Harvard Case - The Video-Streaming Wars in 2019: Can Disney Catch Netflix?
"The Video-Streaming Wars in 2019: Can Disney Catch Netflix?" Harvard business case study is written by Anita Elberse, Monica Cody. It deals with the challenges in the field of General Management. The case study is 18 page(s) long and it was first published on : May 20, 2019
At Fern Fort University, we recommend that Disney adopt a multifaceted strategy to aggressively capture market share in the streaming wars. This strategy should focus on leveraging Disney's existing strengths in content creation, brand recognition, and global reach while simultaneously embracing innovation and adapting to the evolving digital landscape.
2. Background
The case study examines the fierce competition in the video-streaming industry in 2019, with Netflix firmly established as the market leader. Disney, with its vast library of beloved content and iconic brands, entered the fray with Disney+, aiming to challenge Netflix's dominance. The case highlights the key challenges Disney faced, including:
- Netflix's established market position: Netflix boasts a massive subscriber base and a strong reputation for high-quality original content.
- Competition from other streaming giants: Amazon Prime Video, Hulu, and Apple TV+ were also vying for market share, making the landscape even more competitive.
- The need for a compelling value proposition: Disney+ needed to offer a unique and attractive offering to entice consumers away from existing streaming services.
- The evolving consumer landscape: Consumers were increasingly demanding diverse content, personalized experiences, and seamless access across multiple devices.
The main protagonists of the case are Bob Iger, the CEO of Disney, and Reed Hastings, the CEO of Netflix. Both leaders faced the challenge of navigating the rapidly changing streaming landscape and securing their respective companies' long-term success.
3. Analysis of the Case Study
To analyze Disney's position, we can apply a SWOT analysis and Porter's Five Forces framework:
SWOT Analysis:
Strengths:
- Strong brand recognition and loyal fanbase: Disney's iconic characters, franchises, and content hold immense appeal across generations.
- Extensive library of high-quality content: Disney possesses a vast catalog of movies, TV shows, and animation, including classics and recent blockbusters.
- Global reach and distribution network: Disney's established presence in international markets provides a significant advantage.
- Strong financial resources: Disney's financial stability allows for significant investment in content creation and technology.
- Experience in content production and distribution: Disney has a long history of producing and distributing successful entertainment content.
Weaknesses:
- Limited original content at launch: Disney+ initially relied heavily on existing content, lacking a robust pipeline of original programming.
- Pricing strategy: Disney+ initially offered a lower price point than Netflix, potentially limiting revenue potential.
- Technical challenges: Initial technical issues with the platform and app impacted user experience.
- Competition from established players: Disney faced stiff competition from well-established players like Netflix and Amazon.
Opportunities:
- Growing demand for streaming services: The global streaming market is expanding rapidly, offering significant growth potential.
- Expansion into new markets: Disney can leverage its global reach to expand into emerging markets with high growth potential.
- Partnerships and acquisitions: Disney can acquire or partner with other content creators to expand its library and reach new audiences.
- Innovation in technology and content: Disney can invest in innovative technologies like AI and machine learning to enhance user experience and create new content formats.
Threats:
- Increasing competition: The streaming market is becoming increasingly crowded, with new entrants constantly emerging.
- Shifting consumer preferences: Consumer tastes are evolving rapidly, requiring constant adaptation and innovation.
- Technological disruption: New technologies and platforms may emerge, challenging the existing streaming landscape.
- Regulatory changes: Governments may introduce new regulations that impact the streaming industry.
Porter's Five Forces Analysis:
- Threat of new entrants: High, due to the low barriers to entry in the streaming market.
- Bargaining power of buyers: High, as consumers have numerous streaming options and can easily switch between services.
- Bargaining power of suppliers: Moderate, as content creators hold significant bargaining power, but Disney's brand and resources provide leverage.
- Threat of substitute products: High, as consumers can access content through various platforms, including free-to-air television and pirated content.
- Competitive rivalry: Very high, as the streaming market is fiercely competitive, with established players and new entrants vying for market share.
4. Recommendations
To overcome the challenges and capitalize on the opportunities, Disney should implement the following recommendations:
1. Content Strategy:
- Invest heavily in original content: Disney should focus on developing high-quality original programming across various genres, targeting diverse audiences.
- Leverage existing franchises and characters: Disney should create new content based on its iconic franchises, expanding their reach and attracting a loyal fanbase.
- Acquire and partner with content creators: Disney should actively seek acquisitions and partnerships with independent studios and creators to diversify its content library.
- Develop a strong content pipeline: Disney should establish a robust production pipeline to ensure a steady stream of new and exclusive content.
2. Marketing and Distribution Strategy:
- Aggressive marketing campaign: Disney should launch a comprehensive marketing campaign to raise awareness of Disney+ and its unique value proposition.
- Leverage existing marketing channels: Disney should utilize its existing marketing channels, including theme parks, retail stores, and social media, to promote Disney+.
- Strategic partnerships: Disney should partner with other companies and platforms to expand its reach and cross-promote Disney+.
- Personalization and targeted marketing: Disney should leverage data analytics to personalize content recommendations and target specific demographics.
3. Technology and Innovation:
- Invest in platform development: Disney should invest in improving the user experience and functionality of the Disney+ platform.
- Embrace new technologies: Disney should explore and adopt new technologies like AI and machine learning to enhance content discovery, personalization, and user engagement.
- Develop innovative content formats: Disney should experiment with new content formats, such as interactive storytelling, virtual reality experiences, and immersive entertainment.
- Focus on seamless integration across devices: Disney should ensure a seamless user experience across all devices, including smartphones, tablets, and smart TVs.
4. Global Expansion:
- Target high-growth markets: Disney should prioritize expansion into emerging markets with significant growth potential, such as India, China, and Latin America.
- Adapt content and marketing to local audiences: Disney should tailor content and marketing strategies to resonate with local cultures and preferences.
- Develop strategic partnerships in international markets: Disney should partner with local distributors, content creators, and technology companies to accelerate its global expansion.
5. Pricing Strategy:
- Offer a competitive price point: Disney should offer a price point that is attractive to consumers but also supports its long-term financial goals.
- Consider tiered pricing options: Disney could introduce tiered pricing options, offering different levels of content and features at varying price points.
- Bundle Disney+ with other services: Disney could bundle Disney+ with other services, such as ESPN+ and Hulu, to create a more attractive package for consumers.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: The recommendations align with Disney's core competencies in content creation, brand management, and global reach, while also supporting its mission to create high-quality entertainment experiences for audiences worldwide.
- External customers and internal clients: The recommendations address the needs of external customers, such as diverse content, personalized experiences, and seamless access, while also considering the needs of internal clients, such as content creators, marketing teams, and technology developers.
- Competitors: The recommendations are designed to differentiate Disney+ from its competitors by leveraging its unique strengths and adapting to the evolving market landscape.
- Attractiveness ' quantitative measures: While specific financial metrics are not provided in the case study, the recommendations aim to increase subscriber growth, revenue, and market share, ultimately driving long-term profitability.
All assumptions, such as the continued growth of the streaming market and the evolving consumer preferences, are explicitly stated and considered in the recommendations.
6. Conclusion
Disney has the potential to become a major player in the streaming wars by leveraging its strengths and adapting to the changing landscape. By investing in original content, embracing innovation, and expanding its global reach, Disney can create a compelling value proposition for consumers and challenge Netflix's dominance.
7. Discussion
Alternative strategies not selected include:
- Focusing solely on existing content: This would be a short-term strategy that could limit long-term growth potential.
- Adopting a low-cost pricing strategy: This could limit revenue potential and hinder investment in content and technology.
- Ignoring international markets: This would limit Disney's growth potential and market reach.
The key risks associated with the recommendations include:
- Failure to attract and retain subscribers: If Disney fails to deliver compelling content and a seamless user experience, it may struggle to attract and retain subscribers.
- Increased competition: The streaming market is constantly evolving, and new competitors may emerge, posing a threat to Disney's market share.
- Technological disruption: New technologies and platforms may emerge, disrupting the existing streaming landscape.
The key assumptions underlying the recommendations include:
- Continued growth of the streaming market: The global streaming market is expected to continue growing in the coming years.
- Evolving consumer preferences: Consumers are increasingly demanding diverse content, personalized experiences, and seamless access across multiple devices.
- Disney's ability to innovate and adapt: Disney has a history of innovation and adaptation, and it is assumed that it will continue to do so in the streaming market.
8. Next Steps
To implement the recommendations, Disney should take the following steps:
- Develop a detailed strategic plan: This plan should outline specific goals, timelines, and resource allocation for each recommendation.
- Establish a dedicated team: This team should be responsible for executing the strategic plan and monitoring progress.
- Invest in technology and infrastructure: Disney should invest in the necessary technology and infrastructure to support its streaming platform and content production.
- Monitor market trends and competitor activities: Disney should continuously monitor market trends and competitor activities to ensure its strategy remains relevant and competitive.
- Evaluate performance and adjust strategies: Disney should regularly evaluate the performance of its streaming service and make adjustments to its strategy as needed.
By taking these steps, Disney can position itself for success in the increasingly competitive streaming market.
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Case Description
Bob Iger, chief executive officer of entertainment conglomerate Disney, thrilled investors with details about Disney's upcoming foray into video streaming in April 2019. Disney's move was only the latest in a series of actions taken by new and established entertainment companies in a fight for dominance in the video-streaming-subscription space. Netflix, led by chief executive officer Reed Hastings, had established an early foothold in that market after entering in early 2007, amassing 140 million subscribers worldwide by early 2019 and spending $10 billion on content annually. Now, Disney was joining the fray with its signature service, Disney+, after first collaborating with other broadcasters in establishing Hulu, later buying up a majority stake in that service, and launching sports-content subscription service ESPN+. The battle for what many industry observers regarded as the future of the television business was truly on. Had Iger and his team of executives found the right formula to unseat Netflix as the leader in video streaming? Was there room for both players in the marketplace? Or would Hastings and his team at Netflix need to respond in some way to the looming threat posed by Disney?
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