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Ashlee Haupt
English 1201
Professor Hellmers
15 April 2022
Disney's Business Diversification Strategy – A Key to Success
“The happiest place on earth,” is a saying almost everyone, young and old, is familiar
with and most know the company it refers to. For those that do not, this famous saying refers to
Walt Disney World and is often associated with the Walt Disney Company, one of the top
industry leaders in the world today. Of course, everyone knows Disney for their movie
productions, mostly targeting the youth audience. However, throughout the years Disney has
significantly expanded their business in order to reach everyone in some way and help them to
keep their business at the top. Disney’s different businesses have allowed them to reach people
of all ages, both domestic and international, and of all economic classes. The Disney Company’s
business diversification model has solidified them as one of the most well-known, financially
stable companies operating in today’s international business environment.
As many know, Walt Disney himself was a dreamer who had many plans for his business
from the very beginning. Walt started out in business with his brother Roy, and they produced
the “Disney Brothers Studio” where they showed off their work in 1923. Then later, in 1926, he
established a partnership with M.J. Wrinkler who at the time was one of very few women in
movie productions. Jordan Sturgill, a student at East Tennessee State University, wrote “In 1928,
the Disney Brothers Studio released Steamboat Willie, one of the first animated cartoons to
feature synchronized sound” (Sturgill). In the production of Steamboat Willie, the characters
Mickey and Minnie Mouse were first introduced as the icons of the production. From this first
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production, Mickey and Minnie Mouse became the face of Disney and still are today. The studio
went on to produce “Snow White and The Seven Dwarfs” in 1937, at the Circle Theater in Los
Angeles. The Norman Rockwell Museum, which was founded by Norman Rockwell in 1969,
stated, “Many outside of Disney's studio thought the movie would flop, but he was confident in
his vision, and meticulously guided every aspect of production” (Norman Rockwell Museum).
Walt was always proud of his work and never thought less of it. The production of Snow White
turned out to be huge for the Disney Brothers Studio because it was widely appreciated then and
it still is today. After this production, Walt kept producing movie after movie. He produced
Pinocchio, Fantasia, Dumbo all within one year, just four years after his production of Snow
White. Although movies were doing well for Walt he knew he needed to do more in order to
keep expanding. So he began to diversify his business, coming up with new ways to use his
creative ideas to reach everyone.
Teacup ride at Disneyland, Loomis Dean/The LIFE Picture Collection/Getty Images
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As Walt started thinking about what to do next, he came across the idea of amusement
parks while visiting some with his two daughters. He realized early on that bringing characters to
life outside the big screen and giving families a place to escape and build memories together
would be foundational to the company’s mantra and success. Walt opened the first amusement
park in 1955, in Anaheim California called Disneyland. Disneyland cost approximately 17
million dollars to build. Children loved the park, as evidenced in the photo above showing the
teacup ride on the first day of the park’s opening. The History website provides reliable
information about many historical events/entities, stated (today) “Disneyland hosts more than 18
million visitors a year, who spend close to $3 billion” (History). From the minute Disneyland
first opened, they had staggering profits, making more and more every day. Disneyland appealed
to, not only families, but everyone looking for a good time, both young and old. In the beginning,
Disneyland was just another typical amusement park, but Walt knew it could be so much more,
so he came up with a new concept, theme parks. The expanded theme park concept would aim to
connect with visitors on another level and expand Disney’s reach to other parts of the United
States. Greg Allen, an author for NPR, wrote about Walt’s new ideas with the expansion to
Florida. He said, “Walt soon realized that only 2% of visitors came from east of the Mississippi
River” (Allen). Walt knew that in order for this theme park concept to be successful he needed
to be able to reach more Americans in other part so the United States. Since Disneyland wa son
the west coast, they went searching for land and opportunity on the east coast and eventually
setting in central Florida where the weather as nice all year around, the threat of hurricane
damage was low, and most west coast residents could travel there within a day’s drive.
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Magic Kingdom on opening day, October 1, 1971
As shown in the image above, it was a grand celebration in 1971 when Walt Disney
World, in Florida, opened its doors for the first time. The park was called Magic Kingdom,
which excited many just imagining the possibilities the name promised. Unfortunately, Walt died
a year after announcing the build of the theme park so he never say opening day. After his death,
it was left up to Roy, Walt’s brother, to fulfill his dream and many say Roy exceeded it. Disney
World is known as the largest theme park in the world, covering over 4o square miles in central
Florida (Allen). Over the past few decades Disney World in Orlando, expanded greatly to fulfill
Walt’s vision. Disney World now offers four different parks each with a different theme (Magic
Kingdon, Epcot, Hollywood Studies, and Animal Kingdom), waterparks, golf courses, shopping,
and 27 different resorts (Allen). This expansion to a complete vacation destination saw company
profits skyrocket. Today, Disney has not just expanded across the United States, but also
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globally. Samantha Martin and Sharon Liu, students at the University of Connecticut, outlined
Disney’s global efforts as, “Disneyland Paris, Hong Kong Disneyland Resort, Shanghai Disney
Resort, and Tokyo Disney Resort” (Martin and Liu). This business diversification into theme
parks, both domestic and globally, has certainly been a good strategy for the Disney company as
it helped reach more people around the globe and increase profits beyond movie productions.
The theme parks were successful in their own right, but Disney knew the destinations
could be so much more for travelers. The company soon began to open resort hotels, restaurants,
and specialty merchandise stores to serve all traveler needs. This expansion into the hospitality
business not only provided travelers a one stop shop for all their vacation needs and planning,
but it also helped to diversify the Disney Company’s business ventures even further. Today,
there are approximately 27 Disney resort hotels, over 100 restaurants, and numerous stores
selling exclusive Disney merchandise. In recent years, Disney opened Disney Springs in
Orlando, Florida and a similar shopping/eating destination just outside of Disneyland in
California. The Springs areas have numerous shops and restaurants to help visitors pick up
souvenirs and enjoy a nice dinner outside of the hustle and bustle of the theme parks. For
merchandising, not only does Disney have their own stores and products, they have also
partnered with many popular companies/name brands in recent years such as Kate Spade, Alex
and Ani, Pandora, Vera Bradley, and others. These partnerships further provide customers with
the products they desire while still furthering the Disney Companies partnerships and business
diversification.
In addition to theme parks, resorts, and merchandising Disney also expanded to start their
own cruise line. A family trip to the theme parks was great, but Disney knew they must expand if
they wanted to be part of family vacations as children got older and tired of the theme parts.
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Today, there are four different cruise ships offered, each with different restaurants, deck plans,
entertainment, activities, and pools. The Disney cruise line company stated, the four different
ships are called, “Disney Magic, Disney Wonder, Disney Dream, and Disney Fantasy” (Disney
Cruise Line). In addition to the many different cruise ships they also go to different places. The
Disney Cruises go to Alaska, Bahamas, Western Caribbean, Eastern Caribbean, Southern
Caribbean, Northern Europe, Norwegian Fjords, Mediterranean, British Isles, Bermuda, Canada,
Mexican Riviera, Baja, Panama Canal, Pacific Coast, Transatlantic, and Hawaii (Disney Cruise
Line). There are many people, young and old/with children and without, who love the
opportunity to travel, especially on cruises which visit numerous locations and have all amenities
paid. In true Disney fashion, they have ensured each cruise has something for everyone so
wonderful memories are made by all. Aside from recent COVID-19 setbacks, Disney Cruise
Line has been a profitable venture and a way for Disney to once again, successfully, diversify the
company.
Realizing not everyone likes to travel, and in order to strengthen their movie productions
while eliminating competitors, The Disney Company realized they must branch out further and
acquire different media networks. Today, Disney owns three main media networks ESPN, ABC,
and The Disney Channel (Martin and Liu). They also own ESPN+ and Disney+ productions. In
2018, 43% of their revenue came from these media networks (Martin and Liu). In addition,
Disney partially owns the ESPN network in business with Hearst Communications. ESPN and
ESPN+ have been very successful for Disney and allowed them to profit from a different sector
of the population; sports lovers. ESPN is the most watched sports channel in the United States
and ESPN+ allows full access, via subscription, to almost any sporting event one could imagine.
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In addition, The American Broadcasting Company, also called ABC, is one of the
primary media networks on television is owned by Disney. ABC is a cable channel that offers a
bit of everything such as sports, tv shows of all genres, and some movies. They also have their
own news channel, covering all the news in the world today. Many people watch ABC for their
entertainment, news, and good TV shows, which allows Disney to touch just about every
American in some way. The ABC network targets many different audiences, include those of all
ages, races, sexes, and social statuses, via the variety of programming and is on just about every
television in America.
ESPN, ESPN+, and ABC may make Disney millions, the content does venture out of
what many would see as the typical Disney comfort zone, but Disney also has their own cable
channel and more recently their subscription video company. Show and movie production have
always been at the heart of the Disney Company, as that is how they started their business. In
1983, The Disney Channel became a staple in many people's homes. For many middle-aged
Americans and younger, The Disney Channel was a fond memory as the channel played different
shows every thirty minutes. Today The Disney Channel is not as popular as it once was because
of Disney+. Disney+ is a video subscription platform that has many different movies, shows,
documentaries. In order for Disney to maintain that family-friendly reputation there is no rated R
content (Sturgill). Disney+ includes on-demand Disney content past and present which covers
everything including Star Wars, Marvel, original Mickey and Minnie, and much more. Netflix is
one of Disney's biggest competitors when it comes to the video subscription services, but
Disney+ has a lower rate per month making it cheaper than Netflix (Sturgill). The timing for the
launch of Disney+ was impeccable, as it launched just prior to the COVID-19 pandemic, in
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2019. When many were stuck in their homes, they turned to television to pass the time and
Disney+ subscriptions and interest sky rocketed.
Ownership of television media networks and subscription services provide vital to
Disney’s diversification strategy as evidenced by the recent COVID-19 pandemic. While theme
parks, resorts, and cruise lines were shut down or struggling with pandemic precautions, the
media network aspect of the business was flourishing. From an overall corporate perspective,
the success of the media networks, especially subscription services such as Disney+ and ESPN+,
during the pandemic helped to make up for losses the company was taking in other areas so
overall the Company was not in peril.
In addition to the media networks run and owned by The Disney Company, they also
provide studio entertainment. This includes Walt Disney Pictures, Marvel, Pixar, Lucasfilm, and
Touchstone Banners (Martin and Liu). Studio entertainment productions are animated motion
productions that tell a story. Walt Disney Pictures is seen as the production studio that started it
all and today produces the traditional Disney movies we have all grown to know and love. Walt
Disney Pictures films are known for their stories and often, these stories teach everyone
watching a lesson of some sort. From princesses, to villains, and happy endings, these fairy tales
are often instant classics such as Cinderella, Beauty and the Beast, The Lion King, and many
more.
Marvel and Pixar studios are also major players in movie production as Marvel has
produced almost fifty-eight movies. Marvel is a fan favorite with superheroes who always find a
way to stop the villains. There is a superhero for just about everyone, so Marvel movies appeal to
vast audiences. Some major Marvel productions include Spiderman, Black Widow, Iron Man,
and many more. Pixar also produces films loved by many, such as Toy Story, Cars, and Finding
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Nemo. Marvel and Pixar both have been huge in helping Disney increase their revenue and stay
one of the top industry leaders in the world today.
Disney also acquired and now owns Lucasfilm which produced the Star Wars movies.
The Star Wars movies have been one of the top watched movies in the world. There have been
nine Star Wars movies produced, the latest being Episode IX The Rise of Skywalker. The Star
Wars movies have brought in billions of dollars due to the overwhelming popularity of the
movies and die-hard dedication of their fans. Studio entertainment has been a good way for
Disney to bring in more revenue for their business as the “Revenue is generated from the
distribution of films, stage play ticket sales, music distribution and licensing of Company
intellectual property for use in live entertainment production” (Martin and Liu). In addition to
revenue, the variety of studios has allowed Disney to reach different audiences, with something
that appeals to almost everyone.
While Disney has diversified and has many different business areas, at a macro level, all
of their different business areas are part of the larger entertainment industry in some way, so
some could argue their plan is flawed. While Disney’s in-person entertainment business lines,
such as theme parks, resorts, and cruise lines, are still struggling to get back to pre-pandemic
levels, other entertainment business lines such as streaming are also starting to struggle. Brooks
Barnes, a writer for the New York Times wrote about Disney’s struggles with their businesses.
In November 2021, “Disney said its flagship streaming service had added 2.1 million
subscriptions in the recent quarter, sharply fewer than analysts polled by FactSet had forecast”
(Barnes). The entertainment industry is also one of the first to be impacted by a struggling
economy. As people struggle economically, they cut out “nice to have” items from their budget
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which is often entertainment related expenditures. The combined struggles of the entertainment
industry in today’s environment could be seen as challenging for Disney’s business model.
However, no matter how challenging the economy or entertainment industry, no one can
argue The Disney Company always seems to be on top and leading the way on many fronts.
Over the years Disney has been able to diversify their business at many levels. From movies, to
theme parks, resorts, cruise lines, television networks, streaming services, and production studios
there isn’t much Disney hasn’t dabbled in and almost no one, in the world, they haven’t touched
in some way. The Disney Company’s business area diversification model has solidified them as
one of the most well-known, financially stable companies operating in today’s international
business environment. They are one of the top industry leaders today making billions. The Walt
Disney Company has diversified their business strategies over the years, making them a top
business today, making them one of the “happiest company’s on earth”.
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Works Cited
Allen, Greg. 50 years ago, Disney World opened its doors and welcomed guests to its Magic
Kingdom. NPR, 1 October 2021, https://www.npr.org/2021/10/01/1041469785/disney-world-
magic-kingdom-50-years#:~:text=1%2C%202021.,-John%20Raoux%2FAP&text=Disney
%20World%2C%20the%20largest%20theme,1%2C%201971. Accessed 17 April 2022.
Barnes, Brooks. Disney+ subscriber growth slowed notably in latest quarter, putting pressure on
the company. The New York Times, 10 November 2021,
https://www.nytimes.com/2021/11/10/business/disney-plus-growth-slows.html. Accessed 17
April 2022.
History.com. Disneyland Opens . HISTORY, 15 July 2020, https://www.history.com/this-day-in-
history/disneyland-opens. Accessed 17 April 2022.
Kleinhenz, Marc N.Tron Coaster Coming To Disney World? Orlando Informer, 16 July 2017,
Tron coaster coming to Disney World? (orlandoinformer.com).
Martin, Samantha and Sharon Liu. The Walt Disney Company. The University of Connecticut
Student Managed Fund, 2019,
https://smf.business.uconn.edu/wp-content/uploads/sites/818/2019/05/Disney-DIS-Long-
Report.pdf. Accessed 17 April 2022.
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Plunkett, Stephanie. Snow White And The Seven Dwarfs The Creation Of A Classic. Norman
Rockwell Museum. http://www.nrm.org/snowwhite/exhibition.html#:~:text=Snow%20White
%20and%20the%20Seven%20Dwarfes%3A%20The%20location%20of%20a
%20Classic&text=On%20December%2021%2C%201937%2C%20 visionary,Theater%20in
%20Los%20Angeles%2C%20 California. Accessed 17 April 2022.
Sturgill Jordan. Beyond the Castle: An analysis of the Strategic Implications of Disney+. East
Tennessee State University, 2019, https://dc.etsu.edu/cgi/viewcontent.cgi?
article=1554&context=honors. Accessed 17 April 2022.
