The Walt Disney Company, home to Mickey Mouse, Donald Duck, and other iconic characters, has a stellar reputation in many parts of the world for its family-friendly entertainment offerings. The company's parks and resorts division operates theme parks in five global locations, including a recent $1.8 billion park in Hong Kong. Disney's fabled studio entertainment unit has an illustrious history in both animation and live-action features. The Lion King, released in 1994, is the highest grossing animated film of all time.
More recently, Disney has enjoyed massive hits with liveaction features. These include Pirates of the Caribbean and its sequels as well as classic American fare such as the TV show High School Musical.
However, despite high worldwide awareness levels of the Disney brand, as of 2006 only 25 percent of the company's revenues came from outside the United States. Historically, the Disney team has created products at its headquarters in Burbank, California, and then exported them to the rest of the world. Now, as the company targets China, India, South Korea, and other emerging markets, it is departing from its "one size fits all" approach. One factor driving the strategy change: the first-year visitor count in Hong Kong fell short of the target figure of 5.6 million people. This prompted company executives to step up efforts to educate the Chinese about Mickey Mouse, Donald Duck, and other Disney characters.
As Bill Ernest, managing director, told the Financial Times, "If you haven't grown up with the brand, the stories, or the theme, you are not quite sure what you are walking into." In Hong Kong, Disney officials were slow to recognize that Chinese vacationers who live on the mainland often book package tours. Tour operators choose restaurants, shopping opportunities, and other destinations that generate the highest fees and commissions. At first, Hong Kong Disneyland didn't offer a tour package that included dinners. A new "dining with Disney" program was quickly rolled out. To round out the promotion, individual tour operators were offered a 50 percent individual discount as an incentive to visit Disneyland personally so they would have first-hand experience at the park. "Disney has learned that they can't impose the American will- or Disney's version of it-on another continent.
They've bent over backward to make Hong Kong Disneyland blend in with the surroundings."47 Dennis McAlpine, media and entertainment research specialist "We have been U.S.-centric forever. We realize that if we're going to be a global network, then we need to solicit material from around the world."48 Gary Marsh, Disney Channel Worldwide, commenting on Disney's new programming divisions in the UK and Japan Disney also went to great lengths to capitalize on an astrological coincidence: According to the traditional Chinese calendar, 2008 was the year of the rat. In Hong Kong, Mickey and Minnie Mouse wore special red costumes as Disney proclaimed 2008 to be the "Year of the Mouse." Because the Chinese government tightly controls television and motion picture standards, Disney emphasized affordable consumer products such as plush toys and Disney-themed clothing to generate awareness and interest in the Disney brand.
In 2009, amidst the global economic downturn and ongoing challenges at Hong Kong Disneyland, Disney's Parks and Resorts division announced plans for a new $3.6 billion park in Shanghai. The proposed park will be owned jointly by Disney and the Shanghai municipal government. Consisting of a theme park, hotel, and shops, the development would create 50,000 much-needed jobs. Shanghai Disneyland is an important element in Disney's strategy for penetrating the local market.
However, the proposal does not address Disney's need for increased media exposure; company officials believe that a Chinese Disney TV channel is essential to build awareness of the Disney brand and interest in the new theme park. Disney's other divisions are also pursuing a more localized approach in key emerging markets. As Jason Reed, general manager for Walt Disney Studios International Productions, noted, "We've been very successful with our big global productions, such as Pirates of the Caribbean and National Treasure. But we think there's a natural way to supplement these films in areas like China, Russia, and India-areas that have built-in film traditions."
For example, in India Disney is abandoning its go-it-alone policy and partnering with local companies such as Yash Raj Films. One new Hindilanguage show, Dhoom Machaao Dhoom, concerns a girl's quest for identity after living in the United States; another show, Vicky and Vetal, concerns a boy's friendship with a 300-year-old ghost. The new approach is clearly paying off. In 2008, Disney released Roadside Romeo, its first animated feature developed specifically for India. The film was box-office gold, with the best opening weekend of any Disney feature in India. Disney is hoping to appeal to India's family-oriented middle-class consumers; core themes include "believe in yourself, express yourself, and celebrate your family." Because the number of cable television subscribers is increasingly rapidly, Disney launched the Disney Channel and Toon Disney. In addition, the company acquired Hugama, a children's channel. Disney is also making Indian versions of its hit movie High School Musical. One challenge in India is the number of languages and dialects. Roadside Romeo was released in Hindi, Tamil, and Teluga.
Future projects may be produced specifically for southern India where movie preferences are markedly different than in the north. Disney is "going native" in other emerging markets as well. 2009's Book of Masters was the company's first live-action film for the Russian market. A Russian version of High School Musical is also in the works. Next up: the Middle East. As Disney's Jason Reed says, "There's a really strong affinity between the strong family values in the region and the Disney brand. We want to go out and try to make a film that will play to families from North Africa to the Gulf States."
Discussion Questions
1. Why is it necessary for Disney to build brand awareness in China and other emerging markets?
2. Do you agree with Disney's decision to pursue a localization approach in emerging markets?
3. Why is High School Musical so successful in global markets?