Disney SWOT Analysis: Disney Algorithmic Evolution For 2016

zack Zack Tobin is a Financial Analyst  at I Know First. 


Disney SWOT Analysis Extended

  • DisneyA Look at how Disney should fare in 2016
  • SWOT Analysis Extended
  • I Know First forecast Bullish View On Disney

SWOT Analysis

The Force was strong with Disney in 2015. Three years ago, when the house of mouse bought Lucas films, many believed this would lead to some terrible Star Wars films. However, now that the film is released and is a huge success, Disney has gone from being the most successful business in the movie industry to practically owning the movie industry.

disney swot analysis

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Despite its huge box office success, movies aren’t even its main source of revenue. The company still earns billions from cable television, consumer products, and their state of the art amusement parks. All this leaves shareholders salivating in everything they can invest in with this company.

Disney SWOT Analysis

That isn’t to say the company doesn’t have concerns heading into the new year. ESPN, which is a 24/7 sports network owned by Disney, was once an always reliable source of revenue but is now slowly becoming a burden as it struggles to keep subscribers.  Their amusement parks have also seen a recent dip in attendance.

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CEO Bob Iger is optimistic and believes 2016 will be the best year for Disney ever. Wall Street is also optimistic on Disney as they see it earning 10% more profit in the next fiscal year. Are they right? Let’s take a look.

Disney SWOT Analysis


  • Star Wars. The best thing Disney has to look forward to in 2016 is the benefits it will receive from Star Wars. After The Force Awakens was released in December and has already broken the record fastest movie to earn $1 billion worldwide, Disney is finally seeing the tremendous profits. Their entertainment division is their third largest sector, and they have a new Star Wars movie planned every year for the next five years. Given that Star Wars is the highest grossing franchise of all time, the entertainment sector is guaranteed to flourish.
  • Consumer Products: The other benefit that Star Wars gives Disney is that it helps their 4th biggest section, consumer products. Not only does Disney have the rights to Star Wars, but they also have the rights to Marvel films as well. The toy company hasboro has agreed to pay Disney $225 million for Star Wars royalties, and an addition $80 million for Marvel.
  • Theme Parks: In 2015 Disney saw an 7% increase in their total theme park revenue. This is because they chose to significantly raise their prices, with the price of admission topping $100 for the first time ever, and annual passes increasing 35%. It’s clear that Disney has discovered that the money isn’t with the middle class, but with the very wealthy. With other amusement parks such as Universal Studios and Six Flags increasing their prices as well, it appears this is a smart move by Disney.

Disney SWOT Analysis

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  • ESPN Losing Subscribers: While Disney has a lot to feel optimistic about in 2016, it’s the media giant isn’t without its concerns. By far its biggest concern is with the sports juggernaut ESPN. For years ESPN seemed like an unstoppable force with no competition However with people cutting their cable bill, the sports program has lost 8 million subscribers since 2010. More people are turning to the internet for cheap live sports streaming, making it difficult for ESPN to compete.
  • High Costs of Business: The most notable way television has evolved in the 21st century is that rarely is everyone watching TV shows at the time it premieres. Now only sports and news are the only programs that the public feels the need to watch live. This has made ESPN, which is currently struggling all the more important for profit. There other channels ABC, and the Disney Channel are beginning to lose out to cable, and all the alternative ways to watch cable as well.
  • Risk at The Box Office: While their films tend to do well, one bad flop (Such as their film John Carter, which lost $20 million) can damage their reputation. Pixar studios, which is usually one of their most successful movie studios just had their first ever bomb with the Good Dinosaur.


  • Investing In Vice: Disney has recently invested $400 million in Vice Media, giving them 10% stakes in the multimedia company. With ESPN putting the cable tv division in the most vulnerable position, Disney has looked for ways to adjust to the new form of media. With Disney’s investment Vice has now been able to start their own news channel called Viceland.
  • Shanghai Disneyland: The newest t Disney park is expected to open in 2016. The opening of the theme park is what CEO Bob Iger said he was most looking forward to. It’s understandable why as, the five Disney parks that are already open earn up over 31% of the company’s total revenue.  The park in Shanghai will be more high-tech park yet. It is also in an excellent location, as it was built to expand into China’s expanding middle class. There will be 300 million people that are within a 3-hour drive from Shanghai Disneyland.


  • Netflix: Like seemingly every other company on earth, Disney doesn’t know how to compete with the web streaming company. Netflix is a threat to ABC, which is owned by Disney, and could continue to hurt Disney’s already fragile cable television sector. Fortunately, Netflix isn’t just Disney’s competitor, but it’s also one of its largest consumers.  Some of Netflix’s most-watched TV shows, which include Daredevil and Jessica Jones feature Disney’s IP.
  • Warner Bros.: While Marvel’s super hero films have become a cash cow, they finally have some real competition in DC’s super heroes, which are run by Warner Bros. Warner Bros. releasing two DC films in 2016 with Batman V. Superman, and the Suicide Squad.  Considering Batman and Superman are two of the most iconic superheroes of all time, Marvel may have a hard time competing with their lesser known heroes.
  • Smaller Amusement Parks: As mentioned earlier increasing the price at Disney theme parks has appeared to be a smart move so far, but there has also been a drop in attendance. People will always have the choice to go to any other amusement park, for a far cheaper price. Disney needs to be careful to not keep the prices too high and isolate, too much more of the middle class, and maintain the identity of being the happiest place on earth.

disney swot analysis

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5 Forces of Analysis

Threats of New Entrants: (Low)

  • One advantage that Disney already has an extremely loyal fan base. Its company is one of the most famous brands in the world, and that will always make it relevant.
  • Any new company that would try to compete with is at a tremendous disadvantage because they have a much smaller economy of scale.
  • Because Disney already has their parks in the best possible locations, it limits their competition.

Bargaining Power of Buyers

  • Since Disney has billions of customers, not one customer can offer a significant amount of leverage.
  • If there is any leverage to be gained by the customer it’s by using the internet, instead of buying cable.
  • One disadvantage is that Disney is surrounded by controversy.

Bargaining Power of Supplier (Low)

  • Due to high prices charged on merchandise by Disney, Suppliers up prices.
  • Disney has more money than anyone than they buy supplies from, giving them more leverage.
  • Disney’s regulations for suppliers are very strict and if not met at all times they cut the cord.
  • Lots of different revenue streams, which lead to a high cost to switching suppliers. Cost is based on quality control that Disney demands on order time, delivery time and time production restrains

Industry Competitors (Medium)

  • All of its sources of revenue have some sort of rivalry. Their movie sutdios have to compete with Dream Works, Warner Bros., and Fox Studios. Disneyworld has Universal Studios, Six Flags and dozens of other Amusement Parks. ESPN and ABC have has FOX, CBS, and NBC.
  • Yet despite those rivalries, Disney is still the “top dog” in every source of revenue.
  • While all its sectors have a rival, there is no company that rivals them in everything. This makes them unique and they stand

Threats of a Substitutes

  • There is a low threat from other film studios, as there is always a market for animation.
  • Their product generally more expensive than competitors.
  • The biggest threat comes from TV channels, and people willing change their cable plans.


4 P’s


  • Disney has increased their sales of their annual passes by 35% in the past year. Their annual pass with unlimited access is now up $1049, and their one day pass is now at $105 per person.
  • One Share of Disney is worth $105.07. Surprisingly it has gone down 4% since the Star Wars opened, due to concerns over their television business.
  • A ticket for a day at Disney World costs about $20 more than a ticket at Universal Studios. Yet Disney receives over twice as many attendants in their main theme park in Orlando, than the Universal Studios in Orlando.,


  • Theme Parks: Offers the most t most famous amusement parks in the world. They are located in Anaheim, Orlando, Paris, Tokyo, Hong Kong, and later this year in Shanghai. Total revenue from the fiscal year in 2015 was
  • Consumer Products:  Made $4.2 billion in consumer products in 2015. Benefitted primarily from Star Wars, Marvel Films, and Frozen
  • Cinema: Star Wars, may become the highest grossing film of all time, and has already broken numerous box office records. Avengers: Age of Ultron was the third highest grossing film of the year.
  • Media Networks: The media network sector actually takes in the most amount of profit for Disney at $23.26 billion per year. However, the department did struggle in 2015, as its highest grossing network, ESPN has begun to lose subscribers, because of cord cutters.



  • Disney spends around $2 billion on advertising a year. This puts them as one of the biggest ad spending companies in the world.
  • While the prices for the theme parks have gone up, the company offers numerous special deals particularly for physically and mentally disabled, and for the military


I Know First supplies financial services, mainly through stock forecasts via their predictive algorithm. The algorithm incorporates a 15-year database and utilizes it to predict the flow of money across 2000 markets. The self-learning algorithm uses artificial intelligence, predictive models based on artificial neural networks, and genetic algorithms to predict money movements within various markets.

I Know First has a bullish forecast on Disney. The three- month and one-year forecasts for Disney are included.

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Previously I Know First predicted Disney Stock Movement. In this stock forecast we can observe that Disney had a signal of 0.01 and a relative strong predictability of 0.19 on October 14th, 2014. Just three months later we can see that Disney managed to bring returns of 13.72%. The overall package of Dividend stocks performed well bringing 15.51% return to all investors that invested equally on the top 10 stocks from the 14th of Oct 2014.

Income Investing Strategy


For the reasons illustrated in this article, we recommend to long Disney for fruitful results. The I Know First’s algorithmic analysis mirrors the bullish stance that the company is showing.  The indicators throughout this article suggest that Disney will be of long-term value in the future, and a stock investor should consider purchasing.