Note: This article is an actual paper I had to write for a class I took on data-driven decision-making for executives. The aim of the assignment was for us students to come up with a potential data strategy for a business of our choosing. This paper was to be conceptual in framework, not so much a literal strategy as the focus was based in process and the paper reflects that aim. As such, many of the forecasted values and numbers are made up. I formatted this paper to fit this blog and thought it would make for a good piece of content worth sharing. Enjoy!
Data Strategy Proposal for Disney+
Given the current landscape in the business sector, the companies that succeed and grow are the companies that utilize a big data strategy. With the rise of artificial intelligence thanks in large part to the new emerging field of data science, companies that utilize big data can grow and transform in ways that were never possible prior to the emergence of big data analytics. This proposal will give an overview of the Walt Disney Company and a product this company is looking to launch by the end of 2019: Disney+. By implementing the suggested strategy in this proposal, Disney+ can expect to increase revenue for the upcoming service by 50% of original projections, while also cutting costs by additional 25%.
When coming up with a product or service, it is first a good idea to look at the mission statement to make sure this product or service aligns with the goals of the company in question. The Disney mission statement reads as such:
The mission of The Walt Disney Company is to be one of the world’s leading producers and providers of entertainment and information. Using our portfolio of brands to differentiate our content, services and consumer products, we seek to develop the most creative, innovative and profitable entertainment experiences and related products in the world. (Our Mission, n.d.)
The upcoming Disney+ streaming service perfectly aligns with the mission of Disney, and the creation of this service will serve to further allow the Walt Disney Company to remain a leading producer in the entertainment and information sector. Disney will no doubt leverage much of the brand portfolio under the Disney umbrella to ensure the success of Disney+. Some highly recognizable brands owned by Disney include ABC Studios, ESPN, Marvel Studios, Touchstone Pictures, LucasFilm, and Pixar; all these brands can be expected to have a presence in the Disney+ streaming service once launched.
Currently, until Disney+ launches, the media giant has one glaring weakness as a company in that Disney does not have many direct-to-consumer outlets to serve the Disney consumer base. Because of this, Disney is not yet at phase 5 of the Big Data Business Model Maturity Index. The Big Data Business Model Maturity Index is a five-phase reference or framework that is used to identify how successful a business is at utilizing all available data (Schmarzo, 2015). Despite being a multibillion dollar media giant, Disney has not yet reached phase 5 but is instead, more around phase 4 of the index: monetization. The Walt Disney Company makes great use of the data the company has and successfully monetizes that data, but there is a lot more in the way of data science and analytics that can still be done to transform the company one step further.
Disney needs to transform the business from the current model, selling a product, to the next model, selling a service. While it is true that Disney does have direct-to-consumer ventures such as Disney Stores, Disney theme parks, and even broadcast networks, those are small in reach and narrow in scope when contrasted against the reach of direct distribution. In the case of the broadcast networks owned by Disney, Disney is still reliant on cable networks to distribute those networks to the end-consumers. The vast majority of products, services, content, and entertainment that is offered by Disney, is dependent on third-party distribution. However, in the world of big data analytics and the internet, Disney has an opportunity to metamorphosize the Walt Disney Company from a content creator, to a direct-to-consumer content provider. This is how Disney will reach phase 5 of the Big Data Business Model Maturity Index, which is to metamorphosize the business entirely.
Later this year in 2019, Disney will be releasing Disney+, a streaming service and direct competitor to Netflix. Netflix is currently the dominant internet streaming service with 139 million active subscribers (Fiegerman, 2019). While facing steep competition from Netflix and an already bloated streaming market, Disney is in a unique position to compete as the company has a massive portfolio of intellectual property. With such a large catalog of intellectual property, Disney can create a value proposition based on past content, in addition to the creation of new additional content for the service on a regular basis.
Disney is aware of this and has already begun creating exclusive and new content for Disney+ as Disney announced a new upcoming show for the Disney+ service called “Loki.” Starring the actor that played Loki from the Thor movies, Tom Hiddleston, the show will continue the story of Thor’s brother, Loki. This upcoming show alone could offer enough value for many fans of the Disney-owned Marvel franchise, enticing them to subscribe to Disney+. The Thor movies are part of the Marvel Cinematic Universe owned by Disney, a multibillion-dollar franchise having grossed an approximate 11 billion dollars worldwide as of 2017 (Johnson, 2017).
With Disney looking to transition from phase 4 of the Big Data Business Model Maturity Index, to phase 5, Disney has begun adjusting business objectives. With Disney+, the company will transform into a business-as-a-service model. As such, the company is focusing on making this shift by investing heavily into the streaming service. Disney chief executive officer Bob Iger has announced that Disney+ is the top priority for Disney in 2019 (Sorrentino & Solsman, 2019). The business objective for Disney+ will be to create a competitive streaming service where Disney can leverage all the Disney-owned assets creating a strong value proposition for the consumer. For Disney+ to truly succeed and have a transformative affect on the company, Disney will need to embrace a big data strategy.
To make best use of company resources for a successful Disney+ launch, the company should create a Big Data Strategy Document. This document is a single page format tool that allows business leaders to visually plan a data-based strategy for a company. A speculative Big Data Strategy Document has been created, see Figure A in Appendix A. Outlined are some of the key data elements Disney should make use of.
Most critically, the data element that Disney should be prioritizing is Hulu. Disney is the majority stakeholder of Hulu, the third most popular streaming service behind Netflix and Amazon (Lovely, 2018). Disney should leverage Hulu by pulling as much data as possible from the Hulu consumer-base. Disney has such an advantage owning the majority of Hulu in that Disney can utilize much of the data and algorithmic processes that make Hulu so successful and utilize those insights for Disney+.
Disney should also utilize data from the other various brands owned by the media giant. Disney can gain valuable insights by utilizing data from ABC Studios, ESPN, Fox, A&E Network, and History, to name a select few. In addition to the broadcast networks, Disney should also utilize the ratings of various content produced across the entire Disney brand portfolio. Getting content ratings will help Disney gather insights into genres that are popular which can be used to make additional, similar content for Disney+. Traditional forms of data such as demographics and social media cannot be understated either, as many of the Disney brands serve or target specific groups of people like young children, or sports fans.
Disney should use data from every single source of data the company can gather from the Disney business catalog. For a complete list of all the assets owned by Disney, see Figure B in Appendix B. All of this data can be utilized to create valuable business insights into content creation. Disney can reduce production costs on content that is less popular, while also increasing production costs for content that is popular and rising. Below are figures that outline the business value of some critical data that will help make Disney+ successful, the ease of implementation for those data-sets, and the prioritization process Disney should take when beginning implementation.
The financial drivers guiding this big data strategy are as follows: create a new revenue source; direct-to-consumer sales; transform business model; and strengthen the brand value of Disney at large. By creating a new revenue source, Disney will be tapping into a new well of revenue that has not yet been tapped by the Walt Disney Company. Disney has many brands and products, but very little services. A business-as-a-service model is the most coveted ambition the Walt Disney Company is striving to achieve. The business-as-a-service model creates a constant and consistent revenue stream that will only continue to increase as the service grows and expands.
By utilizing the big data strategy outlined in this paper, thanks in large part to the size of the Disney brand portfolio and content, Disney can easily expect to see a revenue increase of 10 billion dollars by the end of 2020; only 25% behind Netflix. By analyzing cross-brand and cross-business data from the entire Disney portfolio, Disney can expect to cut down on operational costs across the company by 10% as content will be created solely based on the insights gained from the data-mining of user interests and habits, across the entire Disney brand portfolio.
The Disney+ service eliminates the sole weakness the Walt Disney Company faces: very little direct-to-consumer sales. This is a major financial driver for this initiative. Disney will now be in a place to offer content directly to the consumer, eliminating the middleman and lowering cost as a result. But even more importantly, Disney will have vast access to data and habits of the Disney+ userbase. This data should be analyzed and used to ensure Disney+ serves consumer interests, ensuring the service maintains a high retention rate.
The entire company will be transformed by this initiative in this final financial driver for this proposal. Disney already has mountains of data from the Disney portfolio that should be used to launch Disney+. Once Disney+ is launched, more insights will be gained, and those insights should be used across the entire Disney portfolio as a result. For example, insights about certain sports shows or topics that appear on Disney+, can be used to enhance content on ESPN. All data across all platforms should be used to enhance the Disney portfolio in all manner of capacity. This is the final step in the Big Data Business Model Maturity Index, phase 5: business metamorphosis (Schmarzo, 2015).
All these initiatives will come together in the final financial driver of this proposal: strengthen the brand value of Disney. By utilizing big data and transforming the Disney service model, the insights gained will transform the business allowing for massive, exponential growth. The brand value of Disney will rise as the company gains exposure as a result. Consumers will be more involved with Disney as subscribers; investors will continue to heavily invest in Disney as the company grows; and the brand will gain recognition beyond the already massive reach Disney currently has. When Disney is compared against competitors, the Disney brand will be among the most competitive in the world given the size of the Disney portfolio, and soon-to-be reach that the Disney+ service will provide Disney – both in direct-to-consumer services – and in data collection.
All the financial drivers should allow for some very potent and successful business initiatives to become a reality and therefore mapped out. As such, this proposal outlines key business initiatives Disney should follow when launching Disney+. The first initiative will be for Disney to have 100 million active subscribers to Disney + within one year of launch. Given the massive size of the Disney brand portfolio, as well as the resources Disney has financially, this initiative will be achievable.
The next initiative will be to establish a very robust marketing campaign to help gain exposure. This is not only a business initiative, but also a key decision. According to Pemberton (2016), companies that have revenues of over $5 billion are spending around 13% on marketing costs. With a projected income of $10 billion from Disney+, Disney needs to invest heavily into marketing the new service. Disney should therefore budget 13% of that forecasted revenue into the year-one advertising costs, or $1.3 billion to ensure this product penetrates the market successfully.
Lastly, a value proposition must be established. Once launched and successfully marketed, Disney will leverage the entire Disney portfolio to create a strong value proposition to the consumer. Cost-to-content ratio, in addition to ease of access, and personal value to the consumer, will effectively create that value proposition.
To stay on course, this proposal has mapped out key decisions to ensure this program meets expectations. The first key decision is one of accessibility. Disney needs to ensure Disney+ is easily accessible. By creating an app for smart TV’s and mobile devices, Disney can ensure anyone will have access to the service, hassle free. Disney could also partner up with cable companies to get the app loaded into the cable box devices provided by the cable companies, much in the same way Netflix does. As Comcast and Disney both have ownership of Hulu, Disney can look to leverage that business relationship with Comcast to do just that.
The next key decision will be in the use of big data analytics to empower this massive service. Looking at how successful Netflix is thanks to the use of data science, Disney has a clear case study for how effective big data analytics will be in this market. Disney must make use of big data analytics. The proposal outlined in this paper shows just how transformative big data analytics will be on the service.
Content is also a vital key decision for this service. With such a large brand portfolio, Disney can offer a massive library of exclusive content, both new and old. Through big data analytics, Disney can gain valuable insights into popular content and use those insights to create more content based on that data, much like Netflix. Disney also needs to create value for the service. This will happen easily because of the content offered, created, and the cost of the service. Disney should charge less than Netflix for this service, with the cheapest plan for Disney+ starting at $7.99 a month, and the most expensive, $13.99 per month.
From a cultural standpoint, Disney+ allows for Disney to have a large platform to further the cultural values Disney promotes. Disney is a leading business in the domain of LGBTQ rights, minority rights, as well as female empowerment, equality, and representation for all. With Disney+, Disney will have the means to further create content that encourages inclusivity, all the while using big data analytics to gain insights into how this content affects the consumers. The cultural affects are potentially massive in scope as very few companies have the reach and resources of Disney to promote such moral, social values. Entire generations can be affected by the positive message Disney promotes through inclusivity and equality in Disney content. Through entertainment and joy, Disney could have an impact on the world over time, helping to lessen the hate and bigotry that still exists today.
There are very few risks if any to the launching of this service or strategy given the Disney brand portfolio. The major risk is financial. If projections end up being too high, then there will be a financial cost to launching this service. However, even if Disney misses targets, the service will still be profitable over time, even if it takes longer than forecasted. No matter how much a target is missed, the business-as-a-service model will consistently generate revenue, eventually turning any potential losses into inevitable, massive gains.
The landscape of the business world today is highly competitive and rapidly advancing because of big data analytics. A company today, no matter the size, can grow by leaps and bounds quickly by utilizing all available data. It is important that a business utilizes big data to enter new markets where possible to grow and metamorphosize and as such, the need for a big data strategy is critical. By utilizing the big data strategy proposed in this paper, Disney+ will transform the Walt Disney Company into heights not yet reached by the media giant. Disney has the potential to dethrone Netflix because of the size of the Disney brand portfolio, but that cannot happen without successful application of big data analytics as outlined in this proposal.
References
Fiegerman, S. (2019). Netflix adds 9 million paying Subscribers, but stock falls. Retrieved from https://www.cnn.com/2019/01/17/media/netflix-earnings-q4/index.html
Gringer, B. (n.d.). Every Company Disney Owns: A Map of Disney’s worldwide Assets. Retrieved from https://www.titlemax.com/discovery-center/money-finance/companies-disney-owns-worldwide/
Johnson, M. (2017). You’ll never guess how much money the Marvel Universe has Grossed. Retrieved from https://www.nasdaq.com/article/youll-never-guess-how-much-money-the-marvel-universe-has-grossed-cm786019
Lovely, S. (2018). The Streaming Services with the most Subscribers -- and How they got here. Retrieved from https://www.fool.com/investing/2018/11/09/the-streaming-services-with-the-most-subscribers-a.aspx
Our Mission. (n.d.). Retrieved from https://www.thewaltdisneycompany.com/about/
Pemberton, C. (2016). Gartner CMO Spend Survey 2016-2017 Shows Marketing Budgets Continue to Climb. Retrieved from https://www.gartner.com/smarterwithgartner/gartner-cmo-spend-survey-2016-2017-shows-marketing-budgets-continue-to-climb/
Schmarzo, B. (2015). Big Data MBA: Driving Business Strategies with Data Science. Hoboken, NJ: John Wiley & Sons, Incorporated.
Sorrentino, M., & Solsman, J. (2019). Disney+ Streaming Service: Release date, price, shows and movies to expect. Retrieved from https://www.cnet.com/how-to/disney-disneyplus-streaming-service-name-release-date-shows-movies-to-expect-punisher-jessica-jones-cancelled/
Appendix A
Big Data Strategy Document
It is highly effective and beneficial to create a coherent Big Data Strategy Document to help leaders visualize a big data strategy. After creating the document, the strategic elements should be filled in.
Figure A: Disney+ Big Data Strategy Document
Appendix B
The Disney Portfolio
The Disney portfolio is massive in scope with Disney being one of the largest media companies in the entire world. With Disney entering the streaming service, Disney should leverage data from every property that Disney owns.
Below is a graphic released by Gringer (n.d) that shows the massive catalog of Disney brands and property. A full-scale image can be viewed at: https://storage.googleapis.com/titlemax-media/every-company-disney-owns-13_pageversion.jpg
Figure B: Every Company Disney Owns: A Map of Disney's worldwide Assets