REPORT 1 CASE ASSIGNMENT: Disney The Happiest Brand on Earth In 2006, Disney’s Pixar released the hit movie Cars, which grossed $462 million worldwide. Since then, Cars merchandise has generated over $2 billion in sales each year. Pixar has since created a series of Cars shorts to be aired on the Disney Channel with a subsequent DVD release. A Cars sequel is in the works for 2011, and an online virtual gaming world is set to release 2009. In 2012, Disney’s California Adventure theme park will open its 12-acre Cars Land attraction.
At Disney, the brand is the name of the game, and cross-platform success of the Cars franchise is by no means the exception to the rule. Disney also has the Jonas Brothers, Hannah Montana, High School Musical, the Disney Princesses, Pirates of the Caribbean, and the list goes on and on. The man behind the magic is Disney’s CEO, Bob Iger, who has lead a dramatic revitalization of the Disney brand since succeeding longtime head Michael Eisner in 2005. When he first took the post, his strategy shifted Disney’s focus around its stable of “franchises. These franchises are distributed across Disney’s multiple company platforms and divisions, such as Disney’s various television broadcasts platforms (the Disney Channel, ABC, ESPN), its consumer products business, theme parks, Disney’s Hollywood Records music label, and Disney’s publishing arm in Hyperion, just to name a few. Iger’s franchise strategy has been supported by the other major move he made upon first becoming CEO. On his first day on the job, Iger told the board that revitalizing Disney’s animation business was a top priority, which would be improved through the purchase of Pixar.
As part of Iger’s franchise strategy the deal made perfect sense, as many of Disney’s latest TV shows, Disneyland rides, and merchandise were based on Pixar characters. Finding a new market to push the Disney franchise became a priority as well. With the Disney brand growing flat, it was becoming evident that Disney had missed some opportunities for broader success due to a narrowing of its target market, which was at the time largely associated with younger children.
Iger’s first move was to broaden Disney’s viewership by moving the Disney Channel from premium to basic cable and launching local versions in key global markets. Then, Disney began pushing franchises to capture the rapidly growing tween market. Putting its support behind the Disney channel’s High School Musical and Hannah Montana and the Jonas Brothers, who were emerging out of Disney’s music label, Disney quickly generated a series of franchise juggernauts in the tween girl market.
Though Disney’s focus has remained on family-friendly fair, Iger has shown a new willingness to look to even broader markets if they fit with the Disney brand. Disney’s Pirates of the Caribbean, the first Disney film with a PG-13 rating, based off the classic theme park ride, played a major role in refocusing the brand, and it also helped expand the Disney appeal to older kids and even adults. The Pirates and Cars franchises also provided preliminary steps for Disney’s latest endeavors to crack the tween boy market, one traditionally difficult for media companies to sustainably capture.
Their efforts focus around the new Disney XD channel, which has a broad range of offerings, such as potential new franchises like the science fiction action-adventure show Aaron Stone and showcases of new musical talent. Disney will also be able to leverage ESPN to create original sports- based programming. The channel will be accompanied by a Disney XD Web site, which will promote the channel’s programs, as well as offer games and original videos, social networking, and online community opportunities.
As it continues to expand and provide new franchise offerings, Disney looks to have relatively strong momentum, even in the midst of rising economic challenges. As Steve Jobs, Apple CEO and Disney board member, puts it, “Family is a renewable resource,” and right now, Disney is making the most of it. SOURCES: Richard Siklos, “Bob Iger Rocks Disney,” Fortune, January 19, 2009, 80–86; Peter Sanders, “Disney Focuses on Boys,” The Wall Street Journal, January 8, 2009, available at ttp://online. wsj. com/article/SB123137513996262627. html (accessed January 14, 2009). 1. Do a brief market opportunity analysis for Disney, identifying the major markets that Disney has expanded into. 2. How does Disney’s cross-platform franchising help create sustainable competitive advantage? 3. Describe the marketing mix for one of Disney’s franchises. 4. Describe the major components of Bob Iger’s strategic plan when he first became CEO.