Disney's Monopoly on Culture and Entertainment

If you've ever seen an animated movie, it's probably related to one of several studios: Disney for classic 2D animations, Studio Ghibli for anime-style movies, and Pixar or Dreamworks for 3D features. What about cartoons? Those are usually with 20th Century Fox or MGM. What's interesting is how much of those Disney owns: they have control over Pixar and 20th Century Fox, not to mention Marvel, Lucasfilms, multiple network TV channels, and more. It's fair to say that Disney has control over a very large share of the market for entertainment.

While each of these studios still keeps their name, and to an extent, their creative marks on their works, Disney has started to take creative control over them. The Star Wars franchise is a great example: many argue that newer films are released primarily to advertise new toys and games so Disney can profit. Another example is the Toy Stories series. When Toy Story 2 was released, Pixar executives claimed that they did not have any more sequels planned; they did not want to be lazy and retrace old character arcs, plot lines, and fictitious worlds for profit. Yet after its acquisition by Disney, Pixar released a stream of sequels, including Finding Dory, Toy Story 3 and 4, and Cars 2 and 3. Over half of the last 10 Pixar films are sequels, in fact.

What's surprising about this is the counter-theoretical nature of Disney's pseudo-monopoly on entertainment. For most monopolistic and even collusive oligopolistic markets, the quantity supplied tends to be less than the quantity demanded; that way, companies can create a shortage, drive up prices, and not suffer from competition. Disney, however, goes the other way: they create a surplus, but use their control over media and entertainment to artificially create demand. Before Finding Dory, there was no demand for another sequel, fresh toys, or related merchandise, but by exploiting nostalgia and the fame of Finding Nemo, Disney was able to create demand for those products.

Perhaps other companies could learn from Disney - I think they have found a much better monopolistic model. Don't create a shortage, create artificial demand.

Source:
https://www.washingtonpost.com/business/economy/the-empires-arise-disney-and-universal-dominate-us-box-office/2015/11/02/4fb4a982-7ce4-11e5-beba-927fd8634498_story.html?utm_term=.dede0ee54655

Comments

  1. AnonymousApril 21, 2019 at 12:00 AM

    I really enjoyed this post and the post did a really good job explaining Disney's business model. It's surprising how effective the company is at creating artificial demand and looking into the topic further, I found more ways that Disney does so. One such example is Disney's vault. The vault is essentially a time period in which a certain Disney film will not be sold. This creates artificial demand for the product and people become scared they will not be able to purchase it and because supply is about to disappear completely. In doing so, artificial demand is created because demand increases simply because of the actions of Disney.

    Source : http://business.time.com/2011/05/20/dvds-in-the-disney-vault-b-s-manipulative-marketing-at-its-best-worst/

    ReplyDelete

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