IF YOU WANT TO GO WHERE YOU NEED TO BE
Description: IF YOU WANT TO GO WHERE YOU NEED TO BE YOU CANNOT STAY THE WAY YOU ARE WALT DISNEY Blowing Up The Castle? Presented to: Robert A. Iger, Chairman and CEO at The Walt Disney Company Presented by: Daniela, Minghao, Victor, Vishnu 11 January
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slide1. IF YOU WANT TO GO
WHERE YOU NEED TO BE<br>
slide2. YOU CANNOT STAY
THE WAY YOU ARE<br>
slide3. WALT DISNEY
“Blowing Up The Castle?” Presented to: Robert A. Iger, Chairman and CEO at The Walt Disney Company
Presented by: Daniela, Minghao, Victor, Vishnu 11 January 2019<br>
slide4. Agenda Page 4 1 Problem
2 Recommendations
3 Internal & External Analysis
4 Strategic Alternatives
5 Implementation
6 Financial Analysis
7 Contingency Plan
8 Conclusion<br>
slide5. 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<br>
slide6. 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<br>
slide7. 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)<br>
slide8. 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<br>
slide9. 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<br>
slide10. 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 Chosen Strategies<br>
slide11. 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<br>
slide12. 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<br>
slide13. 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<br>
slide14. 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<br>
slide15. 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<br>
slide16. 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<br>
slide17. 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.<br>
slide18. Timeline: The following schedule illustrates how the suggested strategies should be implemented Page 18 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion<br>
slide19. Financial Analysis: The following costs are associated with the proposed strategies Page 19 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion<br>
slide20. Financial Analysis: DTC is expected to be profitable in the 4th year of implementation Page 20 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion<br>
slide21. 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<br>
slide22. 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<br>
slide23. 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<br>
slide24. 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<br>
slide25. THANK YOU
FOR YOUR ATTENTION We now welcome any questions you may have. Kindly turn this page for the appendix.<br>
slide26. APPENDIX Kindly turn this page to access supporting material.<br>
slide27. Financial Analysis: The following subscriber number assumptions are underlying the financial model Page 27 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion<br>
WHERE YOU NEED TO BE<br>
slide2. YOU CANNOT STAY
THE WAY YOU ARE<br>
slide3. WALT DISNEY
“Blowing Up The Castle?” Presented to: Robert A. Iger, Chairman and CEO at The Walt Disney Company
Presented by: Daniela, Minghao, Victor, Vishnu 11 January 2019<br>
slide4. Agenda Page 4 1 Problem
2 Recommendations
3 Internal & External Analysis
4 Strategic Alternatives
5 Implementation
6 Financial Analysis
7 Contingency Plan
8 Conclusion<br>
slide5. 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<br>
slide6. 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<br>
slide7. 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)<br>
slide8. 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<br>
slide9. 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<br>
slide10. 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 Chosen Strategies<br>
slide11. 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<br>
slide12. 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<br>
slide13. 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<br>
slide14. 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<br>
slide15. 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<br>
slide16. 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<br>
slide17. 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.<br>
slide18. Timeline: The following schedule illustrates how the suggested strategies should be implemented Page 18 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion<br>
slide19. Financial Analysis: The following costs are associated with the proposed strategies Page 19 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion<br>
slide20. Financial Analysis: DTC is expected to be profitable in the 4th year of implementation Page 20 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion<br>
slide21. 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<br>
slide22. 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<br>
slide23. 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<br>
slide24. 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<br>
slide25. THANK YOU
FOR YOUR ATTENTION We now welcome any questions you may have. Kindly turn this page for the appendix.<br>
slide26. APPENDIX Kindly turn this page to access supporting material.<br>
slide27. Financial Analysis: The following subscriber number assumptions are underlying the financial model Page 27 Problem Recommendation Analysis Alternatives Implementation Financials Contingencies Conclusion<br>