A New Kind of Disney Princess

The Wall Street Journal reports today on Disney's development of a new type of princess for young girls.  Sofia the First is one of the new additions to Disney's family of characters.  She's "confident, resourceful and focused on being a good person. She should not be valued most of all for her beauty. Her royal family should include exactly zero evil stepmothers."    Nancy Kanter, a senior executive at Disney, explains: "We knew we didn't want it to be a young woman looking for a man."    The Sophia the First series debuted on Disney Junior on January 11th.   It has become the year's top-rated show among pre-school children.  Disney aimed to create a princess that would appeal to young girls, but that would provide an image and identity more acceptable to parents than some of the company's traditional princesses.   It appears that they have succeeded.

To me, this case provides another interesting development at Disney, besides the unique way that they are trying to reposition a key type of character.   Here we have a case of a key new animated character debuting on Disney's cable networks, rather than in an animated feature film.   The firm has begun to leverage the character in the theme parks and through its consumer products and retail divisions.  Historically, Disney launched key characters through animated feature films, and then leveraged them to other areas.  With Johnny Depp's Pirates of the Caribbean movies, we saw Disney take a theme park ride and build a popular series of feature films.  Now we have a character debuting on cable and then moving to the theme parks.  Could an animated feature film be next for Sophia the First?   Disney's ability to find different ways to originate content may be a key driver of growth for the future.  Relying only on feature films to launch a new franchise can be expensive and risky.  Having other ways of originating and leveraging characters could be key to the company's future... as important as some of the recent acquisitions have been in terms of adding to the stable of characters in the Disney family. 

Read More

Disney MagicBands: This Could be Magical... and Expensive!

Source: Fast Company

Disney has used RFID technology to develop MagicBands - a wristband that serve as a guest's theme park ticket, hotel key, and payment system throughout DisneyWorld.   When I read about this project at Fast Company's website, I thought to myself... "These MagicBands could be REALLY expensive for parents."  It's going to make spending money that much easier.  I speak from firsthand experience.  We just stayed at DisneyWorld's Contemporary Resort a few weeks ago.   The cards you receive upon check-in serve as hotel room keys and park tickets, and they can be used to pay for food and gifts throughout the parks.  I found myself a bit less hesitant about spending money with that card in hand, as opposed to having to pull cash out each time we bought something.  However, as Fast Company writer Mark Wilson points out, these new MagicBands offer more than a way to dig deeper into customer wallets.  Here's an excerpt:

But the cashflow aspect is only one aspect of Disney’s new service. When you begin to consider the potential of wearing a wireless ID around your wrist, all sorts of natural, customized interactions will become possible. Imagine a child meeting Mickey Mouse, and after sharing a warm hug, Mickey actually wishing them a happy birthday by name. There’s a digital handshake going on here, of course, but it’s totally imperceptible. All a child is left wondering is, “How did Mickey know me … and that it was my birthday?!?” Animatronics will see a similar personalization, so the otherwise obtuse talking robots can specifically acknowledge the people standing in front of them.  At the same time, MagicBands enable a deeper level of data collection for Disney. They’ll be able to track someone through the entire park--to see their kingdom as a complex interaction model--finding trends in preferences and habits that can no doubt be monetized. Do people who meet Cinderella buy more princess apparel? Do those who eat the cheese fries for lunch go back to the hotel to take naps?

Talk about Big Data and Personalization all wrapped up into one incredible initiative!   Immediately, one thinks about privacy issues, but Wilson points out that parents will be able to establish some privacy controls on the wristbands.   The bigger issue is how Disney uses the wristbands.  I think that the real opportunity here lies in focusing first on enhancing the guest experience.  If this new tool can make the guests enjoy their stay even more, then the money will follow.  People will spend more if they are more engaged and more satisfied with the experience, and if the wristbands can be used to minimize some of the guest's typical problems at the park (consider how mobile apps have helped people find rides with the shortest wait times).   If the experience is enhanced, guests will stay longer at the park, interact with characters and exhibits in a more meaningful way, and avoid some of the frustrations that they typically encounter at the park.  When that occurs, the improved profits will come.

Read More

Iger's Long Term Strategy at Disney

As you know by now, Disney acquired Lucas Films last week. With that, Disney now owns the Star Wars and Indiana Jones franchises. I'm not surprised by the move. In fact, you can see a pattern emerging to Bob Iger's strategy at Disney, which is quite in contrast to the strategy during the second half of Eisner's tenure at the company. In Eisner's later years, he moved away from simply focusing on the characters as the central driver of synergy among Disney's businesses. He acquired ABC and Miramax, and he owned a baseball and hockey team for some time - among other moves. Now we see Iger refocusing on characters as the heart of Disney's corporate strategy. We see three major moves (Pixar, Marvel, and now Lucas) during his tenure that all involve expanding the universe of characters which Disney can leverage across its many businesses. I think the focus on characters makes a great deal of sense. Here's why...

When thinking about the characters at Disney, we should note those resources are quite valuable because they are highly durable and inimitable. Moreover, Disney can appropriate the value associated with those resources (as Buffett says, "the mouse has no agent"). How then can one think about leveraging such a valuable resource across multiple businesses? A strategist needs to think about how specialized vs. fungible/general the resource is. A highly fungible resource/capability would be something like “brand management expertise” or “innovation” or “risk management.” A highly specialized capability might be patented product formulas or engineering expertise in a very narrow discipline. Fungible capabilities can be easily transferred across lines of business. However, they are often too general/not unique enough to convey a substantial competitive advantage. On the other hand, highly specialized capabilities tend to provide powerful competitive advantage in a particular business, but they lose value very quickly when a firm tries to transfer them to a wide array of businesses. In other words, there are only so many areas in which you can grow based on a highly specialized set of capabilities.

In the 1980s, Disney’s core capabilities revolved around animated character development and deployment. Those tended to be highly specialized capabilities; Disney was able to leverage those capabilities to enter the hotel and cable television business, but ultimately, growth was constrained by the specialized nature of that capability. To move into even more diverse businesses, Disney had to be able to make the case that it had a broader/more general/more fungible capability such as “managing creativity.” That's the argument that Eisner used to move into a variety of businesses that did not have to do with characters (ABC, Miramax, etc.) There are two challenges associated with defining a firm’s capabilities so broadly. First, it is more difficult to make the case that the firm is truly unique and superior to all rivals in that set of capabilities. Second, it becomes rather difficult to discriminate among various options for diversification, i.e., how many businesses have something to do with managing creativity vs. developing and deploying unique characters?

Read More