Thursday, July 11, 2013

Is the Walt Disney Company an Oligopoly Structure?


The monarch of this magic kingdom is no man but a mouse -- Mickey Mouse. The Walt Disney Company is the world's largest media conglomerate, with assets encompassing movies, television, publishing, and theme parks. Walt Disney Studios produces films through imprints Walt Disney Pictures, Disney Animation, and Pixar, and its Marvel Entertainment is a top comic book publisher and film producer. In addition, Walt Disney Parks and Resorts operates the company's popular theme parks including Walt Disney World and Disneyland.

Oligopoly is a market structure in which the number of sellers is small. It requires strategic thinking, unlike perfect competition, monopoly and monopolistic competition. Under oligopoly, Walt Disney Company is big enough to affect the market. The Company must respond to it's rivals’ choices, but it's rivals are responding to your choices as well. In oligopoly markets there is tension between cooperation and self-interest. If all the firms limit their output, the price is high, but then firms have an incentive to expand output. The techniques of game theory are used to solve for the balance of an oligopoly market.



An oligopoly is much like a monopoly, in which only one company has control over most of a market. In an oligopoly, there are at least two firms controlling the market. There are only a small number of firms that control the large majority of the market. There is no competitive pricing and consumers only have very few to choose from.Disney's major competitors are the other large media conglomerates, such as News Corporation (NWS)Time Warner (TWX)Dreamworks Animation SKG (DWA), and Viacom (VIA), who directly compete with Disney in various business lines.

However,barriers to entry are high. The most important barriers are economies of scale, patents, access to expensive and complex technology, and strategic actions by incumbent firms designed to discourage or destroy nascent firms. Additional sources of barriers to entry often result from government regulation favoring existing firms making it difficult for new firms to enter the market. 



By, Lee Sin Yee
0315598

5 comments:

GuadalupeRuiz said...

okay but how is walt disney an example??? all you did was explain what an oligopoly was???

Unknown said...

i agree with Guadalupe you didnt say if Disney was an oligopoly or not

El said...

Thank you! This is a great explanation. Yes Disney is a participant in an oligopoly market because there are only a few companies dominating the market. If one company increases their output, the others must match.
https://medium.com/spokkz/the-big-brands-that-dominate-the-media-industry-62e63afe0c8d

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