Nanyang-Business-School_SSSSSFinals.pptx

IF YOU WANT TO GO
WHERE YOU NEED TO BE

YOU CANNOT STAY
THE WAY YOU ARE

WALT DISNEY
“Blowing Up The Castle?”
N Nanyang
Consulting
Presented to: Robert A. Iger, Chairman and CEO at The Walt Disney Company
Presented by: Daniela, Minghao, Victor, Vishnu
11 January 2019

Agenda
Page 4
1 Problem
2 Recommendations
3 Internal & External Analysis
4 Strategic Alternatives
5 Implementation
6 Financial Analysis
7 Contingency Plan
8 Conclusion

Problem: Walt Disney is facing three key challenges that need to be
overcome to compete in an increasingly disrupted market Page 5
Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion
Post-Merger
Integration
Disruption from
OTT
 How can you make best use of the Fox acquisition?
 How can you disrupt your business model while mitigating for cannibalization?
 How can you stay competitive?
Cannibalization
Threat

Recommendation: Three strategies will enable Walt Disney to
overcome the identified challenges and prepare for the future Page 6
Integration
Strategy
Customer
Segment Strategy
Online-Offline
(O2O)
Strategy
Post-Merger
Integration
Cannibalization
Threat
Disruption from
OTT
Organizational Assets Customer Acquisition Customer Experience

Internal Analysis: Walt Disney exhibits extensive experience and
strong core competencies in the media industry Page 7
Strengths Weaknesses
 Strong reputation and brand
 Large volume of content (Pixar, Disney,
ESPN Sports)
 Family-focused image
 Multiple streams of revenues (e.g. theme
parks, merchandise)
 M&A experience
 Revenues largely from traditional cable
TV (40%)
 Traditional media
 Large integration challenge ahead
 Lack of technology focus in new media
(e.g. streaming, analytics)

External Analysis: Walt Disney exhibits extensive experience and
strong core competencies in the media industry Page 8
Opportunities Threats
 Technological advancements improving
customer experience
 Exponential growth in streaming services
 Increased (mobile) connectivity
 Globalization
 Disintermediation
 Strong competition incl. new entrants
(e.g. Netflix, Amazon)
 Rapid decrease in subscribers to cable TV
 Customers looking for “long-tail’ offerings

Competitor Analysis: The following positioning map illustrates the
competitive landscape Walt Disney competes in Page 9
Large Content Volume
Low Content Volume
Standalone
Services
Diversified
Services
Walt Disney
Amazon
Prime
YouTube
Premium
Netflix
HBO
Hulu

Strategic Alternatives: Six key strategies have been considered and
analyzed to identify the best-fit recommendations Page 10
STRATEGY
Strategic
Fit
Customer
Fit
Profitability Feasibility
Innovation
Level
DECISION
License Content to Competitors × + + + × ×
Stimulate a Content “War” × + × × × ×
Go “All-In” on OTT × + × × + ×
Integration Strategy + + + + × +
Customer Segment Strategy + + + + × +
Online-Offline (O2O) Strategy + + + + + +
Chosen
Strategies

Implementation (1/3): Integration Strategy
Page 11
What
Why
 Develop and launch an integration strategy for Walt Disney & Fox
 Reduce integration risks and fully exploit potential synergies despite differing cultures

Implementation (1/3): Integration Strategy
Page 12
How
 Determine content from Fox that will be integrated
into Disney’s offerings vs. standalone
 Progressively integrate Fox franchises, e.g. Marvel
into Disney theme parks and merchandise
 Leverage on HR from both organizations (integration
team)
 Form a dedicated future technologies team across
both organizations for e.g. AR/VR, gamification
Operations & HR Culture
 Invite an experienced integration consultant to the
company (e.g. focus groups, workshops)
 Initiate quarterly culture events, e.g. dinner and
dance, movie nights
 Install cross-organizational communication channels,
e.g. Skype for Work

Implementation (2/3): Customer Segment Strategy
Page 13
What
Why
 Develop a coherent customer segmentation strategy to convert non-payTV users in the US and
international subscribers to Disney DTC (direct-to-consumer channel)
 Avoid cannibalization of cable TV subscribers in the US and increase DTV subscribers from
international Disney fan base

Implementation (2/3): Customer Segment Strategy
Page 14
How
 Conduct market research on international OTT
subscribers
 Hire a local marketing team (Paris, London,
Tokyo) for SNS (social networking service)
 Hire a US digital marketing team to focus OTT-
users marketing, targeting cable TV leavers
Operations & HR Marketing
 Sponsor a family-related script-writing contest
at Universities, e.g. HEC Paris
 Give-away free-trials to e.g. Millennials through
partnerships, e.g. Grab Rewards, Deliveroo
 Leverage on digital marketing channels (e.g.
Instagram) with strong video content

Implementation (3/3): Online-Offline (O2O) Strategy
Page 15
What
Why
 Leverage Disney’s US and international theme parks to promote streaming subscription service
 Use real estate as strategic angle to increase the subscriber base rapidly

Implementation (3/3): Online-Offline (O2O) Strategy
Page 16
How
 Hire a dedicated team focusing on cross-marketing
strategies
 Train hotel staff on usage of streaming service in
hotel rooms at Disney resorts
 Establish an analytics team to focus on optimizing
customer conversion rate
 Establish a dedicated customer satisfaction team
Operations & HR Marketing
 Focus on live sports as a key differentiator
 Sponsor University sports competitions, e.g. MBA
Olympics
 Offer a 2-month free trial with entry ticket to
theme parks
 Promote streaming service at merchandising spots
 Offer free subscription service at hotel rooms and
Disney resorts

Key Performance Indicators: The following metrics should be used to
monitor the success of the suggested strategies Page 17
Key Performance Indicator Target
1
2
3
4
5
6
7
 Attrition rate of employees
 Employee satisfaction level
 Customer satisfaction level (DTC)
 Number of DTC subscribers
 Cannibalization rate of cable TV with DTC
 Pace of introduction of Fox franchises into theme parks
 Conversion rate of free-trials to paid service
Less than 10%
90%
92%
32.5 million by 2023
Below 2%
2+ p.a.
40%
8  Number of DTC sign-ups due to theme park trials 5 million p.a.

Timeline: The following schedule illustrates how the suggested
strategies should be implemented Page 18
2019 2020 2021 2022 2023
H1 H2 H1 H2 H1 H2 H1 H2 H1 H2
INTEGRATION STRATEGY
Integration consultant, culture events Consultant Events
Integrate Fox franchises
Future technologies team Hire Develop
CUSTOMER SEGMENT STRATEGY
Market research
US marketing team and campaign Develop Launch
International marketing team and campaign Develop Launch
ONLINE-OFFLINE STRATEGY
Hire cross-marketing team and launch initiatives Hire Launch
Train hotel staff Train
Analytics team Hire Work

Financial Analysis: The following costs are associated with the
proposed strategies Page 19
in Mil $ 2019 2020 2021 2022 2023
Integration Strategy
Integration Costs 35 25 20 20 20
Technology Development 700 800 900 950 1,000
Additional Salary & Admin 20 25 30 40 45
Customer Segment Strategy
Markeitng Team 40 40 40 40 40
Contests 20 20 20 20 20
Digitial Marketing Cost 1,400 1,200 1,200 1,200 1,200
O2O Strategy
Anlytics Team 4 4 4 4 4
Offline Marketing 133 133 133 133 133
Training 5 5 5 5 5
Loss of Revenue from Licensing 500 550 555 580 600
Total Aditoinal Costs 2,857 2,802 2,907 2,992 3,067

Financial Analysis: DTC is expected to be profitable in the 4th year of
implementation Page 20
2019 2020 2021 2022 2023 Trends
Subscribers 17.9 20.5 23.1 28.6 32.5
Monthly Avg Cost ($) 8.99 8.99 8.99 8.99 9.99
Revenue (Mil $) 1,931 2,217 2,497 3,088 3,893
Profit (957) (616) (441) 65 795

Financial Analysis: DTC is expected to be profitable in 5th year with a
low subscriber take up scenario Page 21
2019 2020 2021 2022 2023 Trends
Subscribers 11.2 16.0 18.0 21.1 26.1
Monthly Av Cost 8.99 8.99 8.99 8.99 9.99
Revenue 1,207 1,724 1,942 2,278 3,134
Profits (1,650) (1,078) (965) (714) 67

Financial Analysis: Two profits scenarios have been evaluated and
unveil the profitability of the strategies Page 22
(2,000)
(1,500)
(1,000)
(500)
-
500
1,000
2019 2020 2021 2022 2023
Profits Predicted Profits Slow subscriber Take up Scenario

Contingency Plan: The following risks are underlying the suggested
strategies and need to be mitigated in a timely manner Page 23
Anticipated Risk Mitigation
1
2
3
4
5
6
7
 Top talent leaving the firm
 Below forecasts sign-up for DTC
 Resistance from staff on
integration
 Slow technological progress
 Accelerated cannibalization
 Inability of offline channels to
drive DTC subscribers
 Family-friendly brand image
dilution
Close satisfaction tracking
Increase marketing efforts
Strong feedback culture
Hire “fresh” staff, e.g. incubate talent
Reexamination of marketing channels
Offer better packaging of free-trials
Careful content selection
Probability
Medium
Low
Medium
Medium
Low
Low
Low

Conclusion: Three strategies have been introduced and outlined that
will allow Walt Disney to manage the disruption it is undergoing Page 24
Integration
Strategy
Customer
Segment Strategy
Online-Offline
(O2O)
Strategy
Post-Merger
Integration
Cannibalization
Threat
Disruption from
OTT
Organizational Assets Customer Acquisition Customer Experience

THANK YOU
FOR YOUR ATTENTION
N Nanyang
Consulting
We now welcome any questions you may have. Kindly turn this page for the appendix.

APPENDIX
N Nanyang
Consulting
Kindly turn this page to access supporting material.

Financial Analysis: The following subscriber number assumptions are
underlying the financial model Page 27
2019 2020 2021 2022 2023
TV Users US 188.1 191.6 194.4 196.5 199.8
OTT Viewer US 202.7 206.1 209.4 211.5 215.5
OTT viewer UK 19 20 22 24 27
OTT viewer India 2.1 2.2 2.4 3 3.5
Total 223.8 228.3 233.8 238.5 246
Conversion 8% 9% 10% 12% 13%
Subscribers 17.9 20.5 23.1 28.6 32.5

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