Disney in Shambles
Currently, the Walt Disney Company is in shambles. It seems almost every area of the Disney Empire is spiraling in a downward direction. How and why did this happen? This simple question has a very complex answer.
Disney’s Dubious Management
From its founding, the Walt Disney Company has faced its share of ups and downs, but the one constant theme was the vision of Walt Disney himself. His vision was to build a dynamic entertainment company that created a family friendly experience both on the silver screen and in real life. He wanted his animations to bring happiness to its viewers and later with the creation of Disneyland he wanted the visitors to be taken to a magical place that would offer them an escape from their everyday life. Walt’s vision was a huge success. Disneyland and later Disney World became huge hits with people. The movies his company produced delighted both young and old with their fantasy and wholesome themes. Under Walt’s leadership and that of the following CEO’s, the Disney Company thrived.
Loss of Walt’s Vision
It seems that with Bob Iger gaining the reins of the company, Walt Disney’s vision began to fade. At first, Iger’s idea of buying up creative companies like Lucas, Marvel and Pixar seemed like the perfect plan in order to build on Walt Disney’s vision. But it seems that the plan began to unravel quickly. Iger allowed the creative types to expand on Walt’s ideas and bring it up to so-called modern day standards. This slowly led the focus of their creations to move away from center and enter the political arena on the far left side of the political spectrum. The company moved away from family friendly escapism entertainment, towards a leftist political propaganda form of entertainment. This shift to the left drove the original core Disney employees out as their style of creating Disney classics quickly was pushed aside. This has placed Iger in the position where he can no longer go back to the original Walt Disney vision due to lack of personnel. Then when Bob Iger so-called stepped down from his leadership role and appointed his successor, Bob Chapek, the ticking time bomb exploded. Chapek allowed himself and the Disney Company, to be drawn into the political forefront when he bowed to the creative employees demands that the Disney company, take a stand on the side of far left activists to denounce a new Florida law. This act embroiled the company in a political battle with the Florida governor and forced parents of children who didn’t agree with Disney’s stand to reevaluate the wholesomeness of the content the Disney Company was creating.
The Bad Disney Business Plan
Over the last decade, Disney management embraced the idea of maximizing profits of the Disney Corporation. Holdings like the Disney movie studios, ESPN, cable channels, the theme parks and cruise line along with their broadcast divisions were all first rate entities. Bob Iger felt that he could extract ever increasing amounts of profits because of how high the quality of the products they were providing were. These increased profits would finance the creation of their new streaming division. Streaming was the new growing trend that consumers were embracing and was disrupting the dominance of the old cable television business models. At first this plan worked flawlessly. But then it seems a new corporate attitude crept into the boardroom and it fostered the belief that there was no ceiling as to how high prices could go and how much the public would pay for their products.
So without the company realizing it, Disney entertainment quickly went from a family friendly past time, to a high priced wish list item that requires long term financial planning. Disney management shifted its focus away from middle class America and aimed at drawing the higher income population feeling that this portion of the population was more financially able to spend the amounts of money Disney desired. And it was this rise in the costs of Disney offerings that bred a new, higher expectation level from the public. Disney management aimed at increasing revenues while not adding a corresponding rise in the perceived value of their products.
Questionable Future
So today, Disney finds itself at the upper price levels on most of its products and services. At the same time is still losing customers based on these price levels, its political posture and the value the public perceives of being worth the costs. The Disney theme parks are seeing a drop in traffic. With extremely high park entry ticket prices, along with associated “optional” services are pricing a growing number of families out of the market, this has resulted in demand faltering. The one billion dollar Star Wars themed hotel that was built in order to cater to the higher income portion of the population was forced to close after just one year in operation due to the fact that even the higher income customers felt it was a great one time adventure, but not worth repeating on a recurring basis. Disney streaming offerings are struggling to build their customer base while, at the same time, being able to produce profits. The box office revenues of most of the politically far left modern Disney movies has produced a wave of flops. And the crumbling of the cable industry, with its bundled product offerings has weakened the value of things like ESPN.
Iger is floundering as the leader who can restore the Disney magic that he himself has destroyed. The public is no longer willing to accept what Disney has to offer without now questioning its value. What’s really puzzling is the fact that the Disney board hasn’t demanded more results from Iger. And while Wall Street has punished Disney by lowering the price of its stock value to record lows, it still hasn’t used its financial muscle to attempt to restore the company to its former glory and profits.
Feel free to comment below and give your thoughts as to how you view the Disney Company.