Post on 22-Nov-2014
Marriage
IM 551 IT Strategy & Management Prof. Heeseok Lee
KAIST Strategy Consulting Group Group members:
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Contents
1. Growing Up - Disney History & Core - PIXAR History & Core
2. Dating - PIXAR & Disney
3. Before Marriage
4. After Marriage : Change
5. Happily Ever After : Synergy
Growing Up!!
Growing Up : History of Walt Disney
• Founded in 1923 by Walter Elias Disney, he and his brother Roy created the short film “Alice’s Wonderland”
• Focus on entertainment thru experiences based on creativity and memorable storytelling
• Grown to be a vital competitor in the Broadcasting & Entertainment industry
• Unique brand
• Entertainment giant
• Separates business into five segments
Growing Up : Core Business
Media Networks
Consumer Products
Parks and Resorts Disneyland Resort Walt Disney World Resort Tokyo Disney Resort Disneyland Resort Paris Hong Kong Disneyland
ABC ESPN
Internet/Direct Marketing
The Walt Disney Studios
Toys/ Apparel/Food / Books and Magazines
Growing Up : Capability Bundling of Disney
• Films
• Videos
• Network TV
• Cable TV
• Hotels
• Cruise lines
• Merchandise
• Brand licensing
• NEW … Retail Stores
Toy Story Animated Film
Video
Retail Store Publication
Growing Up : CEO of Walt Disney
In November, 2005
Rober Iger
1. To foster an environment of creative innovation in all aspects of the business
2. Global expansion, meaning to grow the business, particularly internationally in the growing markets of China and India, while ensuring long-term, sustainable growth.
3. A strong application of technology Disney must remain on a platform that can meet c
hanging consumer demands in a well-priced and well-timed manner
Identified three strategic priorities:
Pixel ar t
Growing Up : Pixar
Industry CGI animation, motion pictures, software
Founded February 3, 1986
Headquarters Emeryville, California, U.S.
Products RenderMan, Marionette, Ringmaster
Key people Ed Catmull, Steve Jobs Parent The Walt Disney Company
Pixar Inc.
Growing Up : Pixar
Pixar Inc. history
1979s Lucasfilm
the Graphics Group
1980s Ed Catmull met John Lasseter
1984
John Lasseter went to LucasFilm’s computer division
1986 Steve Jobs bought the LucasFilm computer business
then called Pixar Toy Story (1995)
· A Bug's Life (1998) · Toy Story 2 (1999)
Monsters, Inc. (2001) Finding Nemo (2003)
The Incredibles (2004) Cars (2006) Ratatouille (2007)
WALL-E (2008) Up (2009)
Toy Story 3 (2010) Cars 2 (2011)
The Bear and the Bow (2011) · Newt (2012)
1991 Pixar made a $26 million deal with Disney to produce three computer-animated feature
films
1995 Toy Story
Growing Up : Capabilities
People
Technology
Steve Jobs, Ed Catmull, John Lasseter
Computer animation technology Software : RenderMan, Marionette, Ringmaster
Storytelling Pixar made short films to develop its computer-generated technology and storytelling creativity
Culture “Everyone must have the freedom to communicate with anyone”
“It must be safe for everyone to offer ideas” “art challenged technology, and then technology inspired art”
Growing Up : Disney & Pixar
Feature film agreement
Co-production agreement
Disney and Pixar signed a deal in 1991 to produce the first full length 3D CG animated movie
Pixar would produce for Disney at least 5 films, with production costs, shared equally between the two companies.
Renegotiation for distribution-only deal Two companies broke down completely in mid-2004, with Jobs declaring that Pixar was actively seeking partners other than Disney. Two companies resumed following the departure of Eisner from Disney in September 2005.
CAPS Disney and Pixar collaborated on the development of Computer Animated Production Systems in 1986
Dating!!
Dating : Disney & Pixar
Feature Film Agreement
Co-Production Agreement
Re-Negotiation Try
CAPS Collaboration
1986
1991
1997
2002 ~
2006
Dating : Disney & Pixar
CAPS : Computer Animated Production Systems
Year 1986
Relationship Collaboration of the development of CAPS
CAPS Production system used to make 2D cel-based animation movies
Products The Rescuers Down Under, The Lion King
S/W
Dating : Disney & Pixar
Feature Film Agreement
3D Animated Film
• In 1991, Disney & Pixar signed a deal to produce the first full length 3D CG animated movie.
• Disney : Fund the production cost in return for owning the movie rights and retaining control over over scheduling
• Pixar : Earn a participation fee based on total revenue for the movie, hand had to fund the overage if production costs exceeded a certain pre-agreed budget
• Toy Story : Earned $350M, but Pixar only earned $56M from 1995 to 1998
Dating : Disney & Pixar
Co-Production Agreement
Story Character Visual CG
• In 1997, Disney & Pixar signed a deal to produce at least 5 original full-length animated films for next 10 years
• Disney : Bought 5% of Pixar paying $15M for $1M of its shares with warrants to buy additional shares at higher prices
• Disney & Pixar : Share the production costs & revenue equally. Disney will fund all marketing expenditures while Disney will receive distribution fee of 12.5% of the earnings.
• Disney: Retains the exclusive distribution and exploitation rights
• Disney : $1.5B in operating income & $0.44 in EPS increased
Dating : Disney & Pixar
Re-Negotiation Try
Hey Disney!!
Our relationship is too unfair. I want a new deal!!
I’ll fund all the production costs.
Your job is distribution only. I’ll give you an 8% distribution fee.
- Steve Jobs
Dating : Disney & Pixar
Disney’s SWOT
STRENGTH WEAKNESS
OPPORTUNITY THREAT
Brand Power & Multiple Channels
Experienced
Well Established & Financials
New Boom of Animation
Advent of New Media
Easier to Distribute Contents
Lack of 3D CG Technology
Too much Dependency on Pixar
Too Children Related Images
Pixar’s New Move
Other Competitors
Piracy Issues
Dating : Disney & Pixar
Pixar’s SWOT
STRENGTH WEAKNESS
OPPORTUNITY THREAT
Powerful 3D CG Technology
Proven Capabilities
Creative & Talented People
Big Boom of 3D CG Animation
New Deal from Other Company
Increased Business Opportunity
No Distribution Channel
Focused Business on Animation
Too much dependency on Disney
Advent of New Competitors
Commoditization of 3D CG Technology
High Risk, High Risk
Before Marriage!!
Before Marriage
We are ending talks with Disney! (Jan, 20
04)
Disney board kicks out CEO Michael Eisner over troubled Disney-Pixar relations Negotiations resumed in Sept. 2005 following departure of Eisner
Negotiation Breaks Down!
Before Marriage
Full ownership of film Distribution channel Return the rights of Pixar film after five-year distribution
90 percent of a film’s lifetime revenue across all methods of distribution
Before Marriage
Pixar animation has strategic importance to Disney.
Animation revenue
Theme park sales
Broadcasting sales
Disney’s first full computer version animation “Chicken Little (2005)” fared only marginally well.
Before Marriage
Sequential Synergy
Acquisition Alliance VS
Warner Brother’s Strong Interest in Buying Pixar
Strategic Importance of Pixar to Disney
Rickety Relationship Between Pixar and Disney
Sequential Synergies
Soft Resources (creative manpower)
Clash of Corporate Culture (studio vs. corporate behemoth)
Marriage
Terms of the Deal (Jan., 2006)
Price tag: US$7.4 billion in all-stock deal Steve Jobs: Disney’s largest individual shareholder with 7 percent stock, new seat on board of directors John Lasseter (Pixar’s co-founder): Chief Creative Officer of Pixar and Walt Disney Animation Studios, Principal Creative Adviser at Wal Disney Imagineering Ed Catmull (Pixar president): President of Pixar and Walt Disney Animation Studios
merges with
After Marriage!!
After Marriage : Changes
Discontinue making Toy Story3 : PIXAR committee thought that the next series should have well-made story. ‒ Revision : Meet The Robinsons, American Dog. ‒ Debate : Rapunzel, Joe Jump. ‒ Cancel : Wild, Valiant
Animation Making Tool of Disney : Disney uses Maya and Maya based Animation tools. ‒ PIXAR uses Maya as only 3D Modeling tool. PIXAR is developing MENV30 which is 3D Animation tool. ‒ Disney will have no choice to change the tools to PIXAR’s tools. To reduce license fee To develop more complex functions
After Marriage : Changes
Published 3D Animation : After Acquisition, PIXAR&Disney published 4 3D animations. ‒ Cars(2006), Ratatouille(2007), WALL-E(2008), Up(2009)
Happily Ever After!!
Happily Ever After : Synergies
Growing Up Each Capability by Each Capability
PEOPLE
TECHNOLOGY STORY TELLING
CULTURE
BUNDLING
FINANCE
MARKETING
Human Resource Management
CULTURE VISION
Happily Ever After : Synergies
Sharing each products and channels
Make New product and Sell through New Channel
Disney PIXAR
NEW BUSINESS CHANNEL
THANK YOU!!!