Disney At Crossroads Of Disruptive Trends Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Disney At Crossroads Of Disruptive Trends Case Solution

Key Facts

Disney had made many people smile across the globe, but the company was soon at the verge of disruption as its key customer, i.e. Netflix started selling its online video content in 2007 at lower cost as compared to Disney. In order to survive the online revolution; Disney needed to incorporate drastic changes. Till 2017, this threat was not considered seriously by the company; however, the company’s cable partners faced a challenge of loss of millions of customers, which became a realization point for Disney to come up with a new business strategy.(Richemn Mourad, 2020)

Soon, Disney announced to withdraw its content rom Netflix, thereby shocking the world. However, this strategic move shifted the Disney’s business model from B2B to B2C model. In 2018, the business reorganization was announced by the company’s CEO and Kevin Mayer was appointed as the chairman of the new DTCI division. However, the company’s DTCI division started incurring losses, despite of the company’s stock price had reached a high point in April 2019. The newly appointed chairman had to figure out the key strategies in maintaining the profitability the DTCI’s division, in face of a strong competition from the ones who were once the company’s customers.

Problem Statement

Disney had always remained a top performing company in the entertainment and the online streaming industry, but the company was brought to disruption when its key customer Netflix started offering its online subscription services by generating its own content. Disney then withdrew its content from Netflix, as its key cable operators was losing millions of subscribers after the Netflix’s initiation of providing subscriptions at lower costs. The overall business model of Disney changed and the newly appointed Chairman of DTCI division had to find out different techniques of making the division more profitable.

Porters’ Five Forces

The threat of new entrants is analysed to be medium, as there are already large industry players with established businesses and a large number of customers’ subscriptions.So, there are some entry barriers, as the existing players are dominant with established brand names.
The threat of substitutes is high as the technology is continuously evolving, and the industry players can come up with different new solutions and the customers have different options to switch from one competitor to
The existing rivalry is high as the industry includes large industry players like Netflix, which was once Disney’s customers. So, the competition has increased over the period of time as Disney’ traditional cable partners like AT&T and Comcast have also decided to introduce their own online streaming services.
The bargaining power of customers is high as the customers can easily switch from one alternative to another. Just like different subscribers shifted to Netflix, as it provided low cost solutions, thereby providing the complete season for a comparative lesser cost.
The bargaining power of suppliers is low for Disney, asDisney has a vertical integration system, which has significantly reduced the power of the suppliers.

Resource Based View

Disney enjoys a strong competitive advantage just because of its strong tangible and intangible resources. The tangible resource includes its media subsidiaries, which have the ability to generate new and innovative content for its customers. The intangible resources include the company’s exclusive copyrights, patents and content. These resources are quite valuable, rare, imitable to some extent and organised. The company has strong financial resources, research & development and human capital, which as a whole, helps the company in maintaining a string competitive advantage on the basis of unique products and services and product differentiation strategy.

Alternatives

In order to maintain a competitive position;Disney can use the following alternatives:

Product Innovation at a Low Cost: - Being a unique creator of innovative content; Disney should develop creative content but at lower rates juts like Netflix.Whereby, Disney should offer the subscription at lower rates. This would enable Disney to grab the customers from other competitors and to tap the customers who prefer low priced solutions.
Alliance with Content Developers: -Disney has a strong market position, whereby it can create an oligopoly in the online streaming market by creating alliances with different industry operators through mergers or acquisitions. This would enable Disney to enjoy a larger market share and beating its competitors in the industry.

Conclusion

Disney has well established brand name and being a dominant player; it can easily curb with this challenging situation. It is recommended that Disney should offer subscription services by providing season or movies at a lower cost, with better quality, for customers to get attracted towards the company’s services..........................

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Disney At Crossroads Of Disruptive Trends Harvard Case Solution & Analysis