The Boundaries of Magic Kingdom

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  1. Disney has four core business segments
    1. media networks
    2. Parks and resorts
    3. studio entertainment
    4. consumer products
  2. Main questions
    1. Is this two broad a focus?
    2. Can these things complement each other to create synergistic benefits
  3. Consumer products
    1. Licensing to Hasbro and Mattel
    2. Disney stores
      1. Initially there were Disney stores in malls
      2. The profits were not as high as expected so they were licensed to Children's place who sold Disney apparel
  4. Theme Parks
    1. Tokyo Disney Resort
      1. The operations and ownership is by Oriental land Company and the characters etc. are licensed by Disney
      2. Disney gets a percentage of the gate fee and the sales
      3. Because the part was so successful, it was costly for Disney not to take an ownership stake.
    2. Disney Resort Paris
      1. Because of the Tokyo experience, Disney motivated to own further expansions so took high ownership stake in this one
      2. Disney risk not high because France subsidized it
      3. Not a huge success and has needed capital infusions
    3. Disney Hong Kong
      1. Subsidized by Hong Kong so very little investment for Disney (even though Disney gets high ownership)
      2. Disney subsidiary controls the daily operations.
  5. Movie Productions on the Magic Kingdom
    1. Strategy for actors:
      1. Take actors not in their prime and build them up
      2. Take teenagers and build them up (Hillary Duff)
        1. Synergies - sell Hillary Duff apparel in stores and theme parks
      3. Animated actors - team with Pixar
        1. Eventually bought Pixar when it was owned by Jobs
    2. Expansion of film genere
      1. Touchstone films
        1. New unit to produce more adult films
        2. took criticism for it - had to counter with advertisement
      2. Miramax films
        1. Bought Miramax films
        2. had conflicts with its owners about which types of films to produce
        3. Miramax founders then take these and independently produce movies
        4. still boycotts of Disney products when controversial independent movie comes out
        5. Disney buys out the Weinstein brothers but still can use their name Miramax
  6. Network TV
    1. Merger between Disney and ABC
      1. Disney was able to move more of its own created content to the airways
      2. In general ABC did not do well after the merger
    2. Acquisition of ESPN
      1. This did not have the synergies that the merger with ABC brought
      2. This was a very good acquisition because ESPN offered bargaining power when creating cable packages.