Walt Disney Pictures / Buena Vista Pictures / The Lion King poster Ed Catmull, Steve Jobs, and John Lasseter Animated Movie Economics Animated characters and stories are amazingly lucrative You can own the characters fully (no Jack Sparrows) Long tail … home video, pay-per-view, video on demand, TV, merchandise, video games, electronic use of characters Sequels often outsell originals (and easy to market) Disney was particularly well-positioned to orchestrate this enterprise across multiple channels and over time Owned most of the needed complementary assets Explicit design of Disney corporate strategy!! Disney Corporate Strategy: 1950s
Walt Disney Production
Disney Corporate Strategy: 1960s
Walt Disney Production
Disney Parks
Sleeping Beauty Castle in 2019 after Refurbishment
Spaceship Earth at Epcot in Walt Disney World Florida
Disney Resort in Orlando Florida
Walt Disney World Resort Entrance Walt Disney Feature Animation • 1st Movie: Snow White and the 7 Dwarfs (1934) • Struggled after Disney’s death but recovers under Michael Eisner and Katzenberg in 1980s • The Lion King (1994) is the high point • Katzenberg leaves in 1994 (key “creative force”) • Starts DreamWorks (w/ Spielberg & Geffen) • Studio gets large (2200 employees in 1999), and animator salaries kept rising • Cost cutting in 2000s, failed computer generated (CG) animation attempts and greater reliance on Pixar movies (over 60% of operating income, 1998-2004) The Disney Renaissance 1989-99 1989: The Little Mermaid 1991: Beauty and the Beast 1992: Aladdin 1994: The Lion King 1995: Pocahontas; Toy Story 1996: The Hunchback of Notre Dame 1997: Hercules 1998: Mulan; A Bug’s Life 1999: Tarzan; Toy Story 2
Walt Disney Pictures / Buena Vista Pictures / The Lion King poster The Disney Slump 2000-2007 2000: Fantasia 2000; Dinosaur 2001: Atlantis: The Lost Empire; Monsters Inc. 2002: Lilo & Stitch; Treasure Planet 2003: Brother Bear; Finding Nemo 2004: Home on the Range 2005: Chicken Little, The Incredibles 2006: Cars 2007: Meet the Robinsons; Ratatouille Pixar Ed Catmull (U of Utah), John Lasseter (Disney) end up in Lucasfilm Bought by Steve Jobs for $10 Mn in 1986 Jobs wanted to sell graphics computers, but ends up keeping animation studio instead Developed proprietary technologies and licensed to others E.g. RenderMan™ - Disney, Lucasfilm, Sony, DreamWorks Also made revenue through CGI for ADs Ed Catmull, Steve Jobs, and John Lasseter
Sought to make first animated feature
Eventually becomes Toy Story (1995) 20 Academy Awards by 2005 Disney’s Other Acquisitions Marvel (2009) Lucasfilm Ltd. (2012) • Library of 5,000 characters • Lucasfilms • Some characters licensed to other studios, • Industrial Light & Magic parks • 6 other divisions • Sony: Spider-Man • Fox: X-Men, F4 • Located in N. CA • Universal (Florida) park • Net revenue $1.5B/yr • Struggled with access to capital for blockbusters Disney paid $4.05B • Kathleen Kennedy, president and Star Disney paid $4.24B Wars brand manager • Iron Man 2, Thor, Captain America, • New trilogy Avengers highly successful=more sequels • Star Wars area at Disney California • Theme park planned in UAE without Disney; May be used in Paris park Adventure park; compare to Avatar area at Animal Kingdom in WDW, Merger with 20th Century Fox (2019) Florida Film releases since the merger Disney Pixar • Cars (2006) $462M • Bolt (2008) $310M • Ratatouille (2007) $624M • The Princess • WALL*E (2008) $534M and the Frog (2009) $267M • Up (2009) $731M • Tangled (2010) $592M • Toy Story 3 (2010) $1,063M • Winnie the Pooh (2011) $50M • Cars 2 (2011) $562M • Wreck-it Ralph (2012) $471M • Brave (2012) $540M • Frozen (2013) $1,276M • Monsters Univ. (2013) $744M • Big Hero 6 (2014) $658M • Good Dinosaur (2015) $332M • Zootopia (2016) $1,024M • Inside Out (2015) $858M • Moana (2016) $643M • Finding Dory (2016) $1,029M • Cars 3 (2017) $384M • Coco (2017) $745M Case Assignment
Write a memo to Bob Chapek, Disney’s CEO,
explaining the case for why Disney should be acquiring smaller movie studios like Pixar, Marvel and Lucas Film. What are the risks of this strategy and how can those risks be reduced? Disney Stock Price (v. S&P500)
Lucasfilm Merger
Marvel Pixar Merger Merger References (Images) • Bdesham. (2007). Spaceship Earth at Epcot in Walt Disney World. [Photograph]. Retrieved from https://commons.wikimedia.org/wiki/File:Spaceship_Earth_2.jpg
• Benna, S. (1957). Walt Disney’s Corporate Strategy in 1957. [Diagram]. Retrieved from https://www.businessinsider.com/1957-drawing-walt-disney- brilliant-strategy-2015-7
• CrispyCream27. (2019). Galaxy’s Edge at Disneyland. [Photograph]. Retrieved from https://commons.wikimedia.org/wiki/File:Galaxyedgedl.jpg
• CripsyCream27. (2019). Sleeping Beauty Castle in 2019 after Refurbishment. [Photograph]. Retrieved from https://commons.wikimedia.org/wiki/File:Sleeping_Beauty_Castle_2019.jpg
• Hallett, J. (2010). Bob Iger – World of Color Premiere - Disney California Adventure Park. [Photograph]. Retrieved from https://www.flickr.com/photos/hyku/4700820564
• Heusser, J. (2010). John Lasseter and Ed Catmull. [Photograph]. Retrieved from https://www.flickr.com/photos/neonmarg/4397916420
• Jrobertiko. (2010). Walt Disney World Resort Entrance. [Photograph]. Retrieved from https://commons.wikimedia.org/wiki/File:Walt_Disney_World_Resort_entrance.jpg
• Matthunterross. (1967). Organizational Synergy Diagram. [Diagram]. Retrieved from https://hiveminer.com/Tags/disney%2Cinfographic
• Orr, C. (2017). How Pixar Lost Its Way. [Photograph]. Retrieved from https://www.theatlantic.com/magazine/archive/2017/06/how-pixar-lost-its- way/524484/
• Pixar. (1999). Pixar Executives Ed Catmull, Steve Jobs, and John Lasseter. [Photograph]. Retrieved from https://tinyurl.com/y5wnnabd
• Walt Disney. (1994). The Lion King. [Poster]. Retrieved from https://en.wikipedia.org/wiki/File:The_Lion_King_poster.jpg
