market. Although the company does not initially need to
open a headquarters within Mexico, they will need to in the
future if they decide to make original content specific to
Mexico. This year Netflix announced that the company will
produce 50 new original series and movies within Mexico alone.
As a result, the company also opened a new office location
within Mexico City (De La Fuente, 2019). After establishing an
initial subscriber base during its expansion of Disney+ and
Hulu, Disney should consider opening a location as well if the
company’s Direct-to-Consumer and International business
segment decides that production in Mexico is necessary to
compete.
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Executive Summary
As Disney plans its expansion into Mexico’s SVOD market, the
company must first develop a competitor risk assessment of all
competitors currently operating in Mexico as well as
competitive strategy to ensure a successful entry. Through this
analysis, their a target market size as well as pricing strategy
have been created and suggested to Disney to utilize as their
entry path in order to be a competitive force from the start.
Through analysis of Mexico’s SVOD
Founded in 1923, the Walt Disney Company is recognized as
one of the world’s largest entertainment companies. Since its
inception, Disney has grown at a rapid pace within the

entertainment industry through the production of television
programs, feature films as well as amusement parks. Throughout
its growth, Disney has acquired a number of different brands
including ESPN, ABC, Marvel Studios, Pixar, and Lucas Film
Ltd (The Walt Disney Company, n.d.). In 2018, Disney to earn
$59.4 billion in revenue and $13.1 billion in net income (The
Walt Disney Company 2018). The focus of Disney’s global
expansion is linked to their Direct-To-Consumer and
International business segment. This segment of Disney in
particular is where the company can truly leverage their brand
recognition and content to globally expand into international
markets through their recent acquisition of Hulu and launch of
Disney+ streaming services. Currently, Hulu is not offered in
locations outside of the United States and Disney+ will initially
be exclusive to the United States as well. In order to compete
with other streaming services such as Netflix, which operates in
190 countries, Disney must focus on the expansion of this
business area to retain a respective market share (Brennan,
2018).
The model for this business segment will strictly be buyer to
consumer (B2C) as it relies on personal use of the technology.
The target buyers for this business area will be anyone with
internet connectivity. In order to subscribe and stream content,
users must have access to a screened device as well as the
ability to connect to the service’s website or application.
In order to operate in a foreign country, Disney must ensure that
they have the proper technological infrastructure in place.
After initial examination of entry into SVOD markets in Indian
and Mexico, it was determined that Disney should pursue the
expansion of their streaming services in Mexico. Both countries
would provide Disney with an ideal setting to launch as well
have enough opportunities to succeed. However, through the
PESTAL analysis of both countries, the threats were used as the
deciding factor in the selection of Mexico as the target country.
India’s threats in particular could make the launching of
Disney+ and Hulu very difficult for Disney. Currently, Netflix

is the leading streaming provider in Mexico and there are
currently not many other major competitors. Disney will be able
to compete with Netflix in Mexico through brand loyalty with
content on Disney+ and through original content created by
Hulu. They will also be able to instantly compete due to their
subscription prices that fall lower for both streaming services
compared to Netflix. The company will also be able to take
advantage of this by bundling the two services as a subscription
package. In order to ensure a smooth entry into Mexico’s
market, Disney will implement a best-case competitive strategy
to provide buyers with lower costs and a unique experience. As
a result, Disney should expect to quickly build its user
population in Mexico due to its content and subscription price.
Competitor Strategy and Market Size for Disney
Contents

Executive Summary i
Introduction 1
Competitor Risk Assessment & Advantage 1
Competitive Strategy 2
Target Market 4
Pricing Strategy 6
Conclusion 8
Appendix 10
Reference 12
Running Head: COMPETITOR STRATEGY AND MARKET
SIZE FOR DISNEY 1
COMPETITOR STRATEGY AND MARKET SIZE FOR
DISNEY 14
Introduction
As Disney’s entry into Mexico’s SVOD market, through
their Disney+ and Hulu services, continues to develop, the
company must now begin to create their competitive strategy. In
order to do this, competitors within the current market spaced
were analyzed for their advantages and disadvantages. Four
companies, Netflix, Amazon, America Movil, and Blim, were
all analyzed in order to develop the best path forward into the
market. After the analysis, a competitive strategy, target market
and price strategies were all developed in order to create the
best opportunity for Disney’s first expansion into the global

market.
Competitor Risk Assessment & Advantage
Currently there are four major competitors to Disney within
Mexico’s SVOD market: Netflix, Amazon Prime, America
Movil, and Blim. Netflix and Amazon Prime are both
international competitors while America Movil and Blim are
local competitors. Each of the competitors present their own
advantages and disadvantages within the market. These aspects
of each competitor as well as Disney are outlined in Table 1.
Overall, Netflix is the largest competitor within the Mexican
market and has been able to retain at least 63% of all
subscribers within the country (Martinez, 2018). Meanwhile,
while the two local competitors are able to provide their
services at a lower price point, they are unable to produce and
offer the same volume of content as Netflix and other
international providers.
The competitive advantage of Disney will be the high number of
contents currently produced under Disney owned production
companies like for example the Marvel studios which has been
attracting quit a number of fans. This because according to
research most people responded to the Netflix contents
positively most of which mostly is usually owned by Disney due
to the content production rights. Disney currently owns a
number of companies i.e. ESPN, Lucas Films, National
Geographic, Pixar Studios and 21st Century Fox among others
(Aguilar, 2019). This means that Disney would have a huge
impact if it transferred its various content to their own
streaming platform just like Netflix whereby, they would offer
the various packages for example sports through ESPN to the
sports lovers. Additionally, the company is in control of Hulu
and its popular original content such as The Handmaid’s Tale.
This also means that the Disney’s advantages solely lie in its
contents due to the originality of the products produced for
example the movies since it already has acquired a number of
production companies.
The viability of this competitive advantage clearly exhibits

itself from the success of its products and the customer
reception of the contents currently on other streaming platforms
such as Netflix and Amazon. This means that the change to their
own streaming platform would have a huge impact on the
market since the subscribers who initially used other platforms
to access the Disney produced contents would shift to Disney’s
platform so that they can continue enjoying their products and
services. Other competitive advantages will include the high
reputation for the Company in the world and the high financial
abilities of the company to do the technological upgrades in the
company to full streaming services instead of relying on other
companies like Netflix due to its already acquired list of
contents.
Competitive Strategy
When many heard that Disney was starting their own streaming
service, many wondered, don’t we have enough of them? It does
seem, at least in America, that streaming services have taken
over the media and entertainment industry; with more
households “cutting the cords” from traditional cable
companies. The most common argument being heard now is the
SVOD services have become over-saturated, which means
increased competition.
According to Jhonsa (2018), in the United States, 80% of
Netflix users do not use any other SVOD streaming service
(minus Amazon Prime Video); furthermore, according to other
surveys, most Americans will only want to subscribe between 2
or 3 services. This competitive framework will be similar in
Mexico, where Disney is planning to expand. According to
Parrot Analytics, Netflix has 74% market demand (Parrot
Analytics, 2019). Despite this challenge, Disney has a unique
advantage: the ability of to bundle services.
Bundling of services is the definite way forward for Disney.
Bundling has been used by companies like Netflix to improve
customer experience, mitigate decision exhaustion, improving
customer confidence, understanding products purchased, and
supplementing customer feedback (Gidwaney, 2014).

Furthermore, bundling has proven to work in other industries
such as auto, travel, home care, and meal delivery. This also
being said, bundling for Disney will be more important as more
people continue “cutting the cord”. According to VanDerWerff
(2016), “cutting the cord” is starting to be just as costly, if not
more costly, given all the up and coming streaming services
entering the market. In other words, the SVOD streaming
markets are starting to become oversaturated and combined,
very expensive. Depending on certain consumers, they will have
to pick and choose certain platforms that appeal to them; and in
this economy most people do not have enough money to
subscribe for them all, making it more expensive than cable
companies. This is where Disney can enter the market using
bundling as a competitive advantage.
Given this rational, bundling is Disney’s best weapon. As
covered in our research, Disney currently owns ESPN, ABC,
Marvel Studios, Lucas Films, National Geographic, Pixar, 21st
Century Fox as well as Hulu (Ho, 2019). Based on this
diversification, Disney has an immediate competitive advantage.
Bundling comes in with Hulu. Since Disney owns Hulu, Disney
can implement a bundling package for Disney+ and Hulu.
Options can be given to consumers to either subscribe for one of
their services or both Disney+ and Hulu. Bundling these two
services will give Disney an automatic competitive advantage in
the Unites States and Mexico by getting two services in one.
Adding to this, the diversity of content Disney and Hulu have
will only add to their potential market share in Mexico.
Disney can go even further in their bundling offers as well.
Disney is a well-diversified company offering theme parks
around the world and cruise lines. Disney should implement
bundling and package deals for theme parks, cruises and other
Disney products along with their bundled Disney+ and Hulu
streaming services. The best part is, Disney can mix and match
bundles and offers as necessary; overtime, Disney can start
analyzing which are the most profitable bundles and packages
and start narrowing down their offers to reduce operating costs,

in the long run. Bundling all of these offers together will
definitely entice consumers to add Disney+ and Hulu to their
list of streaming services, and maybe even some to switch over
to Disney+ and Hulu completely.
Target Market
The two primary target segments for Disney+ are the price
focused and quality and brand-focused segments. Companies
that belong to price-focused segment have a transactional
outlook to doing business and does not seek any ‘extras.’
Companies in this segment are often small, working to low
margins and see their product/service as of “low strategic
importance” to their business (“Market Sizing Techniques”,
n.d.). One of the major limitations to SVOD growth in Mexico
is the lack of credit and debit card usage. For subscription video
on demand (SVOD), a valid credit card is the easiest way to pay
for the recurring fees. Based on Global Findex data, credit card
ownership is extremely low in Mexico, only 18% of the
population have a credit card at all. In order for Disney+ and
Hulu to gain more subscribers, Disney will need to adopt and
integrate these alternative payment methods to capture market
share and scale operations.
The quality and brand-focused segment wants the best
possible product and is prepared to pay for it. Companies in
this segment often work to high margins, are medium-sized or
large, and see their product/service as “high strategic
importance, seek the best possible product or service and is
willing to pay a premium for it” (“Market Sizing Techniques.”,
n.d.). Walt Disney has invested a total of $400 million US
dollars to multiplatform content producers which help them
reach millennials in the digital age. Disney is looking forward
at the digital landscape and positioning themselves to stay
relevant as consumer demands for content and distribution
changes. The digital diversification of business models and
commitment to the coming changes of content consumption
behaviors is important. Investment in in-house growth
opportunities or other strategic companies will mitigate risk for

potential shifts in the ecosystem.
Disney is currently looking to expand the streaming service in
Mexico. Based on Statista data, the video on demand market
revenues are expected to grow from US $118 million in 2016 to
US $224 million by 2021 at a compound annual growth rate
(CAGR) of 13.6 % (Statista, 2018)
Disney is targeting Mexico’s 82.5 million internet users. The
figure is estimated to grow to 101.6 million internet users in
2023. (Statista, 2018) In Mexico, SVOD has income of 90
million annually. Accordingly, the subscription video on
demand (SVOD) market is expected to increase from $90
million (US dollar) in 2018 to $186 million (US dollar) by 2021
at a compound annual growth rate (CAGR) of 15.6 %. A
Competitive Intelligence Unit study stated Mexico has some 5
to 6 million subscribers for OTT services. Currently, Disney’s
biggest competitor, Netflix, is a leader in the market by 68.9%
share. Disney is expected to gain a portion of Netflix
subscribers once they enter into the Mexico market.
According to Citibanamex, 30% of Mexican households are
expected to pay for SVOD services by 2025 (Roshan, 2017).
The study also stated that the Mexican SVOD video market is
set to generate over $220 million income in less than ten years
(Statista, 2018). As a result, Disney’s target audience should be
the 30% of Mexico’s 129 million population; approximately 38
million subscribers. Disney will should specifically target
family’s that subscribe since Disney+ will have a very large
focus on family friendly content. Additionally, despite not
being offered in Mexico yet, there is a 7% demand for Hulu’s
collection of original content (Parrot Analytics, 2019). This will
be another pivotal selling point to attract customers that are
interested in content that is not available on other streaming
services.
Pricing Strategy
Social networking has become a significant factor impacting
businesses because of the large number of users attracted to
social networking. Essentially, social networking is attractive

for business organizations because of the fact that this
technology enables business organizations to reach large
populations of potential consumers/customers. Because of such
nature and characteristics of social networking, business
organizations now consider social networking as part of their
strategies. In fact, there is an increasing integration of social
networking into the business strategies of many organizations.
Walt Disney will be using its social networking, streaming and
pricing strategies to become the largest streaming company in
Mexico.
When marketing for the best deal in a new area or other
countries, you have to consider pricing strategy. A pricing
strategy takes into consumers ability to pay, market conditions,
competitor strategies, as well as input costs. Right pricing
strategies of many business organizations, are centered around
factors such as technology innovation and current market
trends.The main purpose of pricing strategy is to examine and
explore the potential implications of social networking and
streaming as a technology available for business organizations,
and how social implications could shape the actual development
of business organizations. As Walt Disney begins its streaming
expansion into Mexico, they have to consider the right pricing
strategy. In order to do so, they must utilize the proposed
competitive strategy to ensure they are able to successfully
implement both Disney+ and Hulu.
Using a Pricing Strategy framework, it is essential that Disney
understands the economic environment they are entering to
ensure their strategic plan is effective (Nagle, 1984). In order to
maximize their entry, Disney should utilize a penetration
pricing strategy. Penetration pricing is a strategy in which
companies offer their product or service at a lower price point
than their competitors in order to attract new customers and
rapidly gain market share (CFI, n.d.). Since Mexico’s economic
climate is not in the same state as established countries,
subscribers will not be able to purchase expensive subscription
packages. Currently Netflix and Amazon have the highest price

point set for their streaming services as shown in Table 1. In the
United States, Disney plans to offer Disney+ and currently
offers Hulu at lower prices than Netflix and Amazon. As a
result, the company should continue to follow that strategy
when expanding into Mexico. A suggested penetration pricing
point for Disney would be to offer both services at five dollars
each while offering the proposed bundled package for nine
dollars. This will allow Disney to attract customers looking for
content at a lower price with similar amounts of content to the
leading providers. Additionally, it will make Disney’s services
the cheapest international streaming option since they will be
offered at the same prices of local services such as Blim. One of
the largest advantages to this pricing strategy is that it typically
creates a very high turnover rate and attracts new customers on
a much quicker rate than other strategies (CFI, n.d). One
disadvantage that Disney will need to be cautious of is that this
pricing strategy can often lead to dissatisfaction when prices are
raised in the long term. The largest price factor in streaming is
the cost of original content. This is the reason companies such
as Netflix have had to raise their prices several times over the
last three years to ensure they remain profitable. Disney must
ensure that the original content from Hulu and Disney+ do not
drive costs past a sustainable level and cause the company to
raise prices of both services. Walt Disney will use this pricing
strategy to ensure that the streaming business and brand that
they promote will be second to none. The company has the best
opportunity to maximize on the product or service that they are
promoting through penetration pricing.
Conclusion
Currently Disney’s largest competitor is Netflix. While there
are other services that are analyzed and operational in Mexico,
Netflix has been able to retain a majority in total subscribers
within the country. In order to make an impact into the
countries subscription pool of about 38 million subscribers and
attract some from other services, Disney will first rely on brand
loyalty from all of its owned exclusive content available on

Disney+ as well as the demand for Hulu’s original content.
They will then use a best-case strategy where the company can
offer their premium service and access to content at a lower
price point than their other international competitors.
Additionally, the company will utilize their ownership of both
services as an incentive for customers to join through a
bundling package of the two at a discounted price point. As a
result, Disney will need to capitalize on their expansion by
implementing penetration pricing for both services and the
bundles. A price point that is similar to local competitors for
international content will draw more interest and investment
from customers to begin to gain a loyal consumer base.
Appendix
Table 1: Advantage & Disadvantage Matrix (Disney &
Competitors)
Advantages Disadvantages
Netflix: -High quality Streaming services -Brand awareness
and brand recognition -Non Interrupted viewing i.e. no
commercials - Lack of originality of content -
Sociocultural disadvantages - High prices for the services
offered i.e. $12.99/ month.
Amazon Prime:- Live streaming infrastructure - Enormous
logistic networks and marketing resources mainly due to its
retailing background of the larger company i.e. Amazon -
Ability to innovate technology - Single minded focus on
online retailing. - Not able to mitigate the threat of legal
and political environment. - High cost of services at $13/
month for subscriptions
America Movil: - Its locally based hence it’s usually to
mitigate the risks that are brought about by the political and
legal issues. - Low cost of services offered. - High local
Brand recognition and brand awareness with over a million
subscribers. - Social cultural advantages thus they are able to
deal with the cultural barriers such as language in their

programs. - They are locally based hence they are not
globally recognized which will make their global market
penetration hard. - Limited number of contents - Limited
financial capabilities to expand.
Blim: - Low price point for subscription i.e. $5-$6 for
subscription. - High number of local content - The
limited resources due to the small size of the company which
will limit its growth in a market with already established
competitors like Netflix.
Disney: - High good mix of both original and non-original
content because of the high quantity of contents it has from the
various companies it acquired. - Good brand reputation - A
large quantity of already acquired contents -The
sociocultural aspects the various countries using different
cultures which might presents some challenges in the delivery
of the contents since its mainly American based meaning its
contents are English produced.
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