The House the Mouse Built

Last month I talked about the reasons behind Disney's buying spree, from a marketing perspective: With a diverse range of properties, there's less likely parents and kids will suffer Disney fatigue. Here is why it makes sense from a financial perspective, but from the marketing view as well. It all comes down to that old chestnut: Content is king:


The acquisitions of Marvel and Lucasfilm will also bolster the company's theme parks as well. Iron Man, Hulk, Indiana Jones, and Darth Vader provide a draw for a wide range of age groups that will visit the parks and cruise lines each year. And it's big business.

Parks and resorts are Disney's second-largest business, generating 30.6% of the company's revenue in the past fiscal year. The studio entertainment segment generated just 13.8% of revenue and just 7.3% of operating income. If we assume that studio entertainment's $722 million of operating income continues, it would take 21.3 years to pay for the three acquisitions highlighted above, so Disney clearly thinks there's money to be made elsewhere and parks and resorts are a likely key.

Then of course there's that other old warhorse of capitalism, the middleman. With so many varied properties in its portfolio, there's less need for it to partner in the long run with third parties to distribute that valued content:


I think that Disney is beginning to position itself as a multidimensional provider of content that will have a lot of bargaining power in the future. The company recently shut down Disney Movies Online, a movie streaming service that never quite had the features consumers demanded. But the service was largely outsourced, and sources say that Disney is developing Disney Movies Anywhere, a service that will have more access across multiple devices.

So, let's assume that Disney creates a way to download or stream Disney content on your tablet or smartphone. There now becomes less need for Netflix, Disney could bypass iTunes, and even cable companies could lose a lot of bargaining power. WatchESPN is already available with your cable subscription; what if Disney offered that on its own?

The bottom line is that Disney has a lot of flexibility as our digital media future unfolds and the addition of popular content gives the company that much more bargaining power.

All I know is that this company will likely be liberating my dollars from my wallet for years to come.

May the Mouse Be With You

A few weeks ago I flagged this story about Disney's struggling Internet division. I think it is still relevant in light of the Mouse's recent purchase of Lucasfilm.

I can't speak for every parent of Disney-crazed kids, but I know that mine consume so much Disney content and products that at some point I think they have their fill. Plus, my wife and I dearly want to limit the amount of time they spend staring at screens. So we're just not going to allow them to spend any time at Disney.com. I wouldn't be surprised if other parents didn't feel the same way, even if they are huge fans of Disney, like we are.

Which no doubt is part of the incentive for Disney to expand its reach with acquisitions like the Muppets, Marvel Comics, and Star Wars. It allows consumers to avoid Disney fatigue while still dumping dollars by the truckload in the company's coffers. Then of course there's the challenge of a company associated with children's entertainment trying to hold on to those kids as they grow older. Your kids might have outgrown Mickey Mouse and Jake and the Neverland Pirates, but not Spider-Man and Luke Skywalker.

It's diversification at its finest. How Disney capitalizes on its properties to turn around its Internet division is up to them to figure out, but something tells me that eventually they will.

The Spin Cycle

A round-up of recent happenings in the world of PR, marketing, and other things I find interesting.

Penn State hires big-name PR firms: In the wake of the Sandusky scandal, Penn State writes a few big checks to fulfill its pledge to be more transparent. Penn State needs to change its culture. Will these firms help with that?

Netflix Stock Takes a Dive: A few weeks ago, after I heralded Netflix's recovery, a Facebook friend noted that its stock was still in the tank. So sue me. Bottom line, though, is that the lessons learned from the whole episode are still relevant.

The Disney Institute: Disney is building up quite a little side business helping companies become, well, become more like Disney. The New York Times, in reporting on The Disney Institute's growth, seems almost apologetic:

Disney, which employs 64,000 people in Orlando alone, has its own employee difficulties, of course. Union spats arise, and some cast members — Disney-speak for employees — chafe at the company’s strict rules, although it recently lifted a facial-hair ban and now allows women to forgo pantyhose. Disney’s sugary customer service can also startle visitors who aren’t used to such uniform cheerfulness. 

But vast numbers of consumers love it, and the company is routinely showcased in business books, like “The Disney Way: Harnessing the Management Secrets of Disney in Your Company,” for its hospitality and efficiency. For instance, the company has spent so much time studying its park customers — more than 120 million of them globally last year — that it places trash cans every 27 paces, the average distance a visitor carries a candy wrapper before discarding it.       

New York City journalists, perhaps you'd like to visit America sometime. It's a lovely place.