Marketing is one of the most critical factors in the determination of the success of companies. For this reason, firms have been on the forefront in determining the best approaches that they can use to establish themselves strongly over their competitors. The ever-growing pressure of competition means that companies have to move cautiously if they have to maintain their competitive advantages. Walt Disney Company, an American animation filmmaker, has been the best in the world for its segment of business for long. Part of the reasons it has maintained such reputation could be attributed to the strength of its marketing strategies. However, a recent move that saw the company grand Netflix Inc. a license to stream Disney’s content directly to consumers is regarded as one of the worst mistakes the firm has ever made. As this paper argues, the move risked the competitiveness of the company in the future through cutting the connection between Disney and its clients and establishing direct competition.
Walt Disney made the worst mistake in its marketing history by allowing the sale of its copyright to Netflix. In this deal, Disney would benefit from an immediate buyout as well as future revenues generated through streaming of its content on Netflix (Owens, 2017). The deal, which does not end until 2019, would allow all members of Netflix to gain access to all movies made by Disney, including all the new releases viewed in the theatres up to 2018. The mistake in this decision is the fact that the company lost a significant level of control of its clients. It is feared that the company will continue to lose the connection it enjoyed over the past with its customers since the clients have learned to associate the films with the new player, Netflix without remembering that they are original Disney’s production.
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The effects of the marketing decision that saw Disney sell some of its patents to Netflix have started to manifest. For example, two years before the end of the contract between the two companies, Disney has come out to indicate that it is not willing to continue the partnership (Kastrenakes, 2017). This move could be a realization that the company has lost a significant amount of money that it could have gained if it were in direct control of its marketing chain. In fact, Disney now suggests that it wants to launch a platform that would allow it to stream its own content to clients directly (Kastrenakes, 2017). Therefore, to argue that the management realized the mistake it made by allowing a third party to control its line of sale is plausible. As hoped, Disney will be able to regain its financial stability since at the moment, Netflix is trading at higher volume of sells than Walt Disney even while the firm does not make its own films (Owens, 2017). However, even while such a move has the potential of reversing the trend in profitability, it is likely to take more time than expected to realize any viable outcome since it will require more investment in the new technologies associated with streaming.
Disney has a plan to develop a line of marketing that will enable it stream content directly to its clients in the same way that Netflix has been doing, but is unlikely if such a move is plausible. It is important to consider both sides of the coin. First, it is arguable from research that companies that control their sales activities through interacting with its clients directly has a better understanding of their needs, which translates into competitive advantage (Bezek, 2017). However, on the contrary, developing competitive advantage through the marketing department does not happen overnight. Instead, it takes commitment from the marketing departments of affected companies to first research the nature of the market and realize the existing gap before moving to capitalize on the opportunity. In this case, Walt Disney made a mistake since allowing Netflix to control its products through interacting with its clients made the latter firm a direct competitor. Therefore, the new strategy might take time before success is realized once more.
Netflix has moved too fast to be realized by Walt Disney in establishing itself as a direct competitor. As much as the firm does not produce its own content it has managed to use the popular brand names such as Marvel Studios and of course, Walt Disney to establish itself among the consumers. There is would likely be no significant effect realized from the withdrawal of Disney from the deal since Netflix is now a bigger firm than Walt Disney had regarded it when it first entered the market. Walt Disney and its managers should be credited with the creation of a company that is now riding on the evolution of technology to gross profitably on content it does not produce. The scenario in future will be different since as opposed to Netflix trying to penetrate the market, it will be trying to suppress the resurgence of its maker. This point indicates the fact that creation of competitive advantage is different from sustaining it, while Disney might have done well in establishing itself as the best animation film company in the world, but failed in the wrong run to sustain such advantage.
What is now at stake for Walt Disney is the loss of its connection with its former customers. Netflix and other related companies have emerged as one of the most competitive businesses in the line of trade that Disney dominated through killing any form of direct competition that would arise. The business must now embark on a re-advertising itself back to former customers, and the process may require heavy investment in new technologies and marketing strategies. The only hope in this move is the fact that Walt Disney has a long-standing reputation as the best animation film company in the US and around the world (Owens, 2017). There is also a need that Walt Disney remains keen enough to avoid mistakes such as the one it made in signing a contract with Netflix in future or else it might end up being acquired by the same firms it enters into contact with.
In conclusion, Walt Disney is considered the best animation film company in the world, and it has held such reputation for a long time. however, as it appears, the company has lost grip in terms of the sustenance of its competitive advantage in the near past. The move to enter into contract with Netflix is considered the worst marketing mistake that the management of the company have made in the contemporary business world. While the deal appeared to be useful in the past, it has turned out to be sour since Netflix is now grossing higher than Walt Disney. It means that Disney has lost control of its marketing chain, which translates to loss of its clients to Netflix. It also implies that Netflix will be a direct competitor, in fact, a stronger one when Disney develops a platform that will stream its films directly to consumers as it has already decided to act. The management should be on the lookout to avoid entering into such deals in future.
References
Bezek, I. (2017). Disney Leaves Netflix: A Big Mistake . Seeking Alpha . Retrieved 17 September 2017, from https://seekingalpha.com/article/4097341-disney-leaves-netflix-big-mistake?page=2
Kastrenakes, J. (2017). Disney to end Netflix deal and launch its own streaming service . Retrieved 17 September 2017, from https://www.theverge.com/2017/8/8/16115254/disney-launching-streaming-service-ending-netflix-deal
Owens, J. (2017). Disney and Netflix: What the split means for viewers . MarketWatch . Retrieved 17 September 2017, from http://www.marketwatch.com/story/disney-and-netflix-what-the-split-means-for-viewers-2017-08-08
