Disrupted industrybrDrastic changes within media and entertainment industrybrOnline streaming is growing quicklybrIncreased number of competitors ID: 776741
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Slide1
Streaming,happily ever/after
DeGroote Consulting GroupElizabeth, Chinomnso, Marley, Britney
1
Slide22
Slide3ever/after
Augmented reality
Lightsaber enabled
3
Slide4How might Disney disrupt online streaming leveraging synergies in the organization?
4
Slide5Key issues
5
Slide6Key issues
- Importance +
- Urgency +Disrupted industryDrastic changes within media and entertainment industryOnline streaming is growing quicklyIncreased number of competitorsDisrupted industryChanging consumer preferences
Acquisition
Changing consumer preferences43.6% YoY customers are leaving TV behind for internetCustomers looking for low cost and high convenienceAcquisitionCulture must be considered when merging two companiesAbility to generate maximum value from additional content70-90% of acquisitions fail to deliver the adequate value
Slide7Analysis
7
Slide8Acquisition analysis8
You purchased…Fox filmFx Networks
National GeographicHuluStar TV India39% of Skyfor…$71.3b cash & stockto get…More contentMore direct relationships with customersInto the streaming marketIncreased Indian market shareKey takeawayThe Fox acquisition has potential to result in significant revenue growth and enable Disney to reimagine streaming.
Slide9Competitive analysis9
Key opportunities exist to capitalize on Netflix’s weaknesses
InconsistencyInteractivity
Transparency
Key takeaway
To disrupt Netflix, Disney must act strategically and leverage internal strengths to attack external weaknesses.
Slide10Analysis of Disney’s streaming capabilities10
Valuable
Disney is already generating value through existing streaming services (e.g. hulu), however value captured in the market is indirect and not maximized.RareDisney has access and control of exclusive character and content use, however Disney allows other streaming services to benefit from their rare content.InimitableDisney’s current streaming services were late to market and imitated other service providers rather than building a unique experience and/or business model.Organized to capture valueDisney is not currently organized to capture value in the online streaming market. Key takeawayDisney must re-organize their business and leverage existing intellectual property to maximize streaming market revenues.
Slide11Opportunities
11
Slide12Opportunities
1reimagine hulu kids
2eTheatre3ever/after integrated experience platform12
Slide131reimagine hulu kids
Key benefits
Leverages existing hulu platformContent can be exlusively used on hulu kidsExisting content enables increased speed-to-marketKnowledge and understanding of target marketKey considerationsDoesn’t improve strategic position relative to NetflixDifficult to capture existing Netflix kids usersOnly generated cash flows for limited period 13
Reimagine the existing
hulu kids experience with interactive Disney games and unlockable content for Disney park visitors or individuals with specific Disney products
Slide142eTheatre
Key benefits
Eliminates middle man and provides direct access to customer baseIncreased margin Increased control of user experienceKey considerationsUntested revenue model for direct-to-consumer releases onlyInability to generate ongoing recurring revenue stream14Develop a new direct-to-consumer release platform, eTheatre, where users can watch new Disney releases live with fans worldwide for limited time periods
Slide153ever/after integrated experience platform
Key benefits
Disruptive user experience enabled by emerging technologyLeverages strengths of acquisition and existing Disney portfolio content Increased control and ability to continuously engage customersKey considerationsRequires contingent workforce to support interim activities prior to launchAdditional content must be created to support new experiences15Develop ever/after integrated experience platform which allows user to stream content, and engage with Disney portfolio content and characters in new ways (e.g. using augmented or virtual reality, smart devices) and transition existing hulu users to ever/after
Slide16Decision matrix
▲ Improves current state ● Maintains current state
▼ Harms current state1reimagine hulu kids2eTheatre3ever/after integrated content streaming platform
Valuable
▲▲▲Rare●●▲
Inimitable▲
● ▲Organized to capture value▼
▲▲
16
Slide17Preferred solution
17
Slide18ever/after
Augmented reality
Lightsaber enabled
18
Slide19mousemedia ► operations ► user experience
► synergy ► ever/after
media
operations
user experiencesynergyever/afterYear 2
19
Slide20Implementation
20
Slide21mousemedia ►
operations ► user experience ►
synergy ► ever/afterKey activitiesDevelop new contentMarket researchInnovation labAcross all subsidariesKey considerationsExclusivity of contentChanging media landscape
media
Year 2
Slide22mousemedia
► operations ► user experience ►
synergy ► ever/afterKey activitiesContingent workforceAdvertisement development (interactive)Accessory developmentInvestor relationsAcquire top talent from Netflix content creations teamKey considerationsAd team must agree to create interactive contentOnboarding of contingent workforce
media
operationsYear 2
Slide23mousemedia
► operations ► user experience ►
synergy ► ever/afterKey activitiesInteractive showsVirtual realityAugmented realityInteractive ads (generate revenue)Connecting usersEaster eggs to match accessoriesKey considerationsCompatibility of accessoriesUnderstanding customer preferences
media
operationsuser experienceYear 2
Slide24mousemedia
► operations ► user experience
► synergy ► ever/afterKey activitiesEliminate redundancies (increase operating income)Create synergies between content (generate revenue)Reverse engineer content (generate revenue)Across all of Walt Disney StudiosKey considerationsCross functional teams requiredAbility to leverage content but remain distinct branding
media
operationsuser experiencesynergyYear 2
Slide25mousemedia ►
operations ► user experience ►
synergy ► ever/afterKey activitiesHappily ever afterCreate social mediasAllow Hulu users 1year freeInfluencer promotionWord of mouthEver/after enabled packaging Key considerationsEntering a competitive market
media
operationsuser experiencesynergyever/afterYear 2
Slide26Investment
Year 1
Year 2media$3.5m$2.5moperations$10.6muser experience$5.0msynergy$1.0m
ever/after
$1.0mGrand Total$21.1m$2.5m
Slide27Revenue Growth
Slide28Operating income
Slide29NPV
2019
2020Incremental CF$15$15Cost-$24Rate11%NPV2
Slide30Key metrics
30
Slide31Key success factors
factor
targettimelinePeopleever/after subscriber base9.7mil2 yearsCustomer satisfaction
90%
2 yearsProfitIncremental cashflows15milYoYNet profit margin5%1 yearsProcessImprove inefficiencies within workforce1% increases1 year
Revamp key movie segment based on purchase of FoxInitial screenplay adaptation1.5 years
$
Slide32Risks + mitigation
Slide33Risks + mitigation
risk
likelihoodimpactmitigationNetflix provides similar survey HMDisney content is exclusive to ever/after platform, which is marketed as an experience platformCustomers do not want to engage in online platform due to
preference
for content on other servicesLHEnsure wide variety of content across all Disney subsidaries, conduct market researchHigh cost of integration across all platformsMHResearch and development in innovation lab to ensure integration and ease of use
Slide34Next steps
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Slide3535
Slide36ever/after
Augmented reality
Lightsaber enabled
36
Slide37mouse
media
►
operations
►
user experience
► synergy ► ever/after
media
operations
user experience
synergy
ever/after
Year 2
37
Slide38Appendix
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Slide39Detailed costing (1/3)
Year 1
Year 2media$3.5m$2.5mContent development$2.5m$2.5mInnovation LabMarket research$1.0m
operations
$10.6mAccessory Development$2.0mAcquire Top Netflix Talent$5.0mContingent Workforce$3.6m
Slide40Detailed costing (2/3)
Year 1
Year 2user experience$5.0mAugmented Reality$1.0mConnecting Users$1.5mEaster Eggs$1.5m
Interactive Ads
Virtual Reality$1.0msynergy$1.0mEliminating RedundanciesReverse Engineered Content$1.0mSynergies Between Content
Slide41Detailed costing (3/3)
Year 1
Year 2ever/after$1.0mHulu TrialInfluencersSocial Media$1.0mProduct
labellinh
Grand Total$21.1m$2.5m
Slide42Video streaming market (in millions USD)
in millions
2017201820192020202120222023Video Streaming Market3237.4443.8051.25
59.96
70.1582.08CAGR17%17%17%17%17%17%Capture 26%26%9.7311.3813.3215.5918.24Ever after price877.8791.11
106.60124.72145.92
Slide43Revenue breakdown by segment
2019
20182017Media Networks$6,620$6,156$5,866Parks and Resorts$5,557$5,193$4,894Studio Entertainment$3,461$2,878
$2,393
Consumer Products & Interactive Media $924$1,001$1,085Revenue Total$16,562$15,228$14,238
Slide44Segment operating income as a % of revenue
Media Networks
$2,025.6530%Parks and Resorts$1,488.3026%Studio Entertainment$886.1125%Consumer Products & Interactive Media$308.1532%Total$4,708.20
IMPROVED OPERATING INCOME12%5%
Slide45Questions45
Can Disney battle digital disruption and shake up the streaming market?Can the Fox acquisition help Disney in gaining a timely advantage in streaming content wars or was it too late for it to succeed in streaming?