A tiny cartoon studio in the 1920s, The Walt Disney Company, better known as Disney, is an international multimillion dollar entertainment and mass media conglomerate today
No matter which part of the globe you belong to, your childhood was, in one way or another, defined by Disney. From your grandparents, parents, and now your children, Disney has traversed through generations.
Popular in the American animation industry, Disney is one of the biggest conglomerates in the television and film industries. They now include theme parks and live action film production.
Over the years, Disney has acquired huge companies like Pixar Animation Studios, Marvel Productions, Lucasfilm Limited, Maker Studios, and one of their recent acquisitions is the 21st Century Fox media corporation.
Fans of Mickey Mouse and Donald Duck might have come across the name Disney a thousand times by now. Yet not many of us know the history of Disney and how it operates.
Disney – A Brief History
Way back in October 1923, brothers Walt and Roy O. Disney began the Disney Brothers Cartoon Studio. They changed their name to The Walt Disney Studio and subsequently to Walt Disney Productions.
But in 1986, they officially became The Walt Disney Company. With headquarters at Walt Disney Studios complex in Burbank, California, the company initially began as an animations production company.
Gradually, there was expansion and diversification into television, theme parks, and live action films. Today, Disney, as you know, is an international conglomerate operating television networks like ESPN, Disney Channel, National Geographic, FX, and Freeform.
Disney OTT platforms like Disney+, Hotstar, Hulu, and ESPN+ offer direct streaming services to consumers via the internet.
What Does Disney Do?
Being a multinational conglomerate, Disney has more than one avenue for earning revenue. Their business is a bit more complex and advanced than other media companies because it is very diversified.
Let’s take a quick look into everything that Disney does and offers:
Live Action Film Production
From the beginning, Disney focuses on producing live action and animation films. This was what started the company in the first place.
Disney brought a revolution in the animation industry with movies and series like Mickey Mouse, Alice in Wonderland, Snow White and the Seven Dwarfs, and many other live action films.
OTT Platforms
Recently, Disney’s OTT or live streaming platform ventures like Disney+, Hotstar, and Hulu offers live streaming of sports, thousands of films and series, live events, and shows online on a yearly subscription.
Television Channels
Disney’s acquisition of several television channels such as FX, National Geographic, Disney Channel, and ESPN is a great source of revenue. It provides television services and handles the channels and the content they produce.
Theme Parks
Disney owns and manages several Disney Theme parks across the globe called the Disney World. With exciting rides and games, it is a one stop vacation destination for kids worldwide and acts as a major revenue stream for Disney.
Other Products
Disney produces several products like toys and games for kids based on the traditional Disney characters for children.
Disney’s IPO and Shares
Disney makes groundbreaking films in the realm of live action production. However, the costs of making these films are very high, and the profit margins are comparatively low.
During the initial years, i.e., before 1938, the company’s partnership was split between four different, successful companies. Later, the partnership was absorbed into one.
After Snow White and the Seven Dwarfs became the highest grossing film in 1939, Walt Disney Studios issued their Initial Public Offering of 155,000 shares of 6% convertible stock on 2 April 19040.
The IPO was in the over the counter market, and it raised nearly $3.875 million for Disney. Today, Disney shares are on the NYSE with the ticker code DIS. You can read more about their share prices if you are interested in investing.
Disney’s Business Model
How did Disney become a huge multimillion dollar empire? Being a conglomerate, Disney has a very complex revenue model. However, if we divide their revenue earning structure into subcategories, we can get an easier understanding.
- Share Prices: Disney earns money from shareholders who invest in Disney on the NYSE.
- Disneyland: They earn from the tickets and sales in Disneyland theme parks, one of the most visited theme parks globally. The gross income at Disney grew from $27 million to $70 million five years after opening the first Disney Land.
- Merchandise and Products: Disney earns from the global sale of Disney based merchandise.
- Box Office Sales: Each movie or series that Disney produces helps them earn revenue from the box office sales.
- Television Subscriptions: Again, owning to so many TV channels, Disney has income from TV subscriptions and advertising revenue.
- OTT Platforms: Finally, ad sales and subscriptions from the new age, live streaming platforms also help Disney earn revenue.
This is just a simplified version of their revenue model. Other than this, they also earn from mergers and acquisitions. With thousands of films, series, channels, and theme parks, you can guess how much Disney earns. No wonder they have a current market cap of a whopping $238.9 billion!
Well, Disney is not just a cartoon productions studio anymore. It is a huge mass media company that holds the top streaming platforms and television channels with a huge consumer base.
Post the COVID 19 pandemic, Disney faced a 63% loss in the second quarter of 2020, with theme parks and production houses shut across the globe. They had to lay off several thousand workers as well!
However, with time, they are picking up the slack and rising back to the top. As Walt Disney said, “The way to get started is to quit talking and start doing.” And Disney lives up to that even today!