What’s next for Disney and Brand Protection?

Disney, one of the world’s most iconic companies released its quarterly earnings report yesterday. The growth in earnings per share was more than analysts expected but the key driver was the product sales from the Frozen franchise as well as theme park revenue. Studio revenues declined slightly but that quarter does not include the revenues for the Avengers Age of Ultron series, which was only released last weekend.

It also does not include the revenues for the upcoming Star Wars installment, “The Force Awakens”. If the theme parks and product revenue were the key drivers of revenue in this quarter, we can expect even more after the release of the Star Wars movie, which according to Disney CEO Bob Iger is the  “Number one franchise in the world in terms of merchandise. And there hasn’t been a film release since 2005.”

Geographically, China is a major growth area for Disney brands. On an interview with CNBC’s Squawk Box, David Bank, RBC Capital Markets Managing Director was asked about piracy. The impression from watching the show that he was considering the question in terms of video/movie/television content rather than commercial goods. His response was that Disney’s strategy in China seems to be to leverage brand value to promote theme parks and products rather than on protecting their content from being pirated.

If that is the case it means that Disney’s corporate security and intellectual property rights teams will have to increase their activities in China in order to ensure that the investment Disney makes in their branded product sales is protected and that counterfeiters aren’t reaping the rewards from those efforts. Especially in light of the Star Wars release. This will mean greater enforcement efforts as well as proactive due diligence of the companies in China that are manufacturing and selling their goods.