1. IF YOU WANT TO GO
WHERE YOU NEED TO BE

2. YOU CANNOT STAY
THE WAY YOU ARE

3. “Blowing Up The Castle?”
Nanyang
Consulting
WALT DISNEY
“Blowing Up The Castle?”
Presented to: Robert A. Iger, Chairman and CEO at The Walt Disney Company
Presented by: Daniela, Minghao, Victor, Vishnu
11 January 2019

4. 3 Internal & External Analysis 4 Strategic Alternatives
Agenda
Page 4
1 Problem
2 Recommendations
3 Internal & External Analysis
4 Strategic Alternatives
5 Implementation
6 Financial Analysis
7 Contingency Plan
8 Conclusion

5. Post-Merger Integration
Problem: Walt Disney is facing three key challenges that need to be overcome to compete in an increasingly disrupted market
Page 5
Post-Merger Integration
Cannibalization
Threat
Disruption from OTT
How can you make best use of the Fox acquisition?
How can you disrupt your business model while mitigating for cannibalization?
How can you stay competitive?
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

6. Post-Merger Integration Cannibalization Threat Disruption from OTT
Recommendation: Three strategies will enable Walt Disney to overcome the identified challenges and prepare for the future
Page 6
Organizational Assets
Customer Acquisition
Customer Experience
Integration
Strategy
Customer Segment Strategy
Online-Offline (O2O)
Strategy
Post-Merger Integration
Cannibalization
Threat
Disruption from OTT
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

7. Internal Analysis: Walt Disney exhibits extensive experience and strong core competencies in the media industry
Page 7
Strengths
Weaknesses
Strong reputation and brand
Large volume of content (Pixar, Disney, ESPN Sports)
Family-focused image
Multiple streams of revenues (e.g. theme parks, merchandise)
M&A experience
Revenues largely from traditional cable TV (40%)
Traditional media
Large integration challenge ahead
Lack of technology focus in new media (e.g. streaming, analytics)
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

8. Opportunities Threats
External Analysis: Walt Disney exhibits extensive experience and strong core competencies in the media industry
Page 8
Opportunities
Threats
Technological advancements improving customer experience
Exponential growth in streaming services
Increased (mobile) connectivity
Globalization
Disintermediation
Strong competition incl. new entrants (e.g. Netflix, Amazon)
Rapid decrease in subscribers to cable TV
Customers looking for “long-tail’ offerings
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

9. Competitor Analysis: The following positioning map illustrates the competitive landscape Walt Disney competes in
Page 9
Large Content Volume
Walt Disney
Netflix
HBO
Hulu
Standalone
Services
Diversified
Services
YouTube
Premium
Amazon
Prime
Low Content Volume
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

10. Strategic Alternatives: Six key strategies have been considered and analyzed to identify the best-fit recommendations
Page 10
STRATEGY
Strategic
Fit
Customer Fit
Profitability
Feasibility
Innovation Level
DECISION
License Content to Competitors × +
Stimulate a Content “War”
Go “All-In” on OTT
Integration Strategy
Customer Segment Strategy
Online-Offline (O2O) Strategy
Chosen Strategies
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

11. Implementation (1/3): Integration Strategy
Page 11
What
Develop and launch an integration strategy for Walt Disney & Fox
Why
Reduce integration risks and fully exploit potential synergies despite differing cultures
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

12. Implementation (1/3): Integration Strategy
Page 12
How
Operations & HR
Culture
Determine content from Fox that will be integrated into Disney’s offerings vs. standalone
Progressively integrate Fox franchises, e.g. Marvel into Disney theme parks and merchandise
Leverage on HR from both organizations (integration team)
Form a dedicated future technologies team across both organizations for e.g. AR/VR, gamification
Invite an experienced integration consultant to the company (e.g. focus groups, workshops)
Initiate quarterly culture events, e.g. dinner and dance, movie nights
Install cross-organizational communication channels, e.g. Skype for Work
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

13. Implementation (2/3): Customer Segment Strategy
Page 13
What
Develop a coherent customer segmentation strategy to convert non-payTV users in the US and international subscribers to Disney DTC (direct-to-consumer channel)
Why
Avoid cannibalization of cable TV subscribers in the US and increase DTV subscribers from international Disney fan base
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

14. Implementation (2/3): Customer Segment Strategy
Page 14
How
Operations & HR
Marketing
Conduct market research on international OTT subscribers
Hire a local marketing team (Paris, London, Tokyo) for SNS (social networking service)
Hire a US digital marketing team to focus OTT-users marketing, targeting cable TV leavers
Sponsor a family-related script-writing contest at Universities, e.g. HEC Paris
Give-away free-trials to e.g. Millennials through partnerships, e.g. Grab Rewards, Deliveroo
Leverage on digital marketing channels (e.g. Instagram) with strong video content
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

15. Implementation (3/3): Online-Offline (O2O) Strategy
Page 15
What
Leverage Disney’s US and international theme parks to promote streaming subscription service
Why
Use real estate as strategic angle to increase the subscriber base rapidly
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

16. Implementation (3/3): Online-Offline (O2O) Strategy
Page 16
How
Operations & HR
Marketing
Hire a dedicated team focusing on cross-marketing strategies
Train hotel staff on usage of streaming service in hotel rooms at Disney resorts
Establish an analytics team to focus on optimizing customer conversion rate
Establish a dedicated customer satisfaction team
Focus on live sports as a key differentiator
Sponsor University sports competitions, e.g. MBA Olympics
Offer a 2-month free trial with entry ticket to theme parks
Promote streaming service at merchandising spots
Offer free subscription service at hotel rooms and Disney resorts
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

17. Key Performance Indicator
Key Performance Indicators: The following metrics should be used to monitor the success of the suggested strategies
Page 17
Key Performance Indicator
Target 1
Attrition rate of employees
Less than 10% 2
Employee satisfaction level
90% 3
Customer satisfaction level (DTC)
92% 4
Number of DTC subscribers
32.5 million by 2023 5
Cannibalization rate of cable TV with DTC
Below 2% 6
Pace of introduction of Fox franchises into theme parks
2+ p.a. 7
Conversion rate of free-trials to paid service
40% 8
Number of DTC sign-ups due to theme park trials
5 million p.a.
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

18. Timeline: The following schedule illustrates how the suggested strategies should be implemented
Page 18
2019
2020
2021
2022
2023 H1 H2
INTEGRATION STRATEGY
Integration consultant, culture events
Consultant
Events
Integrate Fox franchises
Future technologies team
Hire
Develop
CUSTOMER SEGMENT STRATEGY
Market research
US marketing team and campaign
Launch
International marketing team and campaign
ONLINE-OFFLINE STRATEGY
Hire cross-marketing team and launch initiatives
Train hotel staff
Train
Analytics team
Work
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

19. Financial Analysis: The following costs are associated with the proposed strategies
Page 19
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

20. Financial Analysis: DTC is expected to be profitable in the 4th year of implementation
Page 20
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

21. Financial Analysis: DTC is expected to be profitable in 5th year with a low subscriber take up scenario
Page 21
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

22. Financial Analysis: Two profits scenarios have been evaluated and unveil the profitability of the strategies
Page 22
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

23. Anticipated Risk Probability Mitigation 1 2 3 4 5 6 7
Contingency Plan: The following risks are underlying the suggested strategies and need to be mitigated in a timely manner
Page 23
Anticipated Risk
Probability
Mitigation 1
Top talent leaving the firm
Medium
Close satisfaction tracking 2
Below forecasts sign-up for DTC
Low
Increase marketing efforts 3
Resistance from staff on integration
Medium
Strong feedback culture 4
Slow technological progress
Medium
Hire “fresh” staff, e.g. incubate talent 5
Accelerated cannibalization
Low
Reexamination of marketing channels 6
Inability of offline channels to drive DTC subscribers
Low
Offer better packaging of free-trials 7
Family-friendly brand image dilution
Low
Careful content selection
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

24. Post-Merger Integration Cannibalization Threat Disruption from OTT
Conclusion: Three strategies have been introduced and outlined that will allow Walt Disney to manage the disruption it is undergoing
Page 24
Organizational Assets
Customer Acquisition
Customer Experience
Integration
Strategy
Customer Segment Strategy
Online-Offline (O2O)
Strategy
Post-Merger Integration
Cannibalization
Threat
Disruption from OTT
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

25. THANK YOU FOR YOUR ATTENTION
Nanyang
Consulting
THANK YOU
FOR YOUR ATTENTION
We now welcome any questions you may have.
Kindly turn this page for the appendix.

26. APPENDIX N Kindly turn this page to access supporting material.
Nanyang
Consulting
APPENDIX
Kindly turn this page to access supporting material.

27. Financial Analysis: The following subscriber number assumptions are underlying the financial model
Page 27
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion