Gabe Hall
Mrs. Straub
AP Economics
12 April 2016
Disney’s Monopoly Over Entertainment
How often do you think of Mickey Mouse when you’re watching ESPN? How often do you think of Elsa or Olaf when watching a Harry Potter Weekend Event on ABC Family (now Freeform)? Did you ever think of Cinderella’s Castle when watching the epic lightsaber battle between Rey and Kylo Ren in “The Force Awakens”? Well, after reading this, you may never be able to perceive your favorite cinematic universes and television shows the same way again. With Marvel’s “Captain America: Civil War” coming to theaters on May 6th of this year, and “Rogue One” coming later in 2016, I have decided to delve into the empire of Disney Entertainment, and make the argument that they truly have a monopoly over the world of entertainment.
The Walt Disney Company started in 1923 in the rear of a small office in Los Angeles. It was there that Walt Disney, and his brother Roy, produced a series of short live-action/animated films collectively called the Alice Comedies. The rent was a mere $10 a month. In 1937, Disney’s innovative first full length animated feature, Snow White and the Seven Dwarfs, was released to critical acclaim and worldwide success, and the rest was history. A little less than a century later, the Walt Disney Company is currently worth north of $75 billion. How did this miniscule company rise to become one of the top companies in the world? Some may argue that it is because of their parks and resorts. Granted, attractions such as Disney World and Disney Cruises are the second most profitable aspect of The Walt Disney Company. However, this is not what sets them apart. Companies such as Universal and Carnival are in competition with Disney, thus this sector of Disney’s business exists within an oligopoly - a state of very limited competition. What sets them apart is their true dominance in entertainment.
The Walt Disney Company began as animators, creating feature films such as the Hunchback of Notre Dame, The Little Mermaid, and Aladdin, but have since grown to dominate both the television and silver screen markets. In 1984, ABC acquired ESPN. When the Walt Disney Company acquired the American Broadcast Company’s parent company Capital Cities Communications in 1995, both ABC and ESPN became a subsidiary of Disney. This move by Disney allowed them to not only control ABC and its subchannels, but also to control the cornerstone of sports broadcasting, thus beginning their monopoly over entertainment. The television market may seem like a monopolistic competition, but as Disney continues to acquire more and more production companies - such as A&E Networks - their dominance over the entire market will continue to grow as well. Disney, while continuing to diversify itself in television, turned to movies to expand its portfolio. In 2006, Disney made its first big move, by acquiring Steve Jobs’ Pixar at a valuation of $7.4 billion. Although this may seem like a large, and risky investment, with many potential opportunity costs. Disney Pixar has since created many Academy Award winning animated films such as Up and Inside Out, with every film being a raging success at the box office. The Walt Disney Company furthered its reach and control on the entertainment market, by making one of the most lucrative deals in the history of the company, by purchasing Marvel Entertainment in 2009 for $4 billion. Since then, the Marvel Comic based films - including the highly successful Marvel Cinematic Universe - have generated an incredible $8.5 billion. Disney and Marvel have found a way to make even the most obscure heroes have critical and financial success at the box office (i.e. Guardians of the Galaxy). Finally, Disney’s latest move may prove to be the final nail in their monopoly over the world entertainment market. In 2012, Disney purchased Lucasfilm, the company with the rights to Star Wars, for $4.05 billion. Already, Disney is seeing a return on their investment, as “Star Wars: The Force Awakens” has made over two billion dollars at the box office - with more films to come. Although companies such as Fox, Sony, and Warner Bros are also in the market, they do not have the entertainment ‘forces’ that Disney has. Thus, through the acquisitions of companies such as ABC, ESPN, Pixar, Marvel, and Lucasfilm, and the creation of others (such as the Disney Channel), have established Disney’s monopoly over entertainment.
The monopoly that the Walt Disney Company has over the market of entertainment is astounding. Entertainment alone contributes to over half of its yearly revenue - roughly $28 billion. Sure, Disney entertainment does not necessarily have a monopoly in the true sense of the word -
it is not a single producer in the market - but with their increased presence and increased success, their control of the market will only become stronger. If they keep creating films at the level of “Star Wars”, and more than likely of “Captain America: Civil War”, the demand for these movies will continue to increase at an indeterminable rate with the supply of the movies, and the monopoly (I honestly wouldn’t be surprised if they one day acquire Hasbro, and actually own Monopoly) that Disney has over entertainment will grow in power and in profitability. Thus, I contend that the conglomerate of Walt Disney Company has a monopoly over the entertainment business.
Works Cited
"DISNEY's $4 Billion Marvel Buy: Was It Worth It?" Newsarama.com. Web. 12 Apr. 2016.
Nudelman, Mike. "Here's Where Disney Really Makes Money." Business Insider. Business Insider, Inc, 14 Jan. 2015. Web. 12 Apr. 2016.
"The Walt Disney Studios - History." The Walt Disney Studios - History. Web. 12 Apr. 2016.
This blog post was very interesting for I knew that Disney owned a lot of companies, but I didn't know that they were basically a modern day oligopoly. I thought that this was very well researched and was very well written. Also I know that there are a lot of hype around upcoming movies produced by Disney and agree that it will defiantly continue to increase in demand IF Disney can keep creating new and interesting movies that appeal to a vast majority of the population. Overall, this post was 10/10.
ReplyDeleteDisney might be bringing the entire enterainment industry up in the world, bringing greater quality material and refreshing other whole industries in the process. Bought a limited edition Captain Phasma action figure? Disney's got a firm hold on the toy industry as well, and is motivating tie ins so that even kids want to watch the movie and buy the toys as a package deal. Don't forget the video games, the TV shows, the clothes, the food packaging... All these industries are being used by disney to boost each other and make the entertainment industry a bigger player in the economy than it has ever been. Movies may not control countries but they can sure headline any kind of economics bulletin on major websites, which gives them a lot of press and more popularity among potential audiences. Disney is playing this one well.
ReplyDeleteInteresting argument since the movie industry is truly defined as an oligopoly. I think you're right though, Disney seems to make the movie industry into a monopoly. An oligopoly allows for competition among firms, but Disney is clearly winning the competition. I think that has a lot to do with the target market movie firms acquire. Disney movies can be watched by anyone really. I'm so fricken excited for Finding Nemo, like are you kidding me? When I'm 89 years old I'll still be watching Disney movies. Other movie firms acquire a specific target market, while Disney movies are suitable for any age.
ReplyDeleteIt is crazy to think how far Disney has come. Like you said, they started from an office in Los Angeles and are now valued at $75 billion. It will definitely be interesting to see what direction Disney heads in these next couple years. Their investments have seem to have paid off so far, especially with Lucasfilms. One can only imagine the quality of movies and entertainment that can be produced with as much resources that Disney has.
ReplyDeleteIt’s hard to argue that Disney hasn’t become a monopoly, with their created movies, stores, toys, TV shows, theme parks, etc. With their purchase of different networks, I’ve noticed Disney movies are often advertised on ABC Family/ Freeform too. By not directly putting their name on their purchases, Disney has been able to keep its illusion of a family-friendly business, when in actuality, they’re business is growing at an unbelievable rate. Overall, I really liked how you explained how Disney has such a widespread reach over entertainment, creating different markets from monopolies to oligopolies to monopolistic competition.
ReplyDeleteIt's impossible to ignore how far Disney has come since they started, but I had no idea how much they actually owned. I think that is one main reason why they are able to go along without anyone realizing how much they own because they don't make it seem like they own a lot. Unless they completely take over the industries that they are a part of or people start to complain I don't think much will be done to go against them since at this point they aren't really doing anything wrong, just buying out other profitable companies. Overall it'll definitely be something interesting to watch in the future because odds are that they aren't done buying more companies to improve their own.
ReplyDeleteAlthough Disney has acquired many channels in the entertainment network, I don't think they will ever truly become a monopoly. There are so many different networks in the entertainment and even with time, I don't think Disney will buy all of these top channels. On the other hand, I was very intrigued by reading about your point of becoming a monopoly. I did not realize just how big Disney was and you really helped put that into perspective for me. Growing up as a kid, I loved going to all the parks, so it was a great business move for Disney to buy ESPN and ABC because it can target to a more teenager target market. It seems that Disney will continue to grow every year and increasing their profit, but they might not ever be the only business in the entertainment network. Overall, this post was very intriguing and connected well to economics, but I do wish you would have talked about your picture in the post because I believe that could have really helped to add some points into your post.
ReplyDeleteEven with Disney owning all these channels I personally don't think that Disney will ever have a monopoly over the other companies. One the other hand I do think it was smart for Disney to buy more older targeted channels because Disney channel and the parks themselves are more targeted towards younger children. While Disney will continue to grow they will never have a complete monopoly over the bussiness; it will remain how it is with a few large firms.
ReplyDeleteUntil reading this, I didn't really think about how Disney controlled so much of the entertainment world. Sure I knew they had amusement parks and cruises, but their control over other companies that you wouldn't think was controlled by Disney is amazing. Disney buying ESPN and ABC made the efforts to target a growing teen population was smart, and smart decisions like that are what has propelled the small company paying $10 a month for rent into one of the major industries in the world. Because of their growth already, they now have the equipment and tools necessary to stay on top for years and years to come.
ReplyDeleteIt is amazing that is worth so much, and that they own so much of what we look at today as far as our entertainment goes, but we've got to give them credit; they do make good movies. If they didn't make such good movies, then they wouldn't be nearly as large of a company as they are. One thing you didn't mention though was how this large company affects the economy.
ReplyDeleteDisney has a pretty large effect on the economy because of all of the movies they sell, and the visits the the theme parks, and the merchandise they sell. Their revenue is extremely high, to the point that if they did make a bad movie, it really wouldn't affect them too poorly.
Since we live in the U.S. it is impossible for there to be a true monopoly as there are laws against it, but I do agree that Disney has a good stranglehold on the entertainment sector of our economy. It very much does seem like they have a monopoly over the majority of the media sector and it also is crazy to think that Disney branches across so many different markets and does well in all of them.
ReplyDeleteIt's funny, I was just saying this during resource. I don't thinks it's possible to have a true, complete monopoly in the world of entertainment as there will always be someone else creating content. Even so, I feel like Disney might be over-extending itself a bit. I'm curious to see just how far Disney will go with this.
ReplyDeleteKelin Olson
It is amazing that is worth so much, and that they own so much of what we look at today as far as our entertainment goes, but we've got to give them credit; they do make good movies. If they didn't make such good movies, then they wouldn't be nearly as large of a company as they are. One thing you didn't mention though was how this large company affects the economy.
ReplyDeleteDisney has a pretty large effect on the economy because of all of the movies they sell, and the visits the the theme parks, and the merchandise they sell. Their revenue is extremely high, to the point that if they did make a bad movie, it really wouldn't affect them too poorly.
It’s amazing how popular Disney became in such little time. I agree that they don’t have a true monopoly over the entertainment industry, but they do have a monopoly in a way. I think they have gained this monopoly-like status because they have been the most successful in producing what consumers want and because they have a large variety of ways to earn money (from movies to theme parks to cruises); therefore, they are earning the majority of the profits because they truly earned it, not just to crush their competitors. It would be interesting to look at data of the entertainment industry from the years before and after 1937 (the year “Snow White” was created) to see how much Disney had an impact on entertainment right away and how their competitors’ earnings changed upon the beginning of Disney’s productions.
ReplyDeleteIt’s amazing how popular Disney became in such little time. I agree that they don’t have a true monopoly over the entertainment industry, but they do have a monopoly in a way. I think they have gained this monopoly-like status because they have been the most successful in producing what consumers want and because they have a large variety of ways to earn money (from movies to theme parks to cruises); therefore, they are earning the majority of the profits because they truly earned it, not just to crush their competitors. It would be interesting to look at data of the entertainment industry from the years before and after 1937 (the year “Snow White” was created) to see how much Disney had an impact on entertainment right away and how their competitors’ earnings changed upon the beginning of Disney’s productions.
ReplyDeleteI can't believe I can't realised this before. Over half of our lives are practically owned by Disney. How we view sports to some of our favorite tv shows. Honestly they started their company at just the right time. I'd really like to know how they would have been affected if they had started up earlier or later. Would they be as successful as they are today if they had started earlier than they did? Or would they just flop and go nowhere?
ReplyDeleteI was shocked that Disney was right up there with Apple, Fox, and Timewarner when it comes to revenue, but sometimes we forget to think about things other than the movies themselves. It was also alarming to me to discover how much of their revenue comes from places like Disney World. Disney is clearly a monopoly that will continue on for many generations to come due to their creativity and imagination. I think it is good for them that they are beating out other companies, especially because of the famous story on how Walt Disney had been told multiple times that he could never be successful in entertainment due to his “lack of imagination”. Overall, well written and interesting blogpost.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteThe Disney corporation definetly has a monopoly over the film and TV industry, it is evident by the numerous corporations that they have outright bought in the last 20 years, but it doesn’t truly come to the public eye. Disney has definitely made some of the classic movies that kids of all ages love and enjoy. Also, the Disney has made a dream come true for kids wanting to experience the magic the Disney can produce with the creation of Disney World. Disney has made itself into a world leader in entertainment because of the masses that it can reach with the different forms of media, but also because of the many attractions that any age can enjoy at their theme parks and cruise lines, Disney sure knows how to make money.
ReplyDeleteI agree, it's definitely noticeable that Disney is really starting to become the #1 source of entertainment, especially not only on television but now every year a Star Wars movie is slated, and don't forget all the Marvel Movies, animated series, and also consider the revenue they bring in just for people going to disney world. The fact that they now have the subsidiaries of ABC and ESPN, and now owning Marvel and Star Wars, goes to show that they really do own it all.
ReplyDeleteWow Gabe what an interesting topic. It's fascinating to see how much revenue a company that is generally associated with animation films directed toward a youthful audience can generate. What I'd like to see more of is Disney's' impact on the American Economy seeing as they've generated the third largest amount of profit I think it would be an easy addition for you to make. Overall nice job.
ReplyDeleteI'm shocked at how much control disney has over television channels! I personally still love disney movies i loved as a kid and to know they have so much power came as a shock although it shouldnt surprise me that they have so much power over ABC and ABC Family because they are constantly playing disney movies on this channel. I also knew that they had purchased the rights to the star wars movies but I didnt know they purchased the rights to the marvel company.
ReplyDeleteThis is a very interesting topic. I guess I knew before that Disney had a huge influence on the economy, but I never really realized how many different subsidiaries they own. I'm glad that Disney hasn't exercised their monopolistic ability too much or raised prices on their products and services too sharply, because I enjoy their things like Star Wars and Marvel and I'm glad that they make these products readily available. Also, I find it interesting that I can't really think of another company that has as much influence over entertainment as they do, so that is probably good for their profits and brand recognition.
ReplyDeleteThis blog post was very interesting because I was aware that Disney owned a lot of companies, but I didn't know that they were basically a modern day oligopoly. I thought that this was very well researched and was very well written. As you mentioned, with all the hype around these new movies the demand for Disney will only increase and they will continue to become more powerful.
ReplyDeleteThis blog post is highly intriguing as it discusses a topic most consumers do not think about. While I do not agree that Disney really has a monopoly on the entertainment industry, I think your prediction that Disney will continue to gain power in the industry is accurate, it'll keep moving closer to a monopoly. Disney is currently out competing its rivals at the amusement park and the box office and if these trends continue they may render other entertainment companies in the industry obsolete.
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