Question

Describe the competitive forces in the Walt Disney company industry, provide 2 competitors including the company's relative advantages and disadvantages to its competitors, can you provide a buy or sell recommendation and estimated price target. for the Walt Disney company

Answer 1

There are two main competitive forces in the media and entertainment industry :

• Threat of potential entrants - The digitization of media has increased the potential threat of new entrants into the industry. Streaming services such as Netflix have entered into direct competition with Walt Disney, and have begun producing their own shows. The barriers to entry have come down due to the widespread use of technology, penetration of smartphones and increasing data speeds on mobile networks.
• Threat of substitute goods - The younger generation and millenials are moving away from traditional media and entertainment. Studies have shown that they are increasingly using other sources than traditional movies and TV shows for entertainment. Other sources include Youtube, social media, foreign media etc.

Netflix :

Netflix has the advantage of the first-mover in streaming services. However, it lacks the wealth of experience of Walt Disney in producing content and operating in the industry.

Viacom : Viacom has the advantage of operating in the telecom and cable services industries in addition to being in the media and entertainment business. It has the advantage of leveraging and integrating the two businesses to increase their combined value.

Buy/sell recommendation and a price target involved in-depth, detailed study with a number of possible approaches. It is beyond the scope of this answer.