Question

Questions

1. Every five to seven years, Disney can sell the same products to an entirely new audience (i.e., the next generation). The brand acts as a guarantor of the quality of the movie. You can never know what a movie will be like until you have seen it, but a Disney movie for the children always has a certain standard.
   1. Is the animated cartoon industry an attractive industry? Base your arguments on the attractiveness of the animated industry through Porter’s framework. Please identify who the suppliers, buyers, substitutes, new entrants, and rivalries are in the focal industry, indicates whether Disney faces a high or low threat from each force, explain why these threats are high versus low? What are the signs of threat for each force?

Five forces	Animated Cartoon
The threat of new entrants	High
The threat of buyers
The threat of suppliers	High
The threat of substitutes
The threat of rivalries	High

Answer 1

In the animated cartoon, the industry has an approximate market size of close to 14 Billion USD and a CAGR of 11%.

Considering the above facts it is a very lucrative industry with a large user base which is predominantly kids in the age group of 3 - 12 years. Walt Disney has a very strong and established brand image in this space due to it years of experience and expertise in the animated film industry. Doing a Porter's Five Forces Analysis of Walt disney we have the following position:-

1. Competitive rivalry or competition in the industry is very high primarily because of the presence of numerous players who are also well established like Time Warner , CBS , Universal pictures etc.
2. The bargaining power of buyers is also high because of the fact that the consumers are kids and the switching costs of moving on to a different and better cartoon is negligible.
3. Bargaining power of suppliers is low as the company is in a unique industry with very few players so the suppliers are content creators, animators and concept creators who have limited options.
4. Threat of substitutes is moderate as the internet has made it easier to access and view different types of content on varied platforms taking the consumers(in this case children) attention away.
5. Threat of new entrants is low as it is a very niche industry with few people who have the skillset and resources to develop and create animation at the scale done by Disney.

Considering the above factors and Disney's current position in the market, the animation is a good industry to be in.