This article is written by Preeti Pallavi Jena, from the school of law, KIIT University, Odisha. This article talks about the role of Disney, its growth, financial status and how Intellectual Property helps in its growth.
Table of Contents
Introduction
Two people, Animator Walt Disney and Roy Disney executed a company which bought a new look for the American animation. Walt Disney was named as a cultural icon. There was a huge immediate growth in the field of animation which the United States observed. Though it seemed to be immediate but with a lot of hardwork and overcoming the ups and downs, the Disney company has achieved today, the best animation.
Disney created many movies, short films, scripts, TV shows and got copyrights against them for its maintenance. Today animation has made a great and significant role in the media all over the world. It has outshined everything else, which was totally unexpected. This actually happened because they made a method which violated their IP. By observing the economic progress in the past few years, it can be said that Disney will achieve greater heights on its way. Disney and childhood are quite synonymous. Children enjoy watching these characters and appreciate the stories and fairy tales. Day by day the relevance of Disney has increased. Today Disney has grown so much that it is a multimillion-dollar entertainment media all over the world.
Steps Disney took for its growth
It has never been constant to only one department or one part. It has always invested in the media hugely. The merger of Twenty First Century Fox.Inc is the major acquisition made by Disney in the year 2019 which included cable networks, films etc. This single investment can have 3 separate acquisitions. Disney+ hosts many content like the Marvel, Star Wars Franchise etc. The Disney company also gains income from the resorts, Disney park themes and also from the merchandising. These all infrastructures produce around 40% revenue in total. Disney generated revenue of 66% from IP intensive areas and also USD 70 Billion in the year 2019.
Role of IPR in Disney’s growth
Disney has grown over the years by creating the most unique fictional characters. These fictional characters have been the all-time favourite of many people starting from Mickey Mouse to Cinderella. Disney has covered many IP resources used for academy awards telecasts since it has been trademarked and also copyrighted by Disney like the Portrayal of Snow White was used and Disney rejected the Academy of Arts and Sciences in 1989.
The company uses these IP resources on the basis of 3 majors. The media technology, studio entertainment and direct to customers (D2C) and also international mediums. Among these, the most profit-making is the media technology or the media network. Direct to customers make the revenue for collections of fees for disturbing the company’s name. The growth of Disney lies in the IP portfolio and that’s why they are highly maintained.
Copyright intensive industries
Disney will have its growth if it keeps on looking to the new technologies, developments and new resources. By this more customers will be attracted. But the Disney company has gone through a lot of ups and downs and finally now is able to make profitable collaborations with IP intensive industries like marketing,park themes etc.
Disney’s strategy is working
Disney has an intensive collection of IP, it has better content capabilities, new and unique brand due to which it has a competitive approach and has achieved advantage over content companies. One best and trending example is Netflix, which is in huge demand among today’s generation.
Franchise IP
Quality matters more than that of quantity. If you have more options of watching we generally get confused about what to choose and at last we tend to use some movies or series we are familiar with. For example, on Netflix, people prefer watching shows like Friends, and The Office more often. They are ranked as the most-watched ones. But a huge number of people love watching Disney because they like the content, concept of it and the characters of these are very unique and familiar.
Other companies failed to achieve the franchise IP. From 2017-2019, Disney has produced countless movies whose combined worth is estimated to be more than a billion dollars. After this Disney launched Disney+. By this Disney becomes more popular with new subscribers because of lower acquisition costs also. But Netflix is becoming expensive as it produces more than 700 projects in a year. Even if Disney has 45 movies and few TV shows, it will be useful and valuable. As the quality of the shows and movies matter, not the quantity.
Unique brand value
Disney is more famous because of its quality content. It has a very unique content and characters which no other company has. Disney creates new stories and people believe that the content will be of great quality because of its brand popularity and they watch those without having any sort of confusion. Disney has always been treated as a company which provides quality entertainment to its viewers. These Disney content like Star Wars not only gain points in the box office but also gain attention by selling toys of the same characters and attracting children and people to the Disney themed parks. It has the advantage of multiple monetization channels.
Long term view on profits
It’s been observed that Disney will gain a lot of profits by creating extraordinary content. This wide variety of content will provide Disney with countless opportunities to make money.
The basic way of Disney’s performing model is the ability to make unique IP and control it across a variety of platforms. Today which is the Disney Animation Studio, once it was an Animation Power House. Pixar had very different and special technology and creativity work which made it control over the new world of 3D animation. This also has huge development and is loved by everyone.
For short term purposes, these can gain a lot of achievements but it should also gain advantages in the long term process. With the reputation earned through years, even today Disney holds its high-rank position by keeping at pace with modern-day technology and ideas. It has been growing rapidly and will be more successful and receive more revenue for its unique concept of creating and developing characters.
Fierce guardian of its IP
Walt Disney production is being an intense protector of its IP by creating its own characters, scripts, animation styles. Disney is one of the largest lobbyists for copyright law in the United States. Mickey Mouse was protected from being in public domain till 1984.
Copyright gives a legal right of protection to the creators of a product by which they only get the right to use and distribute the work for a certain amount of time before it comes to the public domain. By this Disney has made characters which are recognised globally and have achieved millions of dollars for it. These appear in toys, clothes etc. These rights are protected so that good quality of entertainment will be measured and people will love such characters more.
Expansion of IP portfolio through acquisitions
Disney has extended the IP portfolio among collaborations and acquisitions of other IP intensive companies. In the year 1991, there was a deal between 2 parties, the Pixar Animation Studios and the Walt Disney Studios to produce 3 animated features which gave films like the Toy Story, Toy Story 2, Monsters, Bug’s Life, Finding Memo, The Incredibles. After this in 2006, Disney achieved the Animated film producer premier. Then in 2009, Disney achieved Marvel Entertainment which owns IP existing against the characters of superheroes like Spider-man, Iron man, Batman etc. In 2012, it purchased the Lucasfilm, and got the rights associated with the blockbuster Star Wars franchises. With all this growth in the 21st Century Fox, Disney has been the largest media all over the world. It has also acquired Marvel Entertainment which consists of Deadpool, X-men etc. These all acquisitions helped Disney for launching disney+.
Disney has a film library with popular franchises because of the huge acquisitions. Disney companies have IP relating to characters which now comes under Disney only. Disney depends on a deal of licensing opportunities that come out from the IP. The market share and market power result in the IP which makes huge profit and controls it.
Disney business sectors
Disney work through 4 business segments:
Media networks
Disney media operates many properties consisting of Freeform, FX, ABC broadcast television network, National Geographic etc. The media network has revenue of 28.4 billion in 2020.
Parks, experiences and products
Disney covers many parks themes, resorts in Paris, Hong Kong, California. It also includes the vacation club. They gain revenue from food, beverages, resort, vacation stays and royalties from licensing IP. These parks have around 23% of total revenue in the financial year 2020.
Studio entertainment
It is involved in picture, image production and its distribution through Walt Disney, Marvel, Lucasfilm, Pixar and many more. It also gives live music, entertainment. The revenue which comes from these are used for the live production of entertainment, also in the stage play tickets. This revenue income was decreased in 2020 as compared to 2019, upto 13.4%.
Direct to consumer and international
Disney’s D2C (direct to consumer) and international parts consists of branded networks and channels like Fox, Star, National Geographic, Disney+, Disney+Hotstar. Its revenue includes the subscription fees, advertisement. It was 17.0 billion in 2020 which comprise about 24% in total. It grew 80.8% more as compared to the 2019 record.
Financial status
From the annual report on November 25, 2020, Disney said that due to this corona pandemic, they will lose 32,000 employees by the end of 2021. These employees were working in the parks, products sections. Disney also said that Disney+ has reached 73.7 million paid subscribers. Due to the Covid 19, situations are worse than expected and it had an impact on Disney’s financial status. The company had a net loss of 2.5 billion in this year till October 3, 2020. Revenue fell around 6.1%. The effect was felt in the parks, and products more this time. All the parks, resorts, entertainment places were closed. All the tours, the ship sailing being shut down for so long led to a huge loss. Disney’s advertising impacted negatively because it cancelled all the stage performances, and theatrical releases as well.
Features for the growth of Disney’s in future
There are 3 features for the growth of Disney’s in future:
- Coming up with new inventions to attract the people coming to the Disney theme parks.
- Revenues for its record.
- Increasing the subscription fees and viewers, streaming services.
Frozen was a mega-hit for Disney in the year of 2013. There were also other songs and movies which attracted everyone and got highly successful. Disney needs to keep the record and see who is violating the Intellectual Property Rights and the people violating will have to compensate for it.
Conclusion
The success of Disney lies with the IP which has not only created but also invested a lot in the last century. The creators of the company worked hard on building the copyrights so that they could keep their assets and innovations away from the public and make profit. Disney is experienced and has an idea of creating content that children can relate to. Children love the Disney characters and get attracted towards buying sweatshirts, ice cream, toys for instance Barbie sets relating to such characters. Disney keeps record of the brands and keeps on improving those for gaining more revenue and for making the fictional characters more attractive. Disney has been more trending and always developing their resources. It started long ago and faced numerous challenges from competitors but due to all the efforts made by the Disney team, it has conquered all the challenges and reached a peak.
References
- https://www.wipo.int/wipo_magazine/en/2018/04/article_0003.html
- https://www.matthewball.vc/all/marginalaffinity
- https://www.legalteamusa.net/disney-and-intellectual-property-rights/
- https://www.legalteamusa.net/disney-and-intellectual-property-rights/
- https://www.forbes.com/sites/greatspeculations/2019/12/11/disneys-strategy-is-working/?sh=3f7d4c2c56b0
- https://www.ipwatchdog.com/2015/05/22/disney-leverages-ip/id=57608/
- https://www.investopedia.com/how-disney-makes-money-4799164
- https://www.mondaq.com/india/copyright/895560/role-of-ip-in-the-growth-of-disney#:~:text=These%20product%20and%20infrastructure%20based,intensive%20areas%20of%20its%20functioning.
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