Think of any princess. Who comes to mind first? Whoever you just chose, you probably picked a Disney character (Cinderella, anyone?), not any actual person like British Princess Kate or the like. And this just goes to show how much Disney influences our everyday lives and
our culture.
Disney has expanded to be much more than the a small animation company it once was, now owning an extensive amount of hotels (including the Aulani in Oahu), four cruise ships (and three more coming soon), a private island (Castaway Cay), a private club (Club 33), and theme parks all over the world (located in such places as Tokyo, Paris, Hong Kong, and Shanghai).
An oligopoly’s traits includes few large producers, differentiated (or homogeneous) products, non-price competition, controlling prices, entry barriers, mergers, and not being economically efficient, and Disney abides by all of these aforementioned traits. To start off with, there aren’t many companies out there that do what Disney does and Disney is definitely a “large producer.” Disney’s products and services are differentiated from any other comparable brand and are instantly recognizable to consumers. The abundance of advertising that Disney does indicates non-price competition. Even beyond the obvious advertisements, such as movie trailers, Disney capitalizes on merchandise that does the advertising for you. After all, you can’t go to Disneyland without buying some type of Disney-themed souvenir. Furthermore, Disney is a price maker, and they love making their prices insanely high (Club 33 is a $25,000 initiation fee per person and costs $10,000 per year!). With customer loyalty so high that people are willing to pay those insane prices, it’s impossible for anyone else to compete and enter the market as well. Perhaps the most prominent oligopoly trait Disney possesses is mergers (Pixar Animation Studios, Lucasfilm, Marvel Studios, ABC, ESPN, etc). Lastly, Disney doesn’t abide by the allocative efficiency and productive efficiency rules, especially considering they price the prettiest sequined rose-gold backpack at $85 (but it’s always sold out anyway).
What potential benefits or issues do you foresee if Disney continues to expand? What other prevalent companies demonstrate oligopolistic traits? (And most importantly, how can I get that sequined rose-gold backpack?)
These are truly crazy, yet so true examples of everything that is going on with Disney. It's very nature initially was designed for this moment, where every single person in America has at least one memory from one of their properties. Whether it's ESPN or Marvel or LucasFilm or ABC, Disney has positioned themselves as the largest entertainment conglomerate ever. Just recently, they've moved in a more monopolistic direction as opposed to oligopoly. This is in part due to the fact that they bought Fox's film and TV assets over Comcast Universal. With this move, they could begin to assert their dominance and might one day face antitrust lawsuit.
ReplyDeleteSource: https://observer.com/2018/08/disney-fox-sale-netflix-hulu-amazon-streaming/
Well first, I love the title. I think it accurately describes the conversation going on. As Disney is a big part of multiple generation I found it interesting how you addressed them as not the magical theme it portrays. I liked how you addressed essential parts of their marketing such as the merchandise. The article didn't discuss theme parks as much but you did and I think that it is really important that we discuss that because Disney does get a lot of their revenue from the multiple theme parks it has.
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