1) Disney’s centralized ecosystem built out and up from a strong foundation, guided by entertainment and storytelling.

Unlike skateboarding or streetwear, the world of Disney grew out of a single hub—Walt Disney’s cartoons and his passion and vision for family entertainment. Officially founded in 1923 as the Disney Brothers Cartoon Studio, Walt’s animation branched into comic books, live-action film production and cable television, which then spiraled into theme parks, hotels and resorts, cruises, retail, distribution and programming networks and more.

Each additional rung to Disney’s world blossomed out of a single mantra: retail is entertainment and entertainment is retail. This crafted a symbiotic feedback loop, with each additional branch to the Disney ecosystem fueling those that came before it, spinning the flywheel as the company scaled.

Importantly, the growth of this world transpired incrementally over the course of many decades. It slowly built out and up from a strong foundation, girded in the original cartoon characters and the world that Walt Disney imagined for them between the 20s and 60s (scalability, authenticity). While Amazon, another conglomerate, is also considered an “ecosystem” that is composed of many different companies operating semi-independently, but on a single platform, what differentiates Disney is that it has strived to develop its ecosystem as equally industry-minded (nurturing its network of companies) and consumer-minded (as a liveable world that prioritizes consumer experiences).

This foundation and blueprint for the “Disney world” has allowed the company to expand with a next-to-no barrier to entry for customers, who are able to climb up and down the ladder of the ecosystem from essentially frictionless cartoons to Disney’s hotels, resorts and cruises (accessibility). Disney has also remained an attraction for all types of people—and notably for middle America, rather than a company like Away, which caters mostly to coastal elites.

2) Disney layered additional products and services on a strong foundation, creating a feedback loop that opened up new business opportunities.

Disney’s prowess in film and television production and distribution is built out of Walt’s original vision for family entertainment (scalability). Starting with the launch of the Disney Brothers Cartoon Studio in 1923, which later became Walt Disney Productions, animation and live-action slowly gained speed. The now iconic Mickey Mouse first appeared in the 1928 short “Steamboat Willie,” and more Disney stock characters emerged in the subsequent years, some of which Walt began licensing for merchandise as early as 1929. By the 30s, Disney toys and other items were sold in department stores—royalties from these products helped finance “Snow White and the Seven Dwarfs,” Disney’s first full-length feature, which made $8 million the year of its release in 1937—an unprecedented success that made cinematic history. This pattern—of financing a subsequent project with the help of another product vertical—remained integral to Disney’s development over time.

Disney created a number of features in the interwar years, but another hit did not come along until 1950 with “Cinderella.” This post war box office success solidified Disney’s stature in the entertainment industry and the cash flow from “Cinderella” allowed the company to expand its products and services to realize more of Walt’s initial vision for the Disney ecosystem. Disneyland opened in 1955, guided by the company’s newly established research and development arm—the Imagineers—which was formed to conceptualize liveable Disney experiences. Though not all of the Imagineers’ work has materialized in the way that Walt dreamed up—EPCOT, his Experimental Prototype Community of Tomorrow was meant to be a futuristic utopia but folded into Disney World as a World’s Fair-like attraction, and Celebration, envisioned as be an idealistic township, faces the same issues of any other community—the Imagineers continue to embody the spirit of Walt today.

As the company continued to expand into theme parks and hospitality, entertainment served as the point of departure and the Imagineers fleshed out their ideas through the lens of storytelling and their future visitors. When Disney officially entered the hotel and resort industry in 1971, it led with the assumption that hospitality could be as much about entertainment as about lodging, offering themed attractions just like Disneyland (authenticity). Accessibility was also core to Disney’s DNA; like the ecosystem in its entirety, the parks were constructed for a spectrum of customer experiences and price points in order to foster more participation in the world—today, Disney World still allows low-budget visitors to bring their RVs to the campgrounds as well as luxury resort guests to stay in the Presidential Suite (accessibility). Layered onto these experiences, Disney merchandise was available for purchase at the parks and hotels, from games and books to watches and plush toys.

In film, Disney continued to ride the wave of success with family-friendly releases in the 60s. But by the 70s, its position in the entertainment industry began to falter—refusing to match increasingly sophisticated consumer tastes, Disney turned down George Lucas’ “Star Wars,” and in the eighties, multiple Disney productions flopped because of the company’s reluctance to create anything beyond G-rated, family-oriented films that did not keep up with the Civil Rights Movement and other changing cultural tides (evolution). Disney was also constricted by a “box-office” mentality and desire to work with big celebrities, which then-CEO Michael Eisner sought to reverse in order to focus on Disney’s strengths: “the kind of modest, story-driven movie we tended to make in our salad days.” Eisner also held out on distributing video cassettes, despite prospering home video market—at the time, he was concerned that going down this path would cheapen the company’s image and erode its upcoming theatrical releases and the size of its cable viewership—it was not expected at the time that these videos would become multi-generational collectors’ items. In the end, Disney released Pinocchio on video cassette for almost $80, meaning that only video rental businesses could afford it. In spite of Disney’s falling authority in the live-action space, another high-level executive, Card Walker, repeatedly refused to raise the company’s marketing budget, believing that word-of-mouth could come to Disney’s rescue at the same time that other production companies were spending upward of $10 million on their ad campaigns.

As Disney’s presence in the hospitality sector matured, it also faced setbacks. In the 80s, struggling Disney executives also met with Bill Marriott, the CEO of the fast-growing hotel empire, after the hospitality mogul expressed interest in acquiring the company. However, after increasing admission fees to Disney theme parks, expanding the hotel business and jumping on the home video distribution train, Disney expanded its operating income from $300 million in 1984 to $800 million in 1987. That same year, the company opened the first Disney retail store. Around this time, Eisner and other top-level executives began to favor what they called a “Yes But Philosophy”—yes, a new venture may be expensive, but it could be a great opportunity for the company.

Like other companies, Disney lacked a formula to grow its business, but its strong foundation and creative drive, helped build out the ecosystem. By tapping into its various distribution and production channels, it was able to harness its strengths—specifically, its creativity in the entertainment sphere. When the company experienced a dry spell in the animation or live-action space, it could enact new practices at its theme parks and hotels to enhance revenue.

Each rung in the ladder bolstered those that came before and after it: cash flow from its films and merchandise led to theme, revenue from its parks led to hotels, and so on and so forth, creating a virtuous cycle (scalability). Though Disney’s centralized system is not the only way for a culture to develop—another widely successful entertainment-brand-turned-culture is the Japanese anime industry, which remains largely unregulated and decentralized across many consumer product companies and production houses—it has allowed the company to champion Walt’s vision and his legacy while capitalizing on and streamlining circulation throughout the ecosystem.

3) As Disney looks to maintain its authority in the media industry, it is using acquisitions to fund future projects.

Since the 90s, Disney has embarked on an era of acquisitions, which have enhanced its authority over the media industry. In 1995, Disney acquired Capital Cities/ABC Inc.—the most profitable television network at the time, and the parent company of the cable service ESPN. As the New York Times reported, the merger gave Disney unprecedented reign over the media industry as “the first media company with a major presence in four distribution systems: filmed entertainment, cable television, broadcasting and telephone wires.” For Disney, which always prided itself on being a “content company,” the move into distribution was an important evolution of its strategy.

Similarly, the company exercises its network to create film-based retail. Disney’s “Toy Story” series is the quintessential movie merchandising tale. With the success of the first movie in 1995 and subsequent films, the “toy” characters translated seamlessly to tangible products. “Toy Story 3” brought in $1 billion from the box office and $10 billion from retail sales.

In the 2000s, Disney began to struggle again on the business side, but its culture continued to resonate. But with Mickey and Disney’s other cartoon characters—icons on a global scale—the brand continued to exercise incontrovertible cachet in entertainment and pop culture as it does today: children collect Disney princess toys, the characters lend themselves to endless fashion and accessory collaborations from Versace to Kate Spade—even the name of an Americana-obsessed Cuban youth movement, the mikis, stems from the original mouse. An avid fan base also fuels additional growth for the Disney brand and culture: Disney fashion bloggers—much like the “character performers” at Disney’s parks—act as unofficial influencers on social media, remaking the looks of the Disney cast.

Then, in 2007, Disney acquired Pixar after a long-term partnership (which had spawned the computer-animated Toy Story series), as well as Marvel in 2009, and Lucasfilm in 2012. The latter stemmed from Disney’s partnership to create Star Wars and Indiana Jones attractions at the Disney parks and resorts and allowed Disney to absorb not only the two franchise series, but also the Lucasfilm production house and its consumer products arm into its ecosystem.

Today, Disney makes the most revenue from its media networks ($16.5 billion of its total $55.1 billion in 2017), but its newest battle is maintaining this presence. Despite the numerous acquisitions, cable television viewership continues to decline, and between 2016 and 2017, Disney’s studio entertainment sales fell 21% to $2.9 billion. While Disney enacted a licensing deal with Netflix in 2012, it announced in early 2018 that would purchase majority ownership in BAMTech, terminating its contract with Netflix in order to launch its own streaming service. Most recently, the company has a deal pending to acquire 21st Century Fox, which would help offset competition to its television networks from Netflix and Amazon.

As the company continues to tap into its symbiotic channels and fueling ecosystem-wide growth, it continues to enact business decisions in order to open the door to new ventures. Though historically, the company has strived to keep prices low at Disneyland and its sister parks, the maximum price for a day pass to Disneyland has more than tripled since 2000, up from $43 at the turn of the millenium to $135 in 2018. In March 2018, Disney also announced that it would begin charging overnight parking fees up to $24 at its Walt Disney World Resorts hotels (there is no charge to park during the day at a Disney hotel, and hotel guests don’t have to pay for parking at theme parks). These price increases are attributed in part to renovating Disney’s Hollywood Studios park to include themed Toy Story and Star Wars sections, as well as new hotels and EPCOT attractions. Similar adjustments have also grown Disney revenue and helped spread theme parks across the globe, from the U.S. to Paris to Hong Kong.

With the financial flexibility to create new parks, Disney continues to harness its storytelling formula. Walt Disney Imagineering President Bob Weis sees one of the company’s newest destinations, the Shanghai Disney Resort, as a “local project”: “We design and develop stories… Everything here is built and made in China. Our focus is on knowing this audience ahd having them feel that this park belongs to them.” At the gate to one section of the park called Toy Story Land, Disney added a spinning top—a traditional Chinese toy—alongside its own characters and attractions (accessibility, authenticity). Since its opening in 2016, the park has received 11 million annual visitors.

Still, Disney’s consumer products and interactive media branch—the latter of which encompass licensing, publishing, games and retail—has recently faced rising setbacks. To offset dipping sales in its 680 JCPenney stores and 200 standalone locations, Disney took advantage of its well-oiled ecosystem, utilizing what Disney does best. A trailblazer in experiential retail at its parks and on its cruises, the company revamped its brick-and-mortar locations with a new floor plan and retail strategy, incorporating movie-sized screens to live stream from Disneyland and display new films (evolution). It is also using data from its ecommerce operations to fill its stores with what sells best online. While confronting falling foot traffic at physical stores reverberates across the retail industry, Disney is at an advantage thanks to its entire ecosystem of products and services and by turning its brick-and-mortar stores into hubs of entertainment, could make strides in reversing this trend.

4) Disney uses stories to act as a cultural yardstick, which will endow the company with lasting resonance.

Driven by Walt’s vision and his legacy, the company has pushed itself to retain relevance in the consumer economy as a family experience full of wonder. Despite hiccups in the business in the 1940s, 80s, and 2000s, Disney’s creativity-first, inclusive and egalitarian disposition endowed the company with an unassailable brand presence, carrying it forward as a cultural icon. Though not all executives have led with creativity at the forefront, reverence for Walt’s overarching vision means that above all, Disney operates as a purveyor of stories—the general assumption is that, coupled with healthy business practices, storytelling will lead to profits and growth (authenticity).

As Disney continues to maintain its creative prowess in film, it is increasingly acting as a cultural yardstick: though being a bellwether for social change would likely be too risky for the brand, Disney’s cultural impact is massive, and its productions are beginning to spotlight previously taboo or stigmatize themes and characters, entering them into the mainstream. This also helps to atone for its long history of racial and ethnic stereotyping. Though imperfect, its 2009 release, “The Princess and the Frog,” inaugurated Disney’s first black princess. And as of April 2018, Disney’s “Black Panther” sales hit $1.32 billion—the year’s highest grossing film and the fourth-highest grossing movie in North America of all time. The latest Marvel live-action film, the movie was directed, acted and produced by an almost entirely black and gender-balanced cast. For such a blockbuster, representing a historically underserved demographic grew some of the most excitement for a Disney production since Jurassic World—the actress Lena Waithe predicted that the film industry’s history will be separated into two eras: “Before Black Panther” and “After Black Panther.” As Disney continues to evolve in the 21st century, it will utilize its creative power and ecosystem to match and champion shifts in the cultural fabric, attending to consumer preferences to foster relevance and growth (scalability).

Since the 80s, Disney’s modern philosophy has sought to balance spearheading its own creations with acquiring the companies that will amplify its revenue so it can fund and focus on more of its own innovations. As it adds new layers to the world of Disney itself, the company exercises an omnipresence of epic proportions and provides wide-ranging exposure to its products and services. Now more than ever, it will continue to combine its stories (entertainment) with memories (theme parks, cruises, resorts) and souvenirs (retail), propelled by its desire to protect the company and its founder’s legacy (evolution). As time goes on, Disney will continue to lead with stories, taking the pulse of contemporary culture and activating its toolkit to accomplish what consumers want, but don’t yet have. As current CEO Bob Iger prognosticates in the runup to Disney’s 95th anniversary: “we’re striving to maintain relevance in a world that doesn’t look anything like the world that the brand was created in… It doesn’t even look like the world the brand existed in five years ago.” Times will change, and so will management, but the story of Disney is one of ecosystem-building that sustains bumps in the road.