Disney’s growth strategy has focused on expansion to provide an all-encompassing entertainment company. This reduces risks and also allows exploitation of brands across multiple channels to maximize gains. Disney’s strategy relies heavily on branded creative content that the company can monetize. The main risk from this acquisition is the danger of brand fatigue.
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Disney has paid over $4bn for Lucasfilm. Other notable purchases by the company include Pixar Animation for $7.4bn in 2006 and Marvel Entertainment for $4bn in 2009.
Disney's revenues in 2012 were $42.3bn. The largest segment was Media Networks, which was responsible for 46% of revenues.
Your key questions answered
- What is Disney's plan for long-term growth?
- How does the acquisition of Lucasfilm affect the company?
DISNEY’S GROWTH RELIES ON DIVERSIFICATION
- Operating in several segments reduces risk
-- Brands can be sold across multiple channels
- Disney’s content targets many demographics
-- Success of the Disney Princess brand
-- Disney also has a hold on the female preteen market
-- Disney had struggled with the older male markets until recently
- Disney is also diversifying geographically
-- Control of UTV reinforces Disney’s position in India
-- Chinese expansion
WHY DISNEY PURCHASED LUCASFILM
- The state of the industry
-- Slowdown makes franchises crucial
-- Declining home entertainment market
- Disney’s in-house franchises have achieved varied success
-- Resounding failures on expensive projects
-- Cost cutting
- Disney is tapping into cult franchises
-- Disney and video games
- Strength of the Star Wars franchise
-- The success of the film franchise
-- Achievements within Star Wars merchandising
-- Disney and Star Wars historic co-operation
- The use of other Lucasfilm assets
-- Technology assets
RISKS OF THE ACQUISITION
- Brand fatigue
-- The Clone Wars
-- Digital reinventions have further saturated the market
- How Disney will try to avoid this
-- The Marvel/Pixar approach
- Efforts to maintain the brand
-- Changes in personnel
- Disney’s acquisitions will secure its growth for years to come
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