Question

Has Disney diversified too far in recent years?

Answer 1

Ans: Disney has indeed diversified too far in recent years and the scope of its business has spanned geographically, horizontally, and vertically. Disney invested itself right from distributing films to selling fast food and producing TV programming to operating international theme parks.

As an entertainment company, Disney chose to maintain a competitive presence not only in UnitedStates but also worldwide. With opening theme parks in Europe and Japan, the company maintained its adherence to the Disney formula for family recreation and was able to put itself back on the growth track. This was part of the well defined corporate scope to denote the markets in which the Disney wanted to operate and create more synergy through universal appeal and cross-promotion of its products.

In the context of horizontal diversification, the simultaneous ownership of movie, animation, television, theme parks division, and much more has allowed Disney to utilize a common and similar set of tangible and intangible resources.

Answer 2

In recent years, Disney has taken many measures to diversify, and there is some controversy over whether it is over-diversified:

- **From a positive perspective, diversification is not excessive**:

- **Business synergy and expansion**: Disney has incorporated animation, superhero movies, science fiction movies and other content into its territory through the acquisition of Pixar, Marvel, Lucasfilm, etc. These acquisitions have enriched its content library, and different IPs can achieve synergy effects, such as creating related theme areas and activities in theme parks to drive ticket sales and surrounding consumption. The theme park business and film and television content promote each other. The popularity of movies can attract tourists to experience related scenes in theme parks, and the experience of theme parks can feed back the influence of movie IPs, expanding the source of income, and these businesses are highly related in the entertainment industry. It is not blind diversification.

- **Risk diversification**: Diversified operations diversify the risks of a single business. If you rely solely on the traditional animation film business, when industry competition intensifies or audience tastes change, performance is vulnerable. Now, Disney's multiple businesses, including movies, theme parks, streaming media (Disney+), and peripheral products, are developing together. For example, when the film industry is hit by the epidemic, theme parks can resume operations after the epidemic is alleviated, and streaming media subscribers may also increase due to people's need to stay at home, ensuring the stability of the overall business.

- **From the perspective of causing doubts, there is a possibility of excessiveness**:

- **Cultural and public opinion level**: In the process of pursuing diversity and "diversity and inclusion" (DEI), some measures have caused controversy. The live-action version of "Snow White" made major changes to the plot and character settings, deviating from traditional stories and audience cognition, causing fans' dissatisfaction and public criticism, and damaging the brand image. In content creation, over-emphasizing certain concepts deviates from the public's inherent impression of Disney's "innocence" and "beautiful fairy tales", resulting in the loss of some old fans.

- **Business integration and financial pressure**: Continuously expanding new businesses and acquisitions bring integration difficulties and financial pressure. For example, after the acquisition of 21st Century Fox, energy and costs will be spent on business integration and personnel arrangements. If the new business cannot quickly adapt to the market and achieve profitability, it will drag down the overall performance. Recently, Disney has also faced financial challenges such as difficulty in making profits from its streaming business and rising operating costs for its theme parks.

Overall, Disney's diversification has strategic rationality and positive significance, but it has caused controversy due to cultural concepts and business integration during its promotion. It cannot be simply judged as excessive diversification. It needs to balance the relationship between diversified expansion and brand core maintenance and business integration in the future.