• Founded in 1923, America• 1930s Mickey Mouse & Donald Duck
Snow White and the Seven Dwarves Cinderella Alice in Wonderland 51 animated 2D films in total. Not strong in 3D animation. Peter Pan The Lion King Mulan Winnie the Pooh
• Previously „Lucas Film‟ computer animation workshop • Offered 3D technique in Star Wars (1977)1986 Steve Jobsacquired Lucas Film &renamed it PixarAnimation Studios
• 1991 Disney and Pixar signed cooperative agreement for 5 movies• 2004 Broke up Jobs wanted 100% revenue, not the split cost (50-50)
acquire Jobs became theWalt Disney Co. Pixar largest shareholder $7.4 billion in Disney Jobs being the CEO of Pixar
AdvantagesOptimistic PerspectiveHow they benefit from each other
Optimistic PerspectiveHow they benefit from each other Disney: Consolidate its dominant position in animation industry •The new digital era •The requirement of creativity •The rivalry among organizations in the animation industry Source: FactSet: Walt Disney daily share price
Optimistic PerspectiveHow they benefit from each other Pixar： Improve the capacity of profitability and then create more value. •Strengthening the capability to release animated cartoons •Independent administration •Gain sufficient funds
Optimistic PerspectiveHow they benefit from each other Steve Jobs： Gain a much more influence in the multimedia field His roughly 50% ownership of Pixar is worth over $3.5 billion, which would be more than enough to turn him into Disneys largest individual shareholder should he accept a stock swap.
Optimistic PerspectiveHow they benefit from each other Apple：The one who can release and share media content based on broad band network technique win in the competition. • Bring out the new product---”Family recreation center” •Apple Media content can raising competitiveness of their products like iMac and iPod. • Disney Disseminating its entertainment programs through Apple‟s new media terminals and receiving technical support from Apple. VS.
Optimistic PerspectiveHow they benefit from each other Recent Development • Share price: 38% $35.85 • Market Value: $64,000,000,000 (Nov. 30th 2011) • Average returns to investment: 7.6% • Dividend: 1.1% • Robert A.Iger was intended to become the director of Apple. Source: FactSet: Walt Disney‟s monthly share price (2006-2011)
Disadvantagespessimistic perspectiveWhat’s the risk?
Financial burden• Estimated value of Pixar 6.5 billion – 7.4 billion• End of fiscal year of 2005 ，Disney had net income of 2.5billion USD
Financial burden• Changed original ownership structure of the company.• The Stock-for-Stock often provoke risk
Disney’s CultureBig company, big bureaucracy 150,000 employee in 2008 Hierarchical structure: distant upper management Micromanagement ->low morale, “brain drain” of creative talentProfitability, not quality, rules theday Executives are the ones making creative decisions -Generic Disney formula for animated films -straight- to –video “cheapquels “ -makes films on a tight schedule
Pixar: Free-spirited creativityEmeryville location( the “anti-Hollywood”)Individually–decorated workspaces; huts instead of cubiclesHawaiian shirts and scootersPolicy against employment contracts
Pixar: Egalitarian CollaborationEnvironment invites congregationPixar universityThemes of teamworkBonus structure
Pixar: Perfectionism• Pixar short films• no cheapquels (錄影帶首映，低成本低品質)• Pick 1 idea, good or bad and stick it until it works
The three basic principles• Everyone must have the freedom to communicate with anyone• It must be safe for everyone to offer ideas• Stay close to innovations happening in the academic community
DiscussionQ1:For Disney, are there any other alternativeslike strategic alliance better than acquiringPixar?
Discussion• Internal Development human&technology asset, 3D technology, development cost&fierce competition• Strategic Alliance(not Pixar) with other studios, build new relationship, distribution channel factors• Strategic Alliance(with Pixar) CAPS, feature film agreement, co-production agreement• M&A revitalize animation department, eliminate competition, access to technology &human capital
DiscussionQ2:Before the death of Jobs, Disney, as entertainmentindustry, has brought Jobs enormous wealth.Then, in your opinion, what about purchasingDisney for Apple in the future?
It is an OPEN question!• It is a good choice for Apple. Apple has the ability and money to buy Disney. Disney can bring Apple many media channels.• It is not applicable: two different positions no spare time to afford for Apple