IF YOU WANT TO GO WHERE YOU - PowerPoint Presentation

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 Alternatives5 Implementation6 Financial Analysis7 Contingency Plan8 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 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion 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 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion 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 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion 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 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion 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 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion 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 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion 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 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion 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 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion 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 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion 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 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion 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 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion 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 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion 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 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion 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 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion

Financial Analysis: DTC is expected to be profitable in the 4th year of implementation Page 20 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion

Financial Analysis: DTC is expected to be profitable in 5th year with a low subscriber take up scenario Page 21 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion

Financial Analysis: Two profits scenarios have been evaluated and unveil the profitability of the strategies Page 22 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion

Contingency Plan: The following risks are underlying the suggested strategies and need to be mitigated in a timely manner Page 23 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion 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 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion 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 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion