Tuesday, 18 June 2024

In Business

Disney is Falling: The Company's Challenges from 2021 to 2023

The period from October 2021 to October 2023 marks a tumultuous phase for The Walt Disney Company, characterized by numerous setbacks across its diverse business sectors. This essay delves into the myriad challenges faced by the company, shedding light on the dynamic and ever-evolving media and entertainment landscape.

Business Setbacks

Disney's cable channels, including ESPN and the Disney Channel, have seen a dramatic reduction in viewership. ESPN alone lost 5.6 million subscribers in fiscal 2022, a significant 16% decrease from the previous year. The Disney Channel experienced a 12% drop, losing 3.6 million subscribers.

Major film releases "Lightyear" and "Strange World" failed to meet box office expectations. Despite a hefty $300 million production budget, "Lightyear" garnered only $226 million worldwide. "Strange World" performed even more dismally, earning a mere $74 million against its $180 million budget.

Disney's theme parks in Asia, particularly Shanghai Disneyland and Hong Kong Disneyland, have not recovered to pre-pandemic attendance levels, reporting decreases of 37% and 52% in early 2023, respectively.

The cruise line encountered increased operational costs, notably a 78% rise in fuel expenses in the second quarter of 2023, leading to the cancellation of several itineraries.

ESPN's Viewership and Revenue Decline

A key Disney asset, ESPN, witnessed a considerable loss in viewership during the 2023 NBA Finals and a 5% decrease in revenue in fiscal 2022.

Disney's flagship streaming service added a mere 1.5 million subscribers in the second quarter of 2023, indicating a significant slowdown in its growth.

Market Pressures

Disney+ faces stiff competition from rivals like Netflix and Amazon Prime Video, which boast 221.64 million and over 200 million subscribers, respectively.

The trend of cord-cutting continues to impact Disney's cable operations, with over 6 million Americans abandoning cable TV in 2022.

A shift towards on-demand content, preferred by 62% of consumers, poses a challenge to Disney's traditional cable offerings.

A global economic slowdown could further affect Disney's revenues, with reduced consumer spending predicted.

Product Line Challenges

Reflecting a strategic pivot to online retailing, over 200 Disney stores have closed since 2020, with more expected to follow.

The integration of Fox's assets has been fraught with difficulties, leading to layoffs and internal restructuring.

New systems implemented in Disney parks have been met with substantial customer dissatisfaction, indicating a disconnect between the company's strategies and consumer expectations.

Between October 2021 and October 2023, Disney encountered a multitude of challenges across its vast spectrum of businesses. The struggles it faced are emblematic of the broader shifts occurring within the media and entertainment industries, reflecting changing consumer behaviors, market pressures, and operational hurdles. 

As Disney looks to the future, the company's adaptability, innovation, and strategic decision-making will be critical in overcoming these obstacles and setting a course for renewed growth and success.

Source: Source: Forbes, Reuters, MarketWatch

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