The Walt Disney Company's Aggressive Strategic decisions and it's implementations to Sustain in Indian Media and Entertainment Industry

A CASE STUDY ON

  The Walt Disney Company’s Aggressive Strategic
decisions and it’s implementations to Sustain in Indian
          Media and Entertainment Industry
              In Partial Fulfilment of Requirement of Degree of

                 Post Graduate Diploma in Management

                            SUBMITTED BY

                        HRISHIKESH BIRADAR

                         PGDM (MARKETING)

                               HRD1815390

                               Submitted to

         BALAJI INSTITUTE OF MANAGEMENT & HRD (BIMHRD)

                         SRI BALAJI SOCIETY

                            PUNE (2018-2020)

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TABLE OF CONTENT

         1. Executive Summary…………………………….5

         2. Introduction……………………………………..6

         3. Analysis…………………………………………..13

         4. Analytical Models………………………………16

         5. Recommendations……………………………...27

         6. References………………………………………28

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Executive Summary:
The Walt Disney Company entered Indian market in 2001 but after that they have faced many
problems to cope up with ever changing Indian Environment. Afterwards they have used pool of
strategies to sustain in this Environment through M&As, entering into new markets,
diversification, starting aggressive campaigns, etc. The problems The Walt Disney Company
have face are:

      To create sustainable growth in cost conscious Indian Film Industry;
      Unable to nullify the threat of new entrants;
      Decrease in their loyal customer base both globally and in India;
      Aggressive content creation strategies played by bigger OTT players;
      Both cultural and infrastructure related difference in different Geographical areas.

Disney Studios was the one of most reliable source of cash inflow for The Walt Disney
Company in Worldwide but in India Economic Bollywood Model is seriously blocking the
growth of the company in Indian film Industry. So this case study is targeted to The Walt
Disney Company’s approach to this issue and possible pool of strategies they have implemented
to nullify the threats.

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Introduction:
This case study about problems faced by one of the biggest conglomerate The Walt Disney
Company in India in recent years and they tackled those problems by creating sustainable
environment for their product as well as portfolio. The huge problem the Walt Disney Company
has facing in recent year is decreasing at subscribers to its network, ESPN networks. The
company facing challenges in adopting the new and innovative technologies. The corporate
culture of the Disney at all the level of hierarchy and its workforce is aware of its principles. it
has adopted different backgrounds.

It is one of the largest multi global company in the World. The company needs to convert TV to
internet services. One of the important strategic issues that the world Disney has facing is it
losing a good number of subscribers in the ESPN network. Disney creative potential of creating
large amount of shareholder. Disney has announced a creation of direct customer in international
unit. The company is facing this issue because it is not applying the new technologies which has
been applied by its competitors which is the reason it is facing a competition in the market. Then
the cultural differences they have been facing at Disney UTV venture and followed by the
various setbacks caused lack of cost cutting measures in highly economy based pricing oriented
Indian film industry; where some of their ambitious projects did terrible business on Box Office.
Then Disney India’s decision to create disruption in already technologically disrupted OTT (On
The Top) industry by challenging streaming giants like Netflix and Amazon Prime plus other
notable local OTT players too. Their customer base which was using tradition entertainment
media such as cable networks, DTH services, Pay per TV media, broadcasting media, etc are
significantly decreasing through the recent years. The Walt Disney India has also suffered huge
blow regarding catering Indian Entertainment Industry through opening Disneyland and
Disneyworld in India because of poor infrastructure facilities in India.

Disney Studios was the one of most reliable source of cash inflow for The Walt Disney
Company in Worldwide but in India Economic Bollywood Model is seriously blocking the
growth of the company in Indian film Industry. So this case study is targeted to The Walt Disney
Company’s approach to this issue and possible pool of strategies they have implemented to
nullify the threats.

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About The Walt Disney Company:
The Walt Disney Company is an American multinational mass media corporation, which is
headquartered in Walt Disney Studios in Burbank, California. Walt and Roy Disney started this
company, in 1923, first as an American animation industry, later diversifying into live-action
film production, television, and travel. The company really became a conglomerate in 1986,
taking on its current name of The Walt Disney Company. Today it is one of the most successful
companies in the world having divisions in theater, radio, music, publishing, and online media,
etc.

Company generally operates in 5 major segments:

-The Walt Disney Studios

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-Parks and Resorts

-Disney Consumer Products
-Media

-Disney Interactive

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Analysis of Indian M&E Industry:
The Indian media and entertainment industry is expected to reach around Rs 307 Thousand crore
by 2024. Media and entertainment Industry is looking to expand at a CAGR of 13.5 per cent over
2019-24. In FY19, major segments were television, print and films with a market size of Rs 713
Thousand crores, Rs 333 Thousand crores and Rs 185 Thousand crores, respectively. They are
projected to reach Rs 1025 Thousand crores, Rs 375 billion Thousand crores and Rs 228
Thousand crores, respectively in FY22.

Indian television market has an opportunity of catering to 100 crore homes as 19.7 crore homes
out of the total 2.29 crore have TV sets as of 2018.
Digital media & entertainment (M&E) platforms in India grew 13.3 per cent in FY19 to reach Rs
163,100 crore , contributing the most to the growth of M&E sector in the country. India’s
advertising revenue is projected to reach Rs 1,367 thousand crores in FY24 from Rs 693
Thousand crores in FY19.

India ranked at 15th in the world in music industry and is expected to enter into the top 10 music
markets by 2022.

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Indian Television and Broadcasting Industry:
The television (TV) industry in India is going through a digital transformation, as are most other
Information Technology (IT) sectors in the economy. While cable television is likely to rule the
market over the next few years, satellite television and online video are the current growth
indicators.

There has been impressive growth of subscribers, industry revenue and availability of services.
Much of this growth has been driven by digitization of cable, higher uptake of High Definition
channels and the increase in smart device penetration resulted in increased consumption using
alternate platforms. With precisely 197 million TV households and India is the second largest
television market in the world, next only to China.

The industry today boasts of not less than 800 channels across various genres. Of the total
revenue of about INR 66,000 crores , about 40% is attributable to advertising and 60% to
distribution and subscription services.

For broadcasters, however, subscription revenues (including international subscription) account
for only 28% of the total revenue, and the remaining share comes from advertisements. The
share of advertisements is expected to increase to 75% by 2020.

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OTT Platforms:
The market for TV viewership and content has changed in recent years. The recent surge in OTT
platforms is disruptive for both cable and DTH service providers.

The estimated size of the OTT market in India was INR 773 crore in 2017; this is expected to
double to INR 1575 crore by 2020. Given the rising number of internet users in India, the OTT
market is gradually becoming a source of entertainment.

As per the BCG report titled Entertainment Goes Online, about 81 per cent of consumers in India
have up to three OTT apps on their smart phones devices.

The average time spent by millennials in India watching videos online has increased to 52
minutes per day in 2018 from a only two minutes per day in 2012.

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Indian Film Industry:
The media and entertainment industry in India enjoyed a stellar performance in 2018, with the
film segment expanding by 12.2% to reach an annual revenue of INR 1745 thousand crore.

Of this amount, the domestic film revenues crossed INR 1000 thousand crore with Net Box
Office Collections for Hindi films at INR 32.5 thousand crore – the highest ever.

The number of Hollywood films released in India fell from 105 in 2017 to 98 in 2018.
Hollywood films reached Net Box Office Collections of INR 92.1 thousand crore.

Thirteen Hindi films reached the INR 100 crore mark in 2018, the highest number the industry
has ever seen. Multiplexes added to the total screen count to reach 9,601; however, the number
of single screens declined.1

A major reason for this exponential growth is digitization and the infusion of OTT platform and
overseas theatricals as revenue earners in the industry.

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Analysis:
-Recent setbacks in Indian film Industry:

To conquer Indian Film Industry market share Disney did a serious homework before entering to
the Indian Film Industry but it didn’t go according to their plan and expectations. Disney used
M&A strategies to increase their market share in Indian Film Industry by acquiring UTV Motion
Pictures in 2012.

The reasons behind acquiring UTV Motion Picture were, it was one of the India’s largest
production houses in 2008 by producing more than 10 Hindi movies a year. They also
collaborated with the foreign player like 20th Century Fox, Walt Disney Picture and Sony
Picture. After acquiring UTV Motion Picture The Walt Disney Company concentrated on the
Indian movies but their recent releases turned out to be failures. Out of 39 movies that they have
produced only movies like Dangal, Kai Po Che, Chennai Express, ABCD 2 did good business on
Box Office. After spending lot of money on these new releases they had to go empty handed.

Indian Film Industry works on the Economic model of film making where as Disney Studios is
generally known for making high budget movies so their production model failed terribly in
Indian Market. Specifically, the digital revolution has create a huge shift in content consumption
in India. In keeping with the global digitization, OTT platforms invested aggressively in
acquiring exclusive rights of cinematographic films, which in doing so, pioneered a digital-only
film market in India in 2018. OTT platforms, such as Netflix, are presently not regulated by any
precise regulatory framework, primarily due to the nature of OTT platforms, which cannot be
attributed to the jurisdiction of the existing regulatory structures.

To tackle this problem Disney has decide to put their film operation plans on ice and now they
are focused on only distribution of film business in bollywood since UTV Pictures are the largest
distributors of Indian movies in domestic as well foreign markets since they are operating in
more than 45 countries including North America.

-The Walt Disney Company’s entry in Indian Streaming Market:

After the decrease in customer base of their prominent channel ESPN because of the rise in OTT
platforms like Netflix, Amazon Prime, Hulu, etc, Disney decided to challenge these disruptors in
their own arena. After acquiring Fox Studios, Disney has taken the control of Rupert Murdock’s
Star empire in India and their very own Hotstar OTT platform.

Disney implemented aggressive sporting compaign to lure OTT subscriber base to join Hotstar
as a active monthly users.

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To conquer Indian OTT market they tied up with HBO Networks for content development and
content distribution and streaming. And Disney has taken down all of their cinematic universe
related movies from competitors platforms like Netflix and Prime Videos and currently they are
streaming these movies on Hotstar as part of their Premium Membership program.

At the same time Disney has approached various broadcasting networks such as Fox Sports, Star
India, etc to get exclusive streaming rights of all the sporting events such as Premier League,
Bundesliga, IPL, major bilateral Cricket series and tournaments, etc. This move turned out to be
a successful venture because out 60 crore active smartphone users base in India, 30 crore use
Hotstar on active basis. So it was a huge win for Disney as they are planning to offer streaming
services of Hotstar in Worldwide.

-Ruling out Disneyland and Resorts in India:

Disney were very passionate about opening a their Disneyland and resorts in India and initially
they were in talks with several other Indian investors and Govt agencies, But after doing proper
analysis of Indian scenario they had to put their plan on ice because several factors.

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Disnyland and Resorts require 365 days customer inflow and this model of Disney’s works on
that core principle only but in India the prices and consumer mindset is not in favour of
Disneyland and resorts. Infrastructure in India is not upto the mark to support this kind huge and
expensive venture.

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Analytical models:
               1. Geert Hofstede Cultural Dimensions for India:

Power Distance:

India scores high for this dimension, 77, which indicates a high level of inequality in regards
to power and wealth within the society. This condition is not necessarily subverted upon the
population, but rather accepted by the population as a cultural norm. In this type of society,
managers count on the obedience of their team members and employees expect to be directed
clearly in regards to their functions and what is expected of them.

India is a strong example of a culture with high power distance as its Caste System divides the
Indian population into five groups, with each group having a higher status than the one below it.
These castes define the power of an Indian citizen from birth and they cannot aspire to enter
another caste.

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Individualism:

India is a society with clear collectivistic traits as it scores a 48 for this dimension. This indicates
that there is a high preference for belonging to a larger social framework. Individuals are
expected to act in accordance to the greater good of one’s defined in-group(s).

 Many members of the Indian society have their future prescribed for them by the government,
church, or family. In such situations, the actions of the individual are influenced by various
concepts such as the opinion of one’s family, extended family, neighbours, work group and other
such wider social networks that one has some affiliation toward.

The relationship between an employer and an employee is one based on expectations – loyalty
from the employee and familial protection from the employer. In the workplace, hiring and
promotional decisions are often based on relationships. Relationships are the key to everything in
a collectivist society.

Masculinity:

India is considered a masculine country with a score of 56 on this dimension. India is very
masculine in terms of visual displays of success and power, despite the fact it scores barely
above the midrange.

 In masculine countries like India, the focus is on success and achievements, is validated by
material gains, work is the center of one’s life and visible symptoms of success in the workplace
is very important. The Indian culture values assertiveness, competitiveness and ambition.

Uncertainity/ Avoidance:

India scores 40 on this dimension and thus has a medium to low preference for avoiding
uncertainty. In this country, there is acceptance of imperfection; nothing has to be perfect no has
to go exactly as planned.

Traditionally, India is a patient country where tolerance for the unexpected is high. People in
India generally do not feel driven or compelled to take action-initiatives and feel comfortable
when settling into established rolls and routines with questioning.

People in cultures with a medium to low uncertainty avoidance level tend to value risk-taking,
seek change instead of avoiding it, and demonstrate a high tolerance for difference or error. India
possesses all of these traits which makes it a favourable destination for outsiders to establish
business relationships.

Orientation:

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India scores a 51, making it a culture with long term orientation. In India, the concept of karma
dominates all religious and philosophical thought. Time is not linear, it is polychronic, and thus
not as important as to Western societies who perceive time in a monochronic manner and usually
score low on this dimension.

Countries like India have a great tolerance for religious views from all over the world –
Hinduism is often considered a philosophy more than even a religion; an amalgamation of ideas,
views, practices and beliefs. In India there is an acceptance that there are many truths and often
depends on the seeker.

India’s high score on long term orientation means that its members typically forgive lack of
punctuality, a change of plans based on changing reality and a general comfort with discovering
the fated path as one goes along rather than following an exact plan.

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2. Walt Disney Value Chain for India:

Primary Activities:

Inbound logistics:

It is important to develop strong relationships with suppliers as their support is necessary to
receive, store and distribute the product in India. Without analyzing the in-bound logistics, The
Walt Disney Company can face various challenges in product development phases in India.
Analysis of in-bound logistics requires a company to focus on every aspect of transformation
from raw material to finished product in India. Some examples of inbound logistics are retrieving
raw material, storing the inputs and internally distributing the raw material and components to
start production in India.

Operations:

The importance of analysing operational activities raises when raw material arrives, and The
Walt Disney Company is ready to process the raw material into the end product and launch it in

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the market in India. Some examples of operational activities are machining, packing, assembling
and testing in India. Equipment repair and maintenance also falls into this category in India.

Outbound logistics:

Outbound activities are timely managed with optimal costs and product delivery processes put a
minimum negative effect on the quality in India, and it maximizes the customer satisfaction and
increases growth opportunities for the firm in India. The Walt Disney Company should pay
specific importance to its outbound value chain activities when its offered products are
perishable and require quick delivery to the end customer in Indian Environment.

Marketing and sales:

The Walt Disney Company's marketing and sales activities are- sales force, advertising,
promotional activities, pricing, channel selection, quoting and building relations with channel
members. The company can use the marketing funnel approach to structure its marketing and
sales activities in Indian scenario. The marketing strategies can either be push or pull in nature,
depending on the The Walt Disney Company’s business objectives, brand image, competitive
dynamics and current standing in the market in India.

Effective and wisely integrated marketing activities can develop the brand equity of The Walt
Disney Company and help it stand out from the competition. However, The Walt Disney
Company must avoid making false commitments about product features that cannot be fulfilled
by the production department in India. It indicates the need to ensure coordination between
different value chain activities in India.

Services:

The pre-sale and post-sale services offered by the The Walt Disney Company will play an
important role in developing customer loyalty in India. The modern customers consider post-sale
services as important as marketing and promotional activities in India. The power of negative e-
WOM due to poor support service cannot be undermined in the current technologically advanced
era in India. The company must analyse its support activities to avoid damaging brand
reputation, and instead use it as a tool to spread positive word of mouth due to quick, timely and
efficient support services in Indian context.

Secondary activities:

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Firm infrastructure

The firm infrastructure denotes a range of activities, such as- quality management, legal matters
handling, accounting, financing, planning and strategic management in India.

Human resource management

The Walt Disney Company can analyse human resource management by evaluating different HR
aspects, including- recruiting, selecting, training, rewarding, performance management and other
personnel management activities in India. The Walt Disney Company on employees' talent will
increase the importance of this value chain support activity in India.

Technology development

In a modern, technological advanced era, almost all value chain activities depend on
technological support. The technological integration in production, distribution, marketing and
human resource activities requires The Walt Disney Company to realise the importance of
technology development in India.

Procurement:

The procurement in value chain denotes the processes involved in purchasing the inputs that may
range from equipment, machinery, raw material, supplies, raw material and other items necessary
for producing the finished product in India. Due to its linkage with multiple value chain
activities, The Walt Disney Company should carefully consider its procurement activities to
optimize the inbound, operational and outbound value chain in India.

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3. Bowman’s Strategy clock:

Low price/Less added value:

Options to be avoided since Disney is considered as symbol of innovation, status and market
leader in premium based services

Hybrid:

Disney has followed hybrid pricing approach to cater Indian market where they give access to
some of their services for free but at time of peak demand they charge their customers for their
services eg. Hotstar.

Low price:

Avoided by Disney India.

Differentiation:

Disney is currently using this sector of the clock for their OTT platform Hotstar by acquiring all
the exclusive broadcasting and streaming rights of various sports activities such as Cricket,
Football, F1 races, Olympics, etc in India.

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Focused differentiation:

Even though they have UTV motion pictures for domestic film production still they are
concentrating on distribution of both foreign and domestic films along with their dubbing and
satellite rights in India.

Risky but high margin:

Disney wanted to enter into Disneyland and resorts but initial investment was too high and its
very risky venture when you compare it with Indian scenario. So avoid the disaster they put it on
ice.

Monopoly pricing:

Disney studios and its subsidiaries’ movies are the real strength of Disney in India so they have
created monopoly based pricing by hosting those movies on their own platform Hostar and they
charge premium for access of these movies.

Loss of market share:

These are options to be avoided such as Disneyland, Disneyworld and Indian Film business
which are promptly avoided by the Disney India.

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4. Walt Disney market attractiveness/ Business strength GE matrix:

Market attractiveness can be evaluated by considering the development status of the particular
country, population, literacy ratio, disposable income per capita, availability of technology and
other critical resources.

Business strength is the internal factor of the company such as product portfolio, technology,
variety, supply chain capabilities, etc

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5. Porter’s 5 Force model for Disney India:

    Threat of new entrants:

   Low switching cost (Strong force)
   High capital cost (Weak force)
   High cost of brand development (Weak force)

    Bargaining Power of Suppliers:

   Large population of suppliers (Weak force)
   High overall supply (Weak force)
   Moderate variety of suppliers (Moderate force)

    Threat of substitute products:

   Moderate availability of substitutes (Moderate force)
   Moderate substitute performance-to-price ratio (Moderate force)
   Moderate variety of substitutes (Moderate force)

    Bargaining Power of customers:

   Low switching costs (Strong force)
   Moderate price sensitivity (Moderate force)
   Moderate ability to substitute (Moderate force)

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Rivalry Among Existing Competitors:

   Many firms in the market (Strong force)
   High aggressiveness of firms (Strong force)
   Moderate differentiation (Moderate force)

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Recommendations:
-Disney India should currently focus on following Economy Based Indian Film making Model to
produce films in Indian Film Industry. Instead investing high in pre and post production
activities they should start investing more on content so that it will cut down the cost at its
minimal and will be sustainable in Indian Environment.

-Disney Indian should invest more on distribution, dubbing and satellites rights of their movies
so that it will create alternate and sustainable stream of revenue in India.

-Original content is creation is required for their OTT platforms such as Hulu and Hotstar in
India. As Netflix, Amazon prime, and local players such as Alt Balaji, Zee, Ullu, Voot, etc are
very content rich OTT platforms.

-For OTT platforms’ original content their reliability on HBO Network is very high to tackle that
Disney India should create local content such Hotstar Originals more often.

-Disney India should integrate their new venture Disney+ and ESPN+ with their OTT platform
Hotstar by charging premium so that it will add youth customer base to their customer base.

-Their dependency on Indian broadcasting media should be minimized, instead they should focus
on creating sustainable growth with the help aggressive sporting campaign in India.

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References:

-https://www.ibef.org/industry/entertainment-presentation

-https://www.statista.com/chart/12307/market-share-of-major-film-studios/

-http://dspace.lib.fcu.edu.tw/bitstream/2377/31642/3/M0566104105101.pdf

https://www.academia.edu/9648608/Selecting_a_Strategic_Option_for_Walt_Disney_Amended_on_16
_10_2015_?auto=download

-https://www.questia.com/library/journal/1G1-96454924/a-case-study-of-commercial-television-in-
india-assessing

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