The Walt Disney Company enjoys a strong revenue stream from its Consumer Products business. Leaning on successful films and licensed merchandise, Disney retail brings in 8% of the total revenue which totals approximately $1 Billion dollars per quarter.
Disney acquired Lucasfilm for $4 Billion and has invested several over a billion more for film creation and merchandise development. Recently, consumers as well as retail associates have noticed a growing quality concern resulting in an increase in returned merchandise for defective craftsmanship. In addition, negative sentiment has been increasing from guest surveys in regards to poor product quality. This news coming on the heels of the new Star Wars movie release at the end of 2015 would spell disaster for what Disney estimates will be a 10 to 15 billion dollar market for Star Wars licensed merchandise.
Rather than take a wait and see attitude, Disney has had the past quality data analyzed. The historical quality numbers and calculated trend line are presented in the following graph.
Defects from the primary US supplier have increased nearly 400 percent over the past year. The forecast calls for this trend to continue at a similar rate over the coming months. If actions are not taken to curb this trend, the forecast predicts that up to 4% of all merchandise may contain defects by the end of fiscal year 2016.
Krants, Matt. (2012) Disney buys Lucasfilm for $4 billion. Retrieved September 25, 2015, from http://www.usatoday.com/story/money/business/2012/10/30/disney-star-wars-lucasfilm/1669739/
Zack, George. (2015). Will Walt Disney Co Continue to Post New Highs? Retrieved September 25, 2015, from http://www.bidnessetc.com/45957-will-walt-disney-co-continue-to-post-new-highs/