Corporate Strategy Case Study

Disney in the Digital Age: Profiting from New Media Platforms

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Abstract:
Disney-ABC, a part of the Media Networks of Walt Disney Company had established itself well in the traditional broadcast TV. But the broadcast media was going through a frenetic phase with the emergence of new media platforms, such as Digital Video Recorders (DVRs or PVRs), Video On Demand (VOD), and portable viewing technologies like Video iPod, Mobile TVs and the Internet. The potential of earning incremental revenues from subscriptions, licence fee and advertising had attracted major media companies to adopt these technologies. Disney-ABC, in October 2005 entered into an agreement with Apple Computer to offer its content through Apple's iTunes Music store. But it encountered opposition from its affiliate stations who feared the threat of cannibalisation. Added to this, research showed that customers preferred the traditional broadcast model to video iPod. Analysts say that the new media platforms are only additive to the traditional TV viewing. It remains to be seen whether Disney-ABC would manage to add more viewers to its base with the use of the emerging media platforms.

Pedagogical Objectives:

• To understand the changed dynamics of the television and broadcasting industry and its resultant effect on the media companies
• To learn about new media platforms such as DVR, VOD, iPod, Mobile TVs and the Internet, and their advantages and disadvantages
• To analyse whether Disney's adoption of the new media technologies would be profitable
• To understand the limits of competition and unearth various issues Disney-ABC has to resolve while adopting new media

Keywords : Disney-ABC; Traditional broadcast Television (TV); Video on Demand (VOD); Video iPod; Internet and mobile TV; New media platforms; New business venture; Business life cycle extension; Revenue model; Growth Strategies Case Study; Business model; iTunes Music Store; Video piracy; Cannibalisation