Economic Conditions and Trends of the Walt Disney Company

With the economy remaining The Walt Disney Company’s largest threat, the recent turmoil in the financial markets has adversely affected the economic activity in the United States and other regions of the world in which Disney conducts business, and has affected need for some of Disney’s products and sets. A continued decline in economic activity could adversely affect need for any of their businesses, consequently reducing their overall revenue and earnings. A consistent decline in economic conditions could reduce attendance and spending at one or more of Disney’s parks and resorts, buy of or prices for advertising on broadcast or cable networks or owned stations, prices that Cable Service Providers will pay for cable programming, performance of their theatrical and home entertainment releases, and purchases of Company-branded consumer products. These conditions could also impair the ability of those with whom Disney does business to satisfy their obligations to Disney.

Changes in exchange rates for foreign currencies may also reduce international need for their products, increase the labor or supply costs in non-United States markets, or reduce the United States dollar value of revenue received from other markets.

Cultural and social values and trends

Each of Disney’s businesses creates entertainment or consumer products whose success depends significantly on consumer tastes and preferences that change in often unpredictable ways. The success of their businesses depends on their ability to consistently create and spread filmed entertainment, broadcast and cable programming, online material, electronic games, theme park attractions, hotels and other resort facilities and consumer products that meet the changing preferences of the general consumer market. Many of Disney’s businesses increasingly depend on worldwide acceptance of their offerings and products outside the United States, and the success of these offerings consequently depends on Disney’s ability to successfully predict and adapt to changing consumer tastes and preferences outside in addition as inside the United States.

For example:

  • The success of Disney’s offerings in the home entertainment market depends in part on consumer preferences with respect to home entertainment formats, including DVD players and personal video recorders, in addition as the availability of different home entertainment offerings and technologies, including web-based delivery of entertainment offerings.
  • Technological developments offer consumers an expanding range of entertainment options and if consumers favor options that Disney has not however fully developed instead of the entertainment products they do offer, their sales may be adversely affected.

Political and legal issues

The success of Disney’s businesses is highly dependent on maintenance of intellectual character rights in the entertainment products and sets they create. New technologies such as the convergence of computing, communication, and entertainment devices, the falling prices of devices incorporating such technologies, and increased broadband internet speed and penetration have made the unauthorized digital copying and dispensing of their films, television productions and other creative works easier and faster and enforcement of intellectual character rights more challenging. The unauthorized use of intellectual character rights in the entertainment industry is a meaningful and rapidly growing occurrence. These developments require Disney to devote substantial resources to protecting their intellectual character against unauthorized use and present the risk of increased losses of revenue as a consequence of unauthorized digital dispensing of their content and sales of unauthorized DVDs and other counterfeit products.

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