Internal Analysis

Disney annual/quarterly revenue history and growth rate from 2010 to 2022. Revenue can be defined
as the amount of money a company receives from its customers in exchange for the sales of goods
or services. Revenue is the top line item on an income statement from which all costs and expenses
are subtracted to arrive at net income.

 Disney revenue for the quarter ending December 31, 2022 was $23.512B, a 7.76%
increase year-over-year.
 Disney revenue for the twelve months ending December 31, 2022 was $84.415B, a 15.66%
increase year-over-year.
 Disney annual revenue for 2022 was $82.722B, a 22.7% increase from 2021.
 Disney annual revenue for 2021 was $67.418B, a 3.1% increase from 2020.
 Disney annual revenue for 2020 was $65.388B, a 6.06% decline from 2019.
 The Company evaluates the performance of its operating segments based on
segment operating income, and management uses total segment operating
income as a measure of the performance of operating businesses separate from
non-operating factors. The Company believes that information about total
segment operating income assists investors by allowing them to evaluate
changes in the operating results of the Company’s portfolio of businesses
separate from non-operational factors that affect net income, thus providing
separate insight into both operations and other factors that affect reported
results.
 The following are reconciliations of income from continuing operations before
income taxes to total segment operating income and revenues to segment
revenues (in millions):

Quarter Ended Year Ended

October 2, October
October 1, 2022 2021 Change 1, 2022 October 2, 2021 Change
Income from
continuing
operations
before income >100
taxes $ 376 $ 290 30 % $ 5,285 $ 2,561 %
Add (subtract):
Content License
Early
Termination(1) — — nm 1,023 — nm
Corporate and
unallocated
shared expenses 334 283 (18 ) % 1,159 928 (25 ) %
Restructuring
and impairment
charges — 92 100 % 237 654 64 %
Other (income)
expense, net (63 ) 13 nm 667 (201 ) nm
Interest
expense, net 371 317 (17 ) % 1,397 1,406 1%
Amortization of
TFCF and Hulu
intangible assets
and fair value
step-up on film
and television
costs 579 592 2% 2,353 2,418 3%
Total segment
operating
income $ 1,597 $ 1,587 1% $ 12,121 $ 7,766 56 %
Quarter Ended Year Ended
October October October 1,
1, 2022 2, 2021 Change 2022 October 2, 2021 Change
Revenues $ 20,150 $ 18,534 9% $ 82,722 $ 67,418 23 %
Contract
License Early
Termination(1) — — nm 1,023 — nm
Total segment
revenues $ 20,150 $ 18,534 9% $ 83,745 $ 67,418 24 %
During the fiscal year ended October 1, 2022, the Company recognized a $1,023 million reduction in
revenue for the amount due to a customer to early terminate license agreements for film and television
content delivered in previous years in order for the Company to use the content primarily on our direct-to-
(1)
consumer services (Content License Early Termination). The Content License Early

The Walt Disney Company has a generic strategy for competitive advantage that capitalizes on the
uniqueness of products offered in the entertainment, mass media, and amusement park industries. Michael
E. Porter’s model indicates that a generic competitive strategy enables the business to develop and
maintain its competitiveness in the target market. Disney’s generic competitive strategy is based on
making its products different from those of competitors. On the other hand, the corporation’s intensive
strategies for growth are focused on developing new products that suit global market trends. The company
grows through innovation and creativity, which enable the business to compete against large firms. For
example, the company competes against Viacom Inc., Time Warner Inc., Sony Corporation, CBS
Corporation, and Comcast Corporation, which owns Universal Pictures.
The Walt Disney Company’s generic strategy and intensive growth strategies address such competitive
landscape. Through corresponding strategic objectives and competitive advantages, the entertainment
conglomerate manages challenges in its industry environment.  Product development is The Walt Disney
Company’s primary intensive growth strategy. This strategy involves offering new products in the
company’s current or existing markets. For example, the company releases new movies with
corresponding merchandise to generate more profits from its target customers worldwide. This company
analysis also sheds light on the importance of Disney’s organizational structure, which provides the
organizational design to effectively manage product development. This intensive strategy links to the
differentiation generic competitive strategy in emphasizing uniqueness in product development. A related
strategic objective is to achieve business growth by effectively persuading customers to purchase
Disney’s products on the basis of their unique attributes, such as in entertainment experience.

Disney gross profit for the twelve months ending December 31, 2022
was $28.195B, a 12.49% increase year-over-year. Disney annual
gross profit for 2022 was $28.321B, a 27.07% increase from 2021.
Disney annual gross profit for 2021 was $22.287B, a 3.62% increase
from 2020.

Present here is a value chain analysis diagram for Disney. The diagram carries tons of information starting
with details on Parks and Resorts Unit. This is further subdivided into Firm Infrastructure, Human
Resource Management, Technology Development, and Procurement. There is data on Inbound Logistics,
Operations, Outbound Logistics, Marketing and Sales and, Services. Each of these categories carries
information under them in the form of a flow chart. This diagram is color-coded and depicts
comprehensive information in an effortless manner. A value chain analysis model is utilized in
understanding business and business-related activities in an uncomplicated way. It becomes easy to decide
on a further course of action using such diagrams.
FINANCIAL RATIO OF THE WALT OF DISNEY COMPANY

Strengths

Diversified services. The majority of business in the entertainment

industry specialize in a single niche for example, Netflix focuses
exclusively on streaming platforms. By contrast, Disney offers various
goods and services through its numerous business areas, including
studio entertainment, news channels, direct-to-consumer and resorts,
adventures, and merchandise Disney is committed to meeting all
client’s requirements, irrespective of age. They can spend their time
indoors with Disney must subscription services or outside at movie
theaters or Disneyland amusement parks (Trainer, 2022)

Greater brand value. The trademark and emblem of Disney are instantly
identifiable as films and termed made publicly are often marked with
the "b" to indicate that they are from the Walt (Viney Studios,
Corporation, or Production According to Trainers (2022) publication of
the world's most valuable branda, Disney was ranked sights and its
business worth to predicted to be $60.2 billion Through this capability,
the firm establishes a reputation as a respectable, family-oriented
corporation that caters to all consumers.

Weaknesses
Racism allegations. Disney faced criticism after it was revealed that
Barbara Fedida, a prominent supervisor at Disney's ABC News, had a
record of making prejudiced remarks and participating in other
blatantly racist and unethical conduct (Staff, 2020). The outpouring of
criticism and outrage addressed at Disney caused the firm to put the
implicated executive on administrative leave while investigating their
conduct. With rising protests opposing racism, the presence of racist
executives is a massive flaw (Staff, 2020).
Limited innovation. The limitation of inventiveness is related to Disney's
company tactics. The corporation innovates by continuously improving
its products. However, the institution's activities are constrained by a
lack of technological advancement in utilizing the latest tools. For
instance, Disneyland theme attractions incorporate emerging
innovations that are responsive rather than offensive (Causer, 2019).
The Walt Disney Company's conventional competitiveness approach
and concentrated growth plans place a premium on item quality and
distinctiveness, with a lesser emphasis on quick digitalization.

Major Financial and Internal issues that the company must address

 1st problem: Disney+ burns more and more money.

 2nd problem: Disney parks are too expensive.

Since the parks were closed during the pandemic, Bob Chapek during his
tenure focused mainly on developing the Disney+ streaming platform.

That platform in a short time has gained a great response from the public, and
in just under 3 years has reached 164.2 million subscriptions. Currently, it is
the third largest streaming platform by subscriptions, behind Amazon Prime
(200 million) and Netflix (223.09 million). Certainly a great result, but there is
one problem, however: Disney+ is unprofitable and the company does not
seem too concerned.
Former CEO Bob Chapek with this commentary on Q4 2022 highlighted the growth in
subscriptions and also exposed his confidence that Disney+ can become profitable in
FY2024.

Regarding subscription growth, nothing to say. They are increasing very fast and I would
not be surprised if Disney+ hits 200-220 million subscriptions in the next 2 years. On the
other hand, I would be definitely surprised if Disney+ becomes profitable by FY2024, and
now I will explain why.

This chart shows Disney+ quarterly revenues from Q1 2020. The first thing
that jumps out is that for the first quarter, revenues declined and therefore we
are seeing a slowdown in growth. This result, in contrast to that of new
subscriptions, is mainly due to the year-over-year deterioration in average
monthly revenue per paid subscribers.

2nd Problem: Disney parks are too expensive.

Looking at the results achieved in Q4 2022 we can see that there was a clear
improvement over Q4 2021. The reduction of restrictions related to Covid-19 meant that
Disney could make the most of what it has to offer within its parks. The sharply rising
revenues were not only due to this aspect, however, but also to an increase in park
prices. Ticket prices have increased and with it all the costs associated with the
experience itself.

If we were based on the Q4 2022 results, the price increase was a good move as the
demand was such that it supported them, however, I have concerns about whether this
is sustainable for the next few years.

This 2022 was a record year in terms of vacations, and the reason for this is mainly
because in the previous 2 years Covid-19 limited people's ability to be able to travel.
Many trips that should have taken place in 2020 or 2021 were postponed to 2022, the
first year where Covid-19 was not so limiting. This situation obviously also applies to the
Disney parks, where people were also willing to spend more after two years of waiting.
The year 2022 was basically one of the best years where the Disney parks were
very crowded.

From a revenue standpoint, 2022 was a success for the parks, but we often tend to
overlook something that is perhaps even more important. In fact, it would seem that the
parks' high prices have disappointed fans' expectations. Here are the results of a survey
issued by time2play based on 1,927 Disney World fans:

 92.6% believe that the cost of a vacation to Walt Disney World Resort is
out of reach for the average American family.

 68.30% believe Disney World has lost its magic due to excessive costs.

 66.90% believe that they will not get the full Disney World experience
unless they upgrade to Genie+ and purchase additional admissions to
Lightning Lane.
Overall, these results indicate a tendentially negative experience in Disney parks for
those who are not willing to spend an exorbitant amount of money.
https://thewaltdisneycompany.com/the-walt-disney-
company-reports-fourth-quarter-and-full-year-earnings-
for-fiscal-2022/