Disney’s vertical integration strategy has been far-reaching and diverse; establishing the company as a force to reckon with in the world of entertainment.
When the company got founded on 16th October 1923 by Roy O. and Walt Disney, it was known as Disney Brothers Cartoons Studio. The name got changed to the Walt Disney Studio in 1926.
By 16th December 1929, the Disney brothers’ partnership was replaced by four companies which are the Walt Disney Productions, Ltd.; Walt Disney Enterprises; Liled Realty and Investment Company; and the Disney Film Recording Company.
The end of the brothers’ partnership marked a significant turning point in the company; it opened the door to Disney’s vertical integration as well as its diversification into other fields such as merchandising, and establishment of parks.
By 6th February 1986, Walt Disney Productions was renamed the Walt Disney Company; this is the company’s official name to date although it is most commonly referred to as Disney.
Disney together with its subsidiaries and affiliates identifies as a leading diversified international family entertainment and media enterprise. Thus understanding how the company has successfully implemented a vertical integration strategy in its almost 100 years of existence is essential.
Before we discuss the examples of forward and backward vertical integration of Disney, let us understand the meaning of vertical integration.
See also: Netflix’s Vertical Integration Strategy and Examples
What is vertical integration?
Vertical integration refers to an expansion strategy whereby a business corporation expands its business either forward or backward in a bid to control certain aspects of its supply chain. This is done with the principal aim of controlling and addressing disruptions that can be averted when the company handles parts of its supply chain that were previously handled by external suppliers and contractors.
Vertical integration can be implemented in two ways:
- Forward vertical integration is where a business expands downstream in its supply chain. For instance, Disney’s vertical integration into the distribution of its animations and movies through its online streaming platform, Disney+ is an example of forward vertical integration in action.
- Backward vertical integration strategy refers to when a company expands upstream in its supply chain. For example, since Disney began as a cartoon production studio, its formation of an art school in 1932 to train animators indicates the company adopting a backward vertical integration strategy. This is because by training animators, the brand has gone a step backward in its supply chain. It has also eliminated the need to contract third-party animators.
See also: Starbucks’ Vertical Integration Strategy
Is Disney an example of vertical or horizontal integration?
Disney is an example of a company with both vertical and horizontal integration. Its expansion to film distribution and streaming services shows how the business has vertically integrated. Its purchase of other entertainment companies such as Pixar and Marvel studios indicates the company’s utilization of horizontal integration.
The company’s acquisition of additional profitable entertainment companies such as 21st Century Fox and Star Wars are other examples of horizontal integration strategies applied by Disney.
These acquisitions have added to the teeming animations and movies produced by Disney. The expansion to television and streaming services aids the company to be in charge of how their animations and movies reach customers. These show that Disney employs both vertical and horizontal integration strategies in its operations.
See also: Amazon’s Vertical Integration Strategy and Examples
Examples of Disney’s Vertical Integration Strategies
- Disney art schools
- Television and cable TV
- Book publishing
- Disney Theatrical Group
- Magazines
- Home video distribution
- Disney Music Group
- Retail stores
- Radio stations
- Disney streaming services
Disney has vertically integrated in the above-stated ways which encompass a range of business functions including production, distribution, marketing, and sales of its products and media services.
These examples of Disney’s vertical integration strategies aid the company in controlling and actively managing its supply chain. It has also been beneficial in aiding the company to closely monitor the creativity of content and ensure that it meets changing market requirements and customer expectations. Let us look at the various ways these Disney’s vertical integration examples have impacted the media and entertainment industry.
Disney art schools
One of the earliest ways Disney vertically integrated was by starting an art school on November 15, 1932. The school was founded with the sole aim of training animators that will work for the company.
The formation of the school and Walt Disney’s interest in the training aspect of animation propelled his involvement and that of his brother, Roy. O in the formation of the California Institute of the Arts (CalArts) in 1961.
At its inception, CalArts included a Disney-developed animation program as part of its degree offerings; effectively becoming the alma mater of many of the animators that are working or worked at Disney.
Currently, Disney offers training in animation, art, and storytelling through the Walt Disney Family Museum Animation Academy. The training is done through both virtual and on-site classes, school experiences, and workshops.
Disney’s vertical integration example of training animators aids the company in supporting the development of creative talent in individuals. It also provides the company with a ready crop of animators that can aid the company in creating top-notch animations; thereby further strengthening its supply chain and position in the world of entertainment.
Disney’s vertical integration examples in television and cable TV
- Walt Disney Television
- Disney Television Animation (DTVA)
- Entertainment and Sports Programming Network (ESPN)
- Disney Channel
Walt Disney Television
Disney’s vertical integration strategy through the use of television in its business growth began with the establishment of the Walt Disney Pictures Television Division in 1983. The name was shortened to Walt Disney Pictures Television and later to Walt Disney Television. The changes occurred in 1985 and 1988 respectively.
Before the establishment of its own television division, Disney collaborated with the National Broadcasting Company (NBC) and Columbia Broadcasting System (CBS) to produce an hour-long Christmas special in 1950 and 1951 respectively.
The excellent ratings of the Christmas special made other television stations seek collaboration opportunities with Disney in the production of television series. Walt Disney saw this as an opportunity to diversify and he asked for funding for Disneyland. Apart from starting Disneyland, the collaboration spurred the creation of the Disneyland anthology series for the American Broadcasting Company (ABC) through the American Broadcasting Paramount Theatres.
Disney’s vertical integration example of making television series impacted the television industry by introducing and propelling a move from live programs to filmed television shows. This further propelled the company to set up its own TV division after over 30 years of partnering with other television stations to air its series.
Walt Disney Television produced several television shows including Good Morning, Mickey!, Donald Duck Presents, You and Me Kid, Welcome to Pooh Corner, Contraption, and many others.
The acquisition of Capital Cities/ABC by Disney in early 1996 expanded the capacity of Walt Disney Television beyond the production of television shows into the production of telefilms. The acquisition was another example of Disney’s vertical integration strategy. Top among the telefilms produced due to this acquisition includes Toothless, Tower of Terror, Rodgers & Hammerstein’s Cinderella, Oliver Twist, and Flash.
Thus, Disney’s vertical integration example through the setting up of its own television division impacted the media and television industry by introducing new production models and by enabling the company to better control the distribution of its productions to consumers via television.
Disney Television Animation (DTVA)
Disney’s vertical integration into television includes its establishment of the Disney Television Animation (DTVA) which was established in 1984, December 5th to be precise.
At that time, it was referred to as Walt Disney Pictures Television Animation Group until 1987 when it got rebranded as Walt Disney Television Animation, and then in 2011 when it took on the new name; Disney Television Animation (DTVA) which has been maintained to date.
The establishment of DTVA was spurred by the reorganization and reincorporation of the brand. Disney’s vertical integration which aided the creation of Disney Television Animation was its move toward creating, developing, and producing animation-oriented television series, films, specials, and short films.
Although Disney had already begun vertically integrating into television with its production of One Hour In Wonderland which was a Christmas special made in 1950, it was the establishment of DTVA that enabled the company to produce its own original animated television series.
Disney’s vertical integration into animated television production through the establishment of Disney Television Animation enabled the production of several original animated television series including Gummi Bears, the Wuzzles, Fluppy Dogs, DuckTales, The New Adventures of Winnie the Pooh, etc.
All the original animated television series were created with the main aim of being broadcast on television through Disney Junior, Disney XD, and Disney Chanel. However, with the advancement of the digital revolution through technology, these series are also available on the company’s streaming platform, Disney+.
Apart from the airing of animations, DTVA has also been used by the company to promote different live-action film franchises produced by Disney Branded Television. This includes Disney Channel Original Movies, Disney+ Original Films, and shorts based on the films from the Walt Disney Studios library.
Disney Television Animation also features shorts based on popular rides and attractions from Walt Disney World and Disneyland, as well as shorts based on past productions from Walt Disney Animation Studios.
The establishment of DTVA enabled Disney’s vertical integration as regards the airing of animations. This means that the company no longer depended on contracts from television stations to air their animations.
In addition, the company had full control of the revenue generated from the television airing as well as direct access to customer feedback through the TV ratings of the animations they aired.
Disney’s vertical integration example through Entertainment and Sports Programming Network (ESPN)
Disney’s vertical integration example through television included delving into the world of sports. This was done through the company’s acquisition of Capital Cities/ABC Inc. The acquisition granted Disney access to the cable networks of the American Broadcasting Company (ABC) and Entertainment and Sports Programming Network (ESPN) which further enhanced their ability to deliver their products (shows, films, and animations) to a broader audience.
In order to further strengthen its position in the world of sports and avoid any supply chain disruptions that could arise from third-party contractors, Disney started creating talk shows and movies on sports. The channel airs a variety of live sports broadcasts, talks, sports highlights, news, press conferences, and documentary-styled shows.
Some prominent shows that air on ESPN includes SportsCentre, Around the Horn, GameDay and Pardon the Interruption. Films produced under ESPN include O.J.: Made in America, No Mas, and Nature Boy.
Disney vertically integrated backward in sports when it delved into purchasing some sports teams. First was the franchise for a National Hockey League team, the Mighty Ducks of Anaheim in 1993, and later, the purchase of 25% of the California Angels baseball team in 1995 from Gene Autry. Disney however sold its hockey team on February 25, 2005.
The company went a step further and integrated forward by building a baseball stadium, Disney’s Wide World of Sports baseball stadium at Walt Disney World. The stadium got opened to the public for the first time in 1997.
Disney’s forward and backward vertical integration examples in sports have aided in strengthening the company’s operations in the sports industry as well as increasing overall revenue and profitability.
Disney Channel
The Disney Channel is a pay television channel launched by the company on April 18, 1983. When it launched, it was a premium channel aimed at airing family programs. This was due to the proliferation and availability of television sets in most American homes.
Disney’s vertical integration through this premium cable TV birthed the production of several Disney Channel Premiere Films including Tiger Town, Gone Are The Dayes, and The Undergrads.
By October 1997, Disney Channel Premiere Films were renamed to Disney Channel Original Movies with several films including Under Wraps, High School Musical, The Color of Friendship, and The Cheetah Girls.
The channel’s programming shifted focus from 1997 to become focused on caring programs for children and adolescents between 7 to 17 years. Hence, it now airs theatrically released and original television films, original first-run children’s television series, and other selected third-party programming.
The vertical integration of Disney to provide cable TV access through the Disney Channel spread beyond the United States to other countries including Isreal, Canada, Malaysia, Greece, India, Spain, Brunei, China, France, and Germany.
This expansion to other countries meant providing content with audio subtitle tracks in the country’s most common languages. These have enhanced the acceptability of their content and aided acceptance in different markets which ultimately increases their customer base.
Book publishing
Disney vertically integrated backward when the company moved into publishing in 1990. At that time, Disney formed Hyperion Books, Hyperion Books for Children, and Disney Press. These divisions were saddled with the responsibility of producing books on Disney and non-Disney subjects.
The vertical integration strategy employed through book publishing was to publish books from lesser-known, upcoming, or new authors. They also leveraged the already existing Disney products and talents. This led to the incorporation of an umbrella division, the Disney Publishing Group (DPG) that comprised Hyperion Books, Hyperion Books for Children, and Disney Press in January 1992.
The proliferation and saturation of the market with Disney books led to the merging of Hyperion Books for Children and Disney Press in March 1995. These now operate as a division under Disney Publishing Worldwide (DPW).
Hyperion Books was sold to Hachette in 2013. The deal provided that all books relating to Disney and its products including young adult titles would be transferred to DPW through its Disney-Hyperion imprint. While previously published and 25 yet to be published adult titles were taken over by Hachette.
Disney also publishes books through ESPN Books which was started in 2004. ESPN Books specializes in producing sports-related titles as well as a yearly sports encyclopedia. It also ranks top-selling sports books.
Some notable books that have resulted from Disney’s vertical integration into publishing include Don’t Stand Too Close to a Naked Man, Jump at the Sun, Man in the Middle, the Kingdom Keepers, Now I Can Die In Peace, and Twisted Tales.
With advancements in technology, changes in the reading preference of individuals, and the push towards sustainable use of resources, aside from making its books available in print Disney Publishing Worldwide now engages in digital publication. Customers can now access their favorite Disney titles through the website and various Disney book apps.
Disney Theatrical Group
An additional aspect that Disney has vertically integrated is having its own theatrical group in-house through the incorporation of the Walt Disney Theatrical Productions, Limited on February 8, 1993.
Before then, the Ice Capades, a traveling entertainment show featuring theatrical ice skating performances started adding Disney’s segment to their performances in 1949. When Disney characters became a hit at the 1964 New York World’s Fair, it inspired Walt Disney to create an outlet for live characters.
Thus, when Feld Entertainment’s Ice Follies and Holiday on Ice approached Disney about doing a Disney-related show on ice in 1979, Disney accepted the proposition and the two companies began productions as Walt Disney’s World on Ice in 1981.
This partnership is still ongoing and has seen the production of several shows worldwide including the most recent 2023 remake of the 1994 animated film, The Lion King.
The shows are primarily targeted at children with feature figure skaters depicting the roles of Disney characters in performances derived from an array of Disney films.
Disney’s vertical integration into theatrical production has given the company extra leverage to build on its existing partnership experiences while adding and improving on such performances.
Disney Theatrical Group through its division, Disney on Broadway produces live shows, stageplays, and musicals worldwide. Some of the notable shows include Aladdin, Tarzan, and Camp Rock.
The company has also utilized this aspect of its vertical integration to provide teachers with access to a wealth of resources that are useful in teaching children about Disney characters as well as aiding them to perform Disney Musicals through Disney on stage.
Disney has also gone a step further by directly selling the tickets for its theatrical performances. These varied vertical integrations of Disney aid in increasing its overall revenue and diminishes the challenges that are commonly experienced by other entertainment companies that have not taken such an active role in their supply chain.
Disney Vertical Integration Examples through Magazines
- Disney Adventures
- ESPN The Magazine
- Disney magazine
Disney has vertically integrated by producing the magazines listed above. The company was also the producer of the leading American consumer science monthly magazine, Discover, between September 1991 to October 2005 when they sold the magazine to Spin and Gear magazines.
Additional magazines that have been produced or are still produced by the company include Disney Junior, Disney Cruise Line (DCL), FamilyPC, Disneyland Resort (DLR), FamilyFun, Disney Twenty-three, Celebrations Disney, and Walt Disney World (WDW) Magazines.
Disney Adventures (D.A.)
Disney Adventures (D.A.) was first published on October 9, 1990. It featured a wide variety of items including entertainment news, puzzle games, educational materials, profiles of celebrities, and user contributions. Hence serving as a children’s entertainment and educational magazine.
The magazine served as a means of vertical integration by providing the consumers with the latest news about the company’s cable TV, Disney Channel. This was provided alongside other regular features in a segment tagged “Ticket” which included a guide to music, movies, and books.
In the early years of the magazine’s existence, a new issue was made monthly, thus the magazine was published twelve times per year. The contents of Disney Adventures revolved around Disney characters and products such as DuckTales, ESPN Action, and Mickey Mouse.
The magazine also contained articles on the latest movies from the company as well as features on Walt Disney Parks and Resorts. It further contained trends, science, travel, heroes, explorers, and a segment for real-life adventures; extreme sports, archaeology, and other hobbies and careers.
Over time, D.A. diversified and began featuring comics and other items from non-Disney sources. The magazine publication was also reduced to ten times per year by 1999 before it got discontinued with its last edition published in November 2007
The vertical integration of Disney through D.A. was useful in educating and entertaining children thereby inadvertently increasing their interest in order products of the company such as movies, music, and parks.
ESPN – The Magazine
In addition to vertically integrating into the world of sports through the ESPN television channel and book publishing, Disney also ventured into the production of a sports magazine in 1998. At first, the magazine was published weekly but it was later changed to a biweekly in 2016 and subsequently, it was published monthly.
ESPN The Magazine covers mainly college football, Major League Baseball, college basketball, National Basketball Association (NBA), National Football League (NFL), and National Hockey League.
Part of the reasons why Disney’s vertical integration strategy in the production of this magazine became profitable was due to the humorous and lighthearted approach it utilized in relating sports news and issues.
Disney announced on April 30, 2019, that it would no longer produce ESPN The Magazine in print. This change was propelled by the reduction in print subscribers and the increasing number of online subscribers. Part of the statement read,
“Consumer habits are evolving rapidly, and this requires ESPN to evolve as well.”
ESPN Front Row
The September 2019 issue was the last print version as the company now publishes through its website. The magazine has further vertically integrated by having a Spanish version, ESPN Deportes La Revista.
Disney magazine
Disney Magazine was a quarterly magazine first published in December 1965 as Disney News. At that time, it was a free benefit for members of the Magic Kingdom Club (MKC), hence it was the Official Magazine for Magic Kingdom Club Families. Patrons of the magazine were later charged a cover price with MKC members being entitled to a discount.
The magazine changed its name to The Disney Magazine in March 1994. This change was necessitated by the increased content as well as the widening customer base outside the MKC; which were southern California residents to include a nationwide audience.
The decrease in the number of subscribers after the Magic Kingdom Club was shut down in 2001 and people’s increasing use of the internet led to the ending of the publication of the Disney Magazine with the Summer issue in 2005.
Home video distribution
Before Disney’s vertical integration into the distribution of its home video, the company had licensed some of its movies for distribution through DiscoVision and Fotomat. This arrangement ended when the company ventured into distribution through Buena Vista Home video.
Buena Vista Home Video was legally incorporated on February 13, 1987. It was renamed Buena Vista Home Entertainment (BVHE) in 1997 and still retains it as its legal corporate. In its branding and the public space, however, it operates as Walt Disney Studios Home Entertainment, starting from 2007.
BVHE, the distribution arm of Disney, takes care of distributing Disney’s audiovisual content such as television series, animations, and movies worldwide. They distribute across a range of home media formats including LaserDiscs, video cassettes, DVDs, Blu-ray discs, Ultra HD Blu-ray, and digital media.
In July 1998, Buena Vista Home Entertainment partnered with Warner Home Video in July 1998 for the latter to distribute over 100 Buena Vista/Disney titles on DVD in ex-Soviet Union and Europe, Middle East, and Africa (EMEA) regions until the end of 2000.
The termination of the agreement meant that BVHE could fully control the distribution of all Disney productions in all formats across the world. Disney’s vertical integration into the full distribution of its productions is highly beneficial to the company as it no longer really on third-party distributors nor shares profits with them.
Disney Music Group
The vertical integration of Disney into the production of music was informed by the need to own the soundtrack and music used in its animations and movies as well as a means of finding and promoting upcoming talents.
From the founding of the company, music has been an inherent part of its success as Disney uses both public-domain and original music in its animations.
The company produced its first music in 1929 when Walt Disney and Carl Stalling wrote Minnie’s Yoo-Hoo for Mickey’s Follies. Disney went on to partner with music companies such as Irving Berlin Music and Bourne Co. Music to produce and publish most of its soundtracks and theme songs.
Disney vertically integrated into music publishing in April 1947 when the Walt Disney Music Company (WDMC) was incorporated. It went into music recording in 1956 when the Disneyland Records label was formed.
In a bid to further strengthen its position in music production and publishing, Disney formed Hollywood Records in January 1990 to offer a wide selection of recordings ranging from rap to movie soundtracks. It also founded Lyric Street Records in June 1997 as a division of Hollywood Records for the production of country music.
With the recent proliferation of various digital platforms for the production and publishing of music, Disney has also delved into this aspect of the music industry by forming a new label, RMI Recordings, in June 2017.
RMI Recordings was formed in collaboration with the founders of DigiTour Media, the producers of live events with social media artists. The label was formed to sign digital-first talents; artists that have not been previously published on other mediums.
As of July 2023, Disney Music’s Vevo account on YouTube was one of the most viewed YouTube channels.
The vertical integration of Disney also included the holding, production, distribution, and sponsoring of concert events related to Disney through its division, Disney Concerts. This means that revenue that would otherwise be shared between the company and concert organizers and companies can now be fully earned by the company.
Disney’s vertical integration into the production and publishing of music has aided the company in avoiding the hassles that come with using third-party music in its movies. It has also created another profitable business for the business with the production of non-film music.
Retail stores
Another aspect that shows Disney’s vertical integration is its operation of retail stores. This began on March 28, 1987, when the first Disney store was opened in the Glendale Galleria in Glendale, California. It was further strengthened by the company’s purchase of Childcraft in April 1988.
This aspect of Disney’s vertical integration built on its existing customer base by producing merchandise and other consumer products that were direct offsprings of the company’s movies and characters. Some of the products sold include toy cars and trains, action figures, dolls, collectibles, legos, puzzles, backpacks, and clothing.
Disney stores were so successful, profitable, and widely accepted that the company had over 450 stores worldwide in 1996. By 1999, the number of stores increased to over 725.
At first, Disney owned and operated all its retail stores but beginning in 2002, the company began to sell and license some of its stores. For instance, In 2002, the Oriental Land Company acquired the Disney stores in Japan. Two years later, in 2004, the majority of North American stores were sold and licensed to The Children’s Place.
However, by March 2008, the North American Disney Stores were bought back by the company when Hoop Retail, The Children’s Place subsidiary operating the Disney Stores filed for Chapter 11 bankruptcy. The Japanese stores were also bought back by March 2010.
These buybacks proved beneficial to Disney as sales of its merchandise from these two regions were once again fully controlled by the company. For example, instead of the revenue from the sale of items such as bags or toys being earned by the companies that operated the stores, Disney now directly earned the revenue.
Additional outlets were opened in several other countries including Ireland, China, and Germany. The company also brokered partnerships with retail chains such as JCPenney and Target to have its products sold at their outlets.
Similar to other retailers, Disney has largely moved the bulk of its merchandise sales to its online store while closing a considerable number of its physical stores.
Disney’s vertical integration through its retail stores and subsequent move to online stores became necessary as a means of expanding its market and presence globally beyond its previous limited physical presence.
Radio stations
Although Disney had delved into radio previously in 1955 when Walt Disney started The Magic Kingdom radio show which was heard on ABC Radio from Mondays through Fridays, the company’s acquisition of Capital Cities/ABC in early 1996 birthed the establishment of Disney Radio.
Disney Radio debuted on November 18, 1996, and was targeted at children, pre-teens, and teenagers. The lineup of programs included music, news, stories, features, and contests.
Most of the music played on the radio station was by teen musicians that were signed to the Disney Music Group record labels. Compared to other contemporary hit radio stations of that time, Disney Radio distinguished itself by playing only current hits. This further enhanced its popularity and acceptability among its target demography.
The station also imbibed vertical integration in its operation when it introduced the Radio Disney World Tours in 2000 and 2001 and the Radio Disney Music Awards from 2001 to 2019.
The Radio Disney World Tours traveled to major states in the United States including New York City, San Francisco, and Chicago. The tour played in theatrical venues and featured upcoming talents as well as the radio’s Djs. The tour was quite successful as it had audiences of up over a thousand people per show.
The Radio Disney Music Awards was an annual awards ceremony aimed at honoring popular music artists featured on the network. This was achieved by letting teenagers vote for artists as winners in various categories including Most Talked About Artist, Best Music Group, Best New Artist, Artist with the Best Style, etc.
The combination of the music awards and the tours added considerably to the popularity of the radio station. The radio’s utilization of satellite operations and accessibility on online platforms such as radiodisney.com also increased the radio’s reach to a wider audience.
Although Radio Disney was closed down in 2021, it was an integral part of Disney’s vertical integration as it served as a medium for promoting Disney’s artists, movies, resorts, and other products.
Disney vertical integration examples in streaming services
- Hulu
- Disney+
- Disney+ Hotstar
- ESPN+
- Star+
As traditional television and cable television viewership declines, streaming services have continued to soar. Thus, Disney’s move towards vertically integrating through streaming services has proven to be a great move over the years.
Before Disney began streaming its movies itself, customers could stream the company’s movies on Netflix. But the company announced in 2017 that it was pulling all its movies from the platform as it planned on starting its own streaming platform.
Disney’s prior horizontal integration through the purchase of other entertainment companies also proved beneficial as it provided the company with more content for its various streaming platforms. Let us look at Disney’s streaming services as part of its vertical integration strategies.
Hulu
Disney first ventured into the streaming industry in August 2016 when the company bought a one-third stake in BAMTech Media. However, the company did not have an active streaming platform until December 2017 when its acquisition of 21st Century Fox’s film and TV studios gave Disney a majority stake (60%) in Hulu, a subscription streaming service.
Gradually, Disney got full control of Hulu when WarnerMedia sold its 10% stake back to the company through a stock buyback on April 15, 2019, and Comcast’s subsequent relinquishment of its control to Disney on May 14, 2019.
Hulu is the platform through which Disney offers entertainment and content targeted at mature audiences. Thus, apart from Disney content, it also features films, television series, music, and other content from several entertainment and new companies including Spotify, Warner Music Group, News Corporation, DreamWorks Animation, NBC Universal, Searchlight Pictures, and Sony Pictures.
Disney+
Disney+ originated from BAMTech Media; through a series of acquisitions, Disney gained control of BAMTech Media in March 2018 leading to the launch of Disney+ on November 12, 2019.
Disney conducted a test of the streaming market by launching a streaming service in the UK back in 2015 prior to their official launch of Disney+. The streaming service was called DisneyLife. After the launch of Disney+, it replaced DisneyLife in the UK and was also made available in other countries such as Australia, New Zealand, and Puerto Rico.
Disney+ serves as a subscription video-on-demand over-the-top streaming service that mainly distributes films and television series produced by The Walt Disney Studios and Walt Disney Television. It has dedicated content hubs for the company’s different arms, including National Geographic, Disney, Freeform, Disney-Pixar, Star Wars, and Marvel.
The streaming service also airs original scripted and unscripted content and also serves as a channel for premiere access, network releases, and some third-party content.
Disney+ Hotstar
Disney+ Hotstar is a spin-off of Disney’s acquisition of Hotstar’s parent company, 21st Century Fox. Since the streaming service was already very popular in India due to its existence in the country since 2015 when it was first launched, Disney leveraged its strong market position to gain access to its high customer base and maintain its position as the dominant streaming platform in India.
The streaming service was extended to other countries including Indonesia, Malaysia, and Thailand. It features content from Disney Star’s local networks, including original programming, films, live sports, and television series.
Content from third-party sources including HBO, Hooq, and ShowTime is also streamed on the platform. The 2020 pandemic also led to the streaming premieres of Indian films due to cinema closures.
ESPN+
ESPN+ was successfully launched on April 12, 2018, as a subscription-based video streaming service in the United States. This streaming service was jointly ownedThe Walt Disney Company and Hearst Communications own this impressive platform.
Like all other ESPN-related aspects of Disney’s vertical integration, the streaming service was sports-focused. The content that is streamed through ESPN+ includes ESPN original documentaries, college sports, combat sports, hockey, soccer, rugby, auto racing, golf, cricket, and tennis, and cricket.
Star+
The brand, Star is an acronym for Satellite Television Asian Region which was established in 1991. It was a Hong Kong-based satellite broadcaster founded by Hutchison Whampoa. It was acquired by News Corporation in 1993.
Similar to Hotstar, Disney’s acquisition of 21st Century Fox granted the company ownership of Star. The streaming service, Star+ was launched in August 2021 to cater to Disney customers in North and South America.
The content available through the platform include original local content produced in Latin America as well as general entertainment content carried on Disney+, live sports from ESPN, and sports content from Africa, Asia, and Europe.
See also: Telstra’s Vertical Integration Strategy and Examples
Tabular Summary of Disney’s Vertical Integration Examples
| Disney’s Vertical Integration Examples | Objectives and Function | Type of vertical integration |
|---|---|---|
| Disney art school | Training of animators | Backward |
| Walt Disney Family Museum Animation Academy | Training of artists, animators, and storytellers. | Backward |
| Walt Disney Television | Airing programs such as music, news, stories, features, and contests targeted at children, pre-teens, and teenagers. | Forward |
| Disney Television Animation (DTVA) | Covering and reporting sports-related matters and news | Forward |
| Entertainment and Sports Programming Network (ESPN) | Creation and airing of live sports broadcasts, talks, sports highlights, news, press conferences, and documentary-styled shows. | Forward |
| Disney Channel | Production and airing of Disney Channel Premiere Films for the family and later, Disney Channel Original Movies for children and adolescents between 7 to 17 years. | Forward |
| Hyperion Books, Hyperion Books for Children, and Disney Press | Producing books on Disney and non-Disney subjects. | Backward |
| ESPN Books | Covering and reporting sports-related matters and news | Backward |
| Disney Adventures (D.A.) | Children’s entertainment and educational magazine | Backward |
| ESPN The Magazine | Production of live shows, stageplays, and musicals. | Forward |
| Disney magazine | Publication for the Magic Kingdom Club members and the general public in future years | Forward |
| Buena Vista Home Entertainment (BVHE) | Distribution of Disney’s television series, animations, movies, and other audiovisual content across several home media formats such as DVDs, Blu-ray discs, Ultra HD Blu-ray, and digital media. | Forward |
| Disney Stores | Sale of products and merchandise based on Disney-related movies and characters. | Forward |
| Disney Theatrical Group | Holding, production, distribution, and sponsoring of concert events related to Disney. | Backward |
| Radio Disney | Holding, production, distribution, and sponsoring of concert events related to Disney. | Forward |
| Disney Music Group (Disney Music Publishing, Buena Vista Records, and RMI Recordings) | Music recording and publishing | Backward |
| Disney Concerts | Streaming of diverse Disney media, video on demand, and other third-party content directly to customers | Forward |
| Disney+, Disney+ Hotstar, Hulu, ESPN+, and Star+ | Streaming of diverse Disney media, video on demand and other third-party content directly to customers | Forward |
See also: Tesla’s Vertical Integration Strategy and Examples
Conclusion
Disney’s vertical integration strategy has been reinforced by the company’s mission of informing, entertaining, and inspiring people around the globe through the power of unparalleled storytelling.
By utilizing these vertical integration examples, Disney is better able to reflect its iconic brands, the creative minds behind its enterprises, and the innovative technologies that make it one of the world’s premier entertainment companies.
With the wide array of vertical integration that has been implemented by Disney, it is arguably one of the largest companies with vertical integration in the world.
Disney’s effective use of vertical integration has enabled the company to take an active role in the training of animators, production, and distribution of several animations, television shows, and movies. It has also been able to produce and publish books, music, and merchandise based on its movie characters. All these have established Disney as a force to be reckoned with in the world of entertainment.
See also: Disadvantages of Vertical Integration
Last Updated on November 2, 2023 by Nansel Nanzip Bongdap
Blessing's experience lies in business, finance, literature, and marketing. She enjoys writing or editing in these fields, reflecting her experiences and expertise in all the content that she writes.
