Disney shows how

Disney shows how

The Digital Life

Wednesday, November 25, 2020

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Disney is a massive global organisation which is always innovating, creating and evolving. For o ver two decades the company has engaged in sizeable transactions designed to diversify income and derive revenue beyond its flagship parks, blockbuster family films and its television network. Acquisitions included the likes of Lucasfilm, ABC, ESPN, 21st Century Fox, Pixar and Hulu. This vertical integration strategy has led to Disney's growth as a global multimedia empire.

In 2019, Disney announced and launched its streaming service, Disney Plus, its most ambitious diversification move to date. It was built from the ground up, delivering growth more organically than would be anticipated with a merger/acquisition strategy. The company doubled down on efforts to compete with Netflix and other streaming services. Disney already owned Hulu, but that entity did not realise the kind of impact desired, which raised questions about whether Disney could effectively deliver on its ambitions. Of course, Disney's existing global fan base and massive content library provided the foundation and confidence for such a move. However, this would be a significant departure from its regular distribution strategy and had the potential to cannibalise existing lines of business.

In hindsight, this decision marked Disney's saving grace amid a global pandemic which has seen significant destruction in the physical realm. Following a turbulent period for its parks' business around the world with numerous closures and reopenings, in October Disney laid off 28,000 theme park workers in California alone. Like many stocks, Disney saw a deep decline earlier in the year as one of the companies expected to take the most significant hit with its high dependence on physical foot traffic. In October the company announced a restructuring of its businesses to focus primarily on streaming, prioritising the development and production of original content for its streaming and legacy platforms. “Our creative teams will concentrate on what they do best — making world-class, franchise-based content — while our newly centralised global distribution team will focus on delivering and monetising that content in the most optimal way across all platforms,” Disney CEO Bob Chapek said in a statement.

This about-face represents what is poised to be one of the greatest digital transformation stories of this pandemic era. It is historic because unlike the many tech companies faring well through this time, Disney is a traditional company undertaking a massive rehaul to deliver its experiences digitally. So far they are winning, with over 73.7 million subscribers announced on the first anniversary of the service's launch. Unlike many of its conventional counterparts, including theme park owners, movie theatre chains, cruise lines and hotels, the company has seen a steady recovery in stock price based on investor enthusiasm towards its approach. Disney Plus has met a challenge at a scale it was never designed to confront, at least not in the near term. With continually shifting trends in the world, the company needed to adjust towards a direct-to-consumer strategy. The pandemic accelerated this process significantly. Disney has had to use its streaming service to bypass theatres and push blockbuster titles, like Mulan and the upcoming Soul, direct to homes.

The lesson here is that digital transformation at the enterprise level must focus on leveraging existing resources and brand equity while rethinking processes and positioning products to live in the digital realm. A big mistake made by many organisations is that they emphasise the digitisation of a procedure or product as opposed to focusing on how that process or product should expand and evolve with the enablement of technology. Companies like Netflix and Disney could have digitised their product by delivering individual movies to replace DVDs. Still, instead, they focused on developing robust content libraries that are well categorised and smart, responding to the consumer's changing preferences over time.

An excellent example of a failed digital strategy is the numerous digital wallets, launched worldwide, aimed purely at digitising cash or cards in a society that has expressed no real frustration with these physical solutions. We see the most remarkable successes amongst companies such as Square or Paypal's Venmo, which reconsider the entire process and build out whole ecosystems of products that change the way users interact with money. In many instances, successful digital enterprises solve more underlying problems than meet the eye and often complement rather than completely replace their incumbent counterparts in a phased approach — at least initially.

No need to be a tech genius or coder to drive a digital transformation strategy or innovation culture. You need to be curious and focused on empowering those with strong technical knowledge and skill sets to ascend to excellence. The big question should start with how can we shift this process or product to a digital framework and, in doing so, how can we make it exponentially better. Finding the right talent to respond to this question through experimentation and intense execution will help make the journey successful. Organisations must also aim to participate in elevating their society to embrace this new approach; healthy ecosystems make for the best outcomes in this space.

Kirk-Anthony Hamilton is an architect turned entrepreneur and investor. He is the founder of the Infiniti Partnership Inc and Co-Founder of the Visionaries' Summit and Tech Beach Retreat. He is on a mission to build new technology and innovation-driven, global business ecosystem for the Caribbean.


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