Disney’s Unique Business Model

Disney is, far and away, the most successful film studio in the United States today.  They have dominated the box office this year, making up half the highest grossing films of 2018 so far.  And this is not an anomalous year for them. They are also responsible for half the highest grossing movies of all time.  Of the 35 films to ever exceed $1 billion in worldwide gross, Disney made 17. With the pending acquisition of Fox’s movie studio by Disney, films released under Disney or one of its subsidiary studios will account for a projected 40% of the domestic box office in America.  This is all the more amazing when you realize that movies aren’t Disney’s primary business. They aren’t even Disney’s secondary business. After combining their consumer products and parks and resorts divisions to form the consolidated “Parks, Experiences, and Consumer Products” division, according to adjusted quarterly earnings numbers, the film studios are actually the worst performing division at Disney.  Here’s an even crazier idea: I propose that, as long as their films were beloved, Disney could lose money on every picture and it would not have a serious impact on their business model.  This is possible because Disney doesn’t function like most people expect, as a movie studio. In reality, they operate in an entirely different way.  That’s the secret of Disney. What most people think is their product is their R&D and what most people think is their secondary income stream is actually their product.

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YouTube and Netflix: A Business Strategy Comparison

Ten years ago there were two companies poised to be the de facto powers in online video. Netflix was the lone provider of piracy-free movies and television, cornering the market on mainstream entertainment online. YouTube had just rolled out its partner program for revenue sharing to lock in its biggest content creators, making it the most important and lucrative platform for independent creators and amateur video producers.

With the cost of storing and serving video content as high as they were (and still are) it seemed that both of these companies were destined to be natural monopolies. Now only one of those companies has locked in that position: YouTube. So why did YouTube succeed at becoming indispensable for independent creators while Netflix was unable to do the same for mainstream content? Ultimately, their divergent paths have to do with the relative strengths and weaknesses each had in their market segments and the strategies they employed to adapt to them.

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Predicting the Future

Niels Bohr, famed physicist and Nobel laureate, once said that “Prediction is very difficult, especially if it’s about the future.”  This puts strategists in an awkward position.  Whether you are a communication, brand, design, or business strategist, your job isn’t just to understand society as it is now, but also to make educated guesses as to where it is going. Martin Weigel, Head of Planning at Wieden+Kennedy Amsterdam, wrote in his blog canalside view that one of the categories of books a planner should read are those which let “us peer into the near-future…because our task is creating new futures for our clients’ businesses.”

I have had some modest successes with such predictions.  In one blog post, I foresaw a number of ways in which crowdfunding would evolve and cause disruptions in the market including the rise of Kickstarter consultants who would specialize in launching successful funding campaigns and Hollywood’s usage of the platform for mid-budget projects.  In a follow-on post, I predicted the business climate that would lead to a success story like Oculus Rift’s funding, launch, and sale to Facebook.  Looking into the future was also present in some of my work in ad school.  While developing work for a mock Nikon pitch, my team and I believed that DSLRs should defend their turf by contrasting the art a high end camera was capable of making with the ephemeral and forgettable snap-capturing of a cellphone camera.  A few years later, Apple picked up the same insight, but from the opposite side, and launched the “Shot on a iPhone” campaign to highlight the creative possibilities of their cellphone’s optics.

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Apple’s Strategy is Off-Track

Apple has been riding a high for several years now. It is consistently ranked one of the most valuable brands in the world, beating long time competitor Microsoft by a wide margin. It might seem odd, then, to deep dive into their shortcomings. Healthy brands like Apple are rarely thought of as needing a course correction. But is Apple as healthy as it appears? In the same way that I discovered Harley Davidson was actually better off than people gave it credit for in their brand audit (it was a category problem, not a corporate one), I believe the inverse is true with Apple: they are an ailing brand masquerading as a healthy one. Case in point, Apple just posted its worst quarter in a decade.

Is this the beginning of a major downturn for Apple? And if so, why are consumers shifting away from the popular brand? Some don’t believe there is a problem at all. Forbes contributor Mark Rogowsky posits that, despite the minor downtick in sales, Apple is still “an incredibly successful company.” On the other hand, Apple stocks dropped off a cliff in late April, though it is worth mentioning that the stock market does not have the best track record in tech company valuation. In contrast to Rogowsky, Dan Nathan of Risk Reversal, an influential market analysis site, was quoted in The Guardian as having said: “The jig is up for Apple. The big money’s known that for a while. But people love their iPhones so much, and the tech press are all fanboys, so people haven’t talked about it.” This suggests that many investors feel the same way I do: Apple’s health is somewhat of a façade. So what has us so spooked about Apple?

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Cultural Influence in Art and Advertising

There is an age old expression often tossed around the creative community: “Life imitates art.”  This is sometimes used in a joking fashion to describe when the events of a fictional story become paralleled in the real world later.  For example, when David Duchovny plays a sex addict in Californication, only to learn later that he, himself, suffers from sex addiction.  But it also refers to the philosophical belief that people are so profoundly affected by the art they consume that society itself is reshaped.  Oscar Wilde is quoted as saying that “Life imitates art far more than art imitates Life.”  Academically, this idea forms the framework for many types of media criticism, like cultivation theory which posits that the more time people spend ‘living’ in the television world, the more likely they are to believe social reality is like it’s portrayed on television.  There is certainly some truth to this view.  Although it is widely considered one of the finest films ever made, Clockwork Orange inspired a number of real life copycats, including a gang of wanna-be droogs who beat a homeless man to death, mirroring an early scene in the movie.  Kubrick voluntarily withdrew the film from UK distribution as a result.  It remained “banned” in England until the end of his life.
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Blue Shield of California Brand Audit

Blue Shield of California is in trouble, though it might not look it from the outside. They have strong revenue. They are a recognizable name. They are a member of one of the nation’s largest health insurance associations, and are one of the three largest health insurance providers in California. But despite all that, they are positioned disastrously in the market, in a way that makes them seem primed for failure.

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Solving Business Problems with Advertising Solutions

Recently, I began researching The North Face for something I was considering writing. As an outdoorsman myself, The North Face is part of a category I know well. I was eager to see how my own perceptions about the brand and its target consumers would stack up against what came out during my research. I made sure to talk to a variety outdoorsy people, from casual campers to serious adventure seekers, from REI yuppies to hardcore gear-heads, and went online to check what people were saying on review sites, opinion sites, and outdoor specialty sites. In the end, I came to some simple observations.

Basically, The North Face is in a healthy place right now as far as brand communications are concerned. The North Face’s brand is the clothing equivalent of Clif Bar’s brand. They are both lifestyle brands whose core identity is built around the serious adventurer. This attracts plenty of people who, despite not being truly serious adventurers themselves, want to be part of that lifestyle, and that’s both natural and great for the brand. When it comes to their ads, The North Face does a great job of capturing the mythos of the serious outdoorsman, even in their springtime ads that focus more on training than summiting snowy peaks. The work that Mekanism has been doing is, in my opinion, top shelf. They won two CLIOs for it. Their “This Land is Your Land” spot was so good Jeep basically ripped them off for their Super Bowl spot (and got caught for it). There was one point of weakness that I found, though. While they still communicate the idea of gear for the serious outdoorsman, they are beginning to lose the serious outdoorsman market, which could be a disaster for the brand.

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The Benefits of Travel for Account Planners

The truth is, as a planner, it’s often hard to know what to do to improve your skills.  Each project has the possibility of teaching something new about the work you do, if you’re open and receptive during the process.  On the other hand, it could teach you nothing.  The position that planning and strategy holds in the process of developing creative work often makes it hard to know how much your work led to the success or failure of the output. Was some aspect of the data gathering where the break happened?  Or was your interpretation of the data wrong?  Was it your creative brief that failed to get the right kind of work from your team?  Or was it the restrictiveness of the client’s demands?  Or was it that the creative team just wasn’t up to the task, heaven forbid?

There are ways to improve your skills outside the hands-on learning of the job.  You can read books about planning.  You can read blogs written by other planners, senior members of the field that you respect.  That being said, I can count on one hand the number of books about planning that have universal acclaim, and both books and blogs are typically written by working planners that may have personal or professional reasons to not give away all of their tricks.  Even ignoring those two weaknesses, this kind of material tends to show you various tools that can help you with your work, but often do very little to teach you how to get better at the core of it.  In other words, they teach you how to get data and how to organize it, but give very little help in learning to better interpret it.  And, of course, interpretation is 90% of job.

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Lumia Brand Audit

Nokia’s cell phone division has a long and storied past. One of the oldest manufactures of mobile devices, they have been making them since the early 1980s. In the 90s, they were the number one brand in the category, known for their iconic candybar-style phone. Their phones were so ubiquitous that their default ringtone was used in TV shows to signal to the audience that someone was receiving a call. For example, the kick-off of every “Big Cell Phone Guy” bit on Trigger Happy TV (2000-2001) was the Nokia default jingle. However, by 2010 they had given up most of their ground to touch screen phones, and Samsung surged ahead to grab the number one spot.

This represents an interesting opportunity to explore why Lumia, Nokia’s smartphone line, has been totally unable to become a competitive brand, despite the strength of Nokia’s manufacturing, the financial backing of Microsoft, and significant advances to its technological core that ought to make it competitive with its closest rivals: Apple and Google. Lumia’s history is complicated. It started as a Nokia brand, but ended as a Microsoft brand, feels like the only Windows phone, while just being the most recognizable one. A second rate brand running a third place operating system, Lumia has languish in relative obscurity, failing to garner the attention that their competitors did. But perhaps, buried deep in the creative outputs of three years of collaboration between two giant and famous companies, there just might be a brand worth saving.

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Digital Strategy and Social Platforms

Digital advertising is a bit of a minefield. The average user has an expectation that everything will be free. Advertisers want to do their best to reach users, but users have retreated behind ad blockers or have built up a sort of immunity to common advertising methods, often referred to as ad blindness. But brands can’t give up on advertising on the Internet. The Internet has become too important a part of too many people’s lives to be ignored. It has made major inroads into supplanting advertising’s old go-tos: TV, radio, and print. So there exists this tension between brands trying to find ways to reach their potential consumers in the digital space, and those consumers actively trying to avoid those brand messages while still benefiting from the free stuff that the brands are supporting.

One of the ways this has evolved over the years is that brands have begun putting more of their focus on platforms instead of ad buys. Why buy a bunch of banner ad space on some blog site that no one is going to see, when you could make yourself an undeniable presence on a social platform that millions of people are using? And even if you’re not getting enough free attention there, most platforms have options to pay to promote your content. So we see companies set up pages on Facebook and Twitter, and advertising agencies scrabbling to find ways for brands to inject themselves on Pinterest, Instagram, Vine, Yik Yak, Kik, Snapchat and so on. Brands are all afraid that if they are slow to adopt one of these potential advertising platforms they are going to be left behind. This is an incredibly dangerous way of thinking, for a number of reasons.
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