The Power and Future of the Mouse
“The happiest place on earth” or “Where dreams come true”, both globally recognizable phrases that have created Disney’s impact on the entire entertainment industry. However, is it really a place where dreams do come true? The growth of The Walt Disney Company over the years has made it one of the leading companies in the entertainment world. It came to conquer nearly 40% of the industry following its acquisition of Fox a few years ago. Although the growth was seen as a positive for investors, one began to question the market share the Walt Disney Company possessed. Overall, Disney appears to be on the path to reach a monopoly type status. Although it might seem preventable with governmental involvement and possible consumer intervention in reality it might be difficult to prevent. This inevitable power and control that Disney has created over the industry will continuously impact the media landscape in the years to come. Due to the priority in competing with Netflix’s streaming data, there is no doubt that Disney will try to monopolize this aspect the most. Overall, the growth in monopolistic behavior Disney has will continue to grow as we see Disney acquire more entertainment properties.
Disney’s growing power puts the entertainment industry at a disadvantage. For example a monopolistic power can have control over how people obtain and receive media, limiting creative content and diversity, harming smaller studios/artists in getting recognition, and impacting the job market. In Disney’s case we can see the intensity and power it currently has in the entertainment industry through the ongoing Scarlett Johansson lawsuit. The case revolves around Johansson claiming that Disney caused a breach in her film contract. This breach was associated with her film Black Widow having both a theatrical release and a direct to streaming release through Disney+. Essentially she has said that her contract was guaranteed an exclusive theatrical release, as previous Marvel films, but that was not the case as Black Widow had a hybrid release.
After the news of the lawsuit was released many considered that other actors with similar deals would come forward and provide their thoughts or possibly pursue action. Besides Black Widow there were 2 other Disney films released under a similar release model structure, Jungle Cruise and Cruella. Both these films were released in theaters and through Disney+ on the same day. Dwayne Johnson, who was the leading star in Jungle Cruise, stated that he was very satisfied with the model and was in favor of the way the film was released. Jungle Cruise appeared to be very successful on Disney+ and in the box office. While there were rumors that Emma Stone might have also followed Scarlet Johansson’s steps it was announced recently that after talking with Disney she has confirmed a sequel for her film Cruella. This could have been a way to also keep actors like Emma Stone to pursue any action towards Disney, further adding to the power it holds over the industry. Other actors that have worked with Johansson in previous Marvel films have described this case as becoming very messy. Disney minimized their statements to a fair minimum.
This case heavily emphasizes how Johansson missed out from financial compensation due to the streaming release. It is estimated that she missed around a $50 million payout. Within the case there have been discussions about how Disney wants to have this lawsuit handled. Most recently, Disney is trying to have the lawsuit moved to a more private conversation rather than it going through the public courts and a jury. Overall, the priority is to having Disney move to a more private matter in order to protect their image and maintain control over the media. From Disney’s perspective they see that Johansson may be playing gamesmanship as the correct party should be Marvel and not Disney. The benefit of having it become more of a private conversation allows Disney to work with Johansson’s team and avoid any further information to be available for the public. Also, if Marvel was the one being sued it would more likely be discussed and settled privately. However, in Johansson’s perspective they have specified that Marvel was not the one to make the ultimate decision to put Black Widow on Disney+, it was Disney’s decision. This point caused the reasoning as to why Disney was the one being sued compared to Marvel.
As the case has continued, Disney has made sure to cut all ties with the actress with any upcoming work. She recently was working with Disney on an ongoing project related to The Twilight Zone. Johansson was set to produce and star in this project. As a result of the lawsuit this project has since been cancelled. This could have been seen as a strategic move to continuously intimidate any other actors or creators from suing or pursuing any legal action. The cutting of all ties can definitely limit the availability of opportunities and studios Johansson can work with as Disney owns a variety of media outlets. This case will be monumental in deciding how Disney continues to act as monopoly in order to continue generating a high revenue.
The main priority for many businesses and corporations is often to promote continuous growth from both a profit and power standpoint. The goal for any business is to maximize profit. Often many businesses need an effective strategy to exit the market based on success or to minimize losses. This could include an IPO, strategic acquisition, or a buyout. Most of these exit strategies allow for other companies to prosper and gain a wider market share. Since 1993, Disney has strategically acquired or merged with other companies to expand their market. Some examples that have continuously contributed to a high success in profit are businesses like Pixar, ABC, ESPN, Freeform, Hulu, Marvel, Lucasfilm, and most recently 20th Century Fox. All of these acquisitions have allowed Disney to expand in different market sectors, like television, film, news, technological software, and their theme parks.
As companies grow, the concern for a monopoly grows as well. Big companies like Apple, Google, Amazon, and Facebook all came from early startups and now are some of the most powerful corporations in the tech industry. Most of these companies have grown and gained control through a variety of methods, some have been through a general revenue growth or increase of services. The second has been through acquiring similar companies into their resource belt. Many of these tech companies believe that this type of growth is beneficial for them as it allows for them to continuously compete and grow within the industry allowing for an expansion. For example, when Facebook acquired both Instagram and WhatsApp the justification for the acquisition was to explore different areas of growth and to promote their company. It wasn’t an absorption but rather a partnership view from their eyes. In Disney’s case, as mentioned by one of Disney’s top producers, John Favreau, Disney’s standing in the entertainment world isn’t a concern. Disney’s power actually promotes the concerns that many have with monopolies as positives. For example, he mentions that the comparison to the tech world isn’t justified due to Disney not having as large of a market capitalization as other tech companies. He also mentions that due to the changing market Disney has to compete in a changing world since the tech industry has been changing the financial rules. Favreau attributes the Fox acquisition as a solution to compete with Netflix and target a new primary business operation of direct to consumer (Katz).
Like the tech giants, Disney has faced criticism about how they hold onto data and information. Some consider it as a potential security risk, however, these businesses don’t see as much of an issue with it. As cited by Mark Zuckerberg, the holdings of data is nothing more than market research (Fung). Another critique if a breakage of these large corporations would occur would be the loss of valuable information and data. Much of this data is already used for research and development purposes and could hinder current research done with these companies. These losses also could limit or stop certain companies from their innovation efforts. Disney launched its streaming service Disney+ November 2019 and since then it has had over 116 million subscribers in 61 different countries. In the coming months Disney plans to continue expanding, adding the service to 5 new countries, including South Korea. This addition will greatly add tension to other available streaming competitors already in Korea, like Netflix. In an article published by Korea JoongAng Daily, stated that Netflix currently has around 10 million subscribers in Korea (So-Yeon). This could cause some stress for Netflix as Disney+ is more affordable for use. This increase in subscriptions would definitely further increase the expected revenue Disney will have. As it continues to expand among different countries, it will be able to have a greater control on what is viewed and a better understanding of consumer analytics.
Something that Disney+ analytics has mentioned is that Disney+ tries to study behavior to better increase experience on Disney’s streaming platforms. It studies a variety of things, not just the things that you watch but so much more than that. For example, what subscribers are not watching, how long they stay on the end credits, or how often they watch certain content. Disney+ has incorporated various algorithms or analysis on subscriber behavior (Forbes Insider Team). Another big thing that is important is how streaming companies, like Disney, are very secretive about their data. By controlling the data, companies control the narrative. They’re able to have a say and not discuss any big wins or losses within releases (Katz). For example, when Loki was announced by Disney+ that it was the most streamed debut on the platform but never released any associated number. It also can attribute to Disney using the data they have collected to determine which future projects will provide success and revenue.
This road could greatly limit creativity to what we view and consume. If superhero movies like Marvel always do well in the box office then it might lead Disney to only focus on creating and marketing those movies to the public. In general monopolies allow for corporations to determine and set the quantity and prices for goods and services. Normally through a free market it would be naturally decided through a variety of factors, like demand and resources. However, in the case of monopolies, the monopoly makes those decisions. Often, they tend to price products and services that provide them with a higher profit. Often financial and economic theory tells us that monopoly creates a limitation to free markets. With a monopoly present it limits the diversity in creativity, competition, and could endanger the democracy of certain regions. When corporations start becoming like monopolies the concern of antitrust laws arise. Antitrust laws are created to assist with the protection of consumers and ensuring fair competition. These are associated with monopolies as they can facilitate or limit certain mergers and acquisitions in order to prevent companies from creating or maintaining a monopoly-like state. Essentially this allows for fairness in competition. When antitrust laws are discussed as a governmental intervention often discourse if that’s a viable solution follows. Some argue that this is the only viable and necessary solution to avoid having companies take further control. While others see this as a redundant option that can’t be sustainable in the long run. Over time corporations might find themselves going around and finding loopholes to these laws. It brings forth the question: do these businesses see themselves above the law or do they see breaking certain laws as part of the business model? It’s a question that Disney would have to think about as it grows and deals with more issues about copyright and antitrust laws.
Bringing back the Scarlet Johansson case, it will be a stepping stone to how Disney grows and becomes perceived as a bigger force to be reckoned with. Due to the cutting of ties Disney had with Scarlet it did begin to limit her opportunity for work. Although currently there are still about 60% of other studios and companies she can work with, the growth that Disney will continue to make can harm her in the long run. This continuous acquisitions and growth over time will shrink her work pool even further and lead to where she will only work for a handful of studios. Essentially some of these studios will still be impacted by Disney to where even then they might not be able to have her participate in any projects. This shrinkage of work opportunities would also impact other actors into following along with what Disney works on, regardless if Johansson is victorious.
This dominance that Disney has will leave an impact on many stakeholders in the industry outside of Johansson. The discussion of how to approach and compensate artists was put into question as other studios followed a theatrical release and direct to streaming approach. For example, Warner Media announced the plan to release all Warner films both in theaters and on HBO Max on the same day for the whole 2021 year at no additional cost besides the subscription costs. When this was first announced it caused a lot of uproar from the talent, especially from actors and directors. As a result Warner Media had a very large payout to make since many had no prior idea that this would be a possibility based on their contracts. Since then they’ve also announced they will continue this method for the 2022 year as well. This was another way how studios took into consideration the dual release model. Under this instance the case becomes an essential way to set precedent for payout and obligations to contracts. Entering a more hybrid world, it can be expected that with upcoming projects a streaming release will be up for negotiation in contracts. As Disney’s content continuously grows it will have a much larger choice to determine what projects get a theatrical release and which get a direct to streaming release.
Overall the outcome could be seen from two different paths. If Disney wins then it will further instill and give the power to media corporations to do as they see fit, putting their own business agendas over set contracts and laws. It can also create a sense of intimidation for other creators to not stand up against these big media companies. However, if Johansson is able to win the case it could stabilize or bring back some power to these talent personnel rather than bigger executives.
The release of Shang Chi greatly shows the power and reliance that Disney has to other markets. Marvel greatly considered this film to be an experiment as it only had a theatrical release during the pandemic. After its first weekend in the box office, the film was seen a huge success, ranking the second highest grossing film for an opening week during the pandemic. The first rank was Black Widow. Having only a theatrical release and bringing in a great amount of revenue, Disney decided to continue having all of their upcoming films be an exclusive theatrical release. After 45 days of release Disney will add their released films on the streaming platform at no additional cost. It also confirmed untitled projects expected to release on major holiday weekends. This success will show Disney’s power in other markets like movie theaters. Already having a close relationship due to Disney’s releases, now theaters have guaranteed support and expectation for revenue as these films will assist with keeping theaters in business, especially after the pandemic. Disney not only will lead to other markets but can further lobby for a maintain in control over crossing industries.
As the continuous growth Disney has experienced, it is greatly expected that Disney’s revenue and market capitalization will increase not just in film but through all revenue aspects. As more success comes from the platform so will their stock prices making it a powerful competitor among the entertainment and tech industry. Over time, we’ll be surrounded by Disney products and media. There might not be a way to slow this growth down but with informing oneself it can lead to a better understanding on how these powerful companies gain so much power and how they can be limited from achieving such dominating growth. There’s not just a concern for the entertainment industry but almost every industry as well.
Works Cited
Fung, Brian. “‘Near-Perfect Market Intelligence’: Why a House Report Says Big Tech Monopolies Are Uniquely Powerful.” CNN, Cable News Network, 10 Oct. 2020, www.cnn.com/2020/10/10/tech/apple-amazon-facebook-amazon-monopoly-data/index.html.
High, Kemet. “A Timeline of Disney’s Media Acquisitions.” Complex, Complex, 21 Nov. 2019, www.complex.com/pop-culture/2019/11/disney-acquisition-timeline.
Insights Team, Forbes. “Forbes Insights: How Disney plus Personalizes Your Viewing Experience.” Forbes, Forbes Magazine, 9 Sept. 2021, www.forbes.com/sites/insights-teradata/2020/04/21/how-disney-plus-personalizes-your-viewing-experience/?sh=70b49a7c3b6e.
Katz, Brandon. “‘Lion King’ Director Jon Favreau Understands WHY Disney Is Not a Monopoly.” Observer, Observer, 22 Aug. 2019, observer.com/2019/08/disney-stock-net-worth-jon-favreau-not-a-monopoly/.
Katz, Brandon. “Why Big Streaming Companies Are Determined to Keep Their Ratings Hidden at All Costs.” Observer, Observer, 28 July 2021, observer.com/2021/07/netflix-apple-amazon-disney-streaming-viewership-ratings-mystery/.
SO-YEON, YOON. “Disney plus Will Arrive Soon and Shake up the Streaming Business.” Korea JoongAng Daily, koreajoongangdaily.joins.com/2021/08/22/business/tech/disney-plus-netflix-OTT/20210822070100794.html.
