The Walt Disney: The Entertainment King
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This case is comprised of the company's history, from 1923 to 2001. The Walt years are described, as is the company's decline after his death and its resurgence under Eisner, some topics are devoted to Eisner's strategic challenges in 2001: managing synergy, managing the brand, and managing creativity. The case was written by Michael G. Rukstad and David Collis The case was uploaded with a Walt Disney font, but Slideshare was not able to detect that
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The Walt Disney: The Entertainment King
- 1. Walt Disney I only hope that we never lose sight of one thing – that it was all started by a mouse
- 2. The Rise of Walt Disney• Formed by two brothers Walt and Roy with focus on short stories. • First major hit was “Oswald, the lucky rabbit” • Minor changes to the rabbit led to the creation of “Mickey Mouse” • Adding synchronized Sound. • Licensed mickey mouse for earning cash in the short term • A flat, non hierarchical structure with focus on team work, communication and co operation • First full length movie to sustain the business with goal of releasing two feature films per year.
- 3. The Walt Disney era 1923 1928 Founded company Mickey mouse launch 1937 Snow White – 1st feature film – full length 1940 Company went public 1950 Launched 1st TV Special Own distribution Channel 1963 1955 Opening of Disney Land 1966 Death of Mr. Walt
- 4. Post Walt Disney – 1967-1984 • Walt Disney world(Theme park) opened in 1971. • Disney opened in house travel company to increase traffic in park. • Tokyo Disneyland announced in 1976 wholly owned by Japanese partner. • Film output constantly declined because of lack of creativity. • New Label Touchstone to target teen/adult market was introduced. • Deteriorating financial performance due to incurring high cost to finish EPCOT. • Oil tycoon Sid Bass invested $365 million, reinstating Roy E. Disney to the board, and ending all hostile takeover attempts.
- 5. The turnaround 1984-1993 • Eisner former President and CEO of paramount Pictures was named as Chairman and CEO of Disney • He committed to a return on stockholder equity exceeding 20%. • He viewed “managing creativity” as Disney’s most distinctive corporate skill. • Top priority was to revitalize Disney’s movie and TV business, started the Disney Sunday Movie in 1986 to put disney back on map. • Sold independent TV station some of the programming that Disney had accumulated over the years. • Box office share improves from 4% to 19% because 27 out of 33 movies were profitable
- 6. • Disney pursued strong scripts from less established writers and well known actors in career slump and TV actors then movie stars. • Decision to expand animation staff and accelerate production by increasing frequency of animation movies. • Invested $30 million in CAPS to make Who Framed Roger Rabbit, which was a huge success. • Further Profits came from merchandising and licensing agreements.
- 7. Maximizing theme park profitability • Investments made on attractions • Attendance building strategies to promote growth and revenues • National television ads, special events, media broadcast events • Lifting restrictions • Raised ticket prices
- 8. Co-ordination among businesses • Overlaps amongst expanded businesses • Negotiated internal transfer pricing ( Disney film library material) • Corporate marketing function • Marketing calendar • Monthly meeting – interdivisional issues • Library committee • In-house media buying group • Joint co-ordination of important events I think our biggest achievement till date has been bringing back to life an inherent Disney synergy that enables each part of the our business to draw from, build from, and bolster others -Michael Eisner
- 9. Disney’s Expansion • Pioneered the concept of retail-as-entertainment concept with the launch of Disney Stores in 1987 • In the late eighties to early nineties, Disney founded Hollywood records (a pop music label), Disney Press (publisher of children books), and Hyperion Books (an adult publishing label). Each of these divisions proved to be successful because of their low start up costs and huge profits. • Opening of Euro Disney (later renamed to Disneyland Paris) allowed Disney to have theme park operations within Europe, whereas new attractions were added to the existing parks • With acquisition of Miramax in 1993 and establishing Hollywood Pictures, Disney were expanding their movie business
- 10. 1994 and the Turmoil Broke Box office record. Net revenue $700mn Re-Financed through deal from Saudi Prince and European banks The transitions Wells Eisner Katzenberg Departure Led executives to leave company or change roles • Second largest acquisition in the history of US • Observers of the merger were skeptical for the purchase price; 22 times the 1995 earning and synergies due to vertical integration • Press reports of cultural clashes between ABC and Disney • ABC executives were uncomfortable on the fact that how ABC was used to cross promote Disney Product
- 11. Disney Slumps To The End Of Century • Disney’s approach to filmmaking had changed dramatically • Movies needed to stand out • The change was necessary because of growing impact of international audiences, who were attracted to movies with big name stars and with expensive special effects • Average budget rose from $22mn to $55mn Movies Home Division Videos DisneyLand(s) and merchandises • Major driver for growth in 1990 • With dropping revenues , Disney decided to make all but 10 of its animated films available • Only one would be on the shelves each year, release to be promoted by company wise marketing • Build more than one park site to turn park into resort • Online selling of merchandises
- 12. Challenges: Managing synergies • Key to synergies was Disney Dimension. • Larger bonuses were awarded to those who had been most committed to synergies. • Synergies boosted cross-promotion. • With help of cross-merchandising, Disney intended to make each new animated film to function as a mini-industry. • Focus was on generating more revenue from outside U.S, it planned to integrate its overseas operations. • Horizontally, Disney began developing new venues in the US, LIKE ESPN zones, sports restaurants multistory facility like DisneyQuest.
- 13. • It also expanded in cruise ships and educational retreats. • Disney Institute opened in 1996 focused on fitness and adventure in learning. • Vertically, major initiatives involved Internet and TV. • Synergy drove lower cost on theme park as well. • But Disney had far too many relationship to productively manage.
- 14. Challenges: Managing the Brand • New businesses faced the prospect of damaging the brand. • Controversy over show Ellen because of her sexuality and ethnicity • Resentment shown by Catholic group for movie Priest • Stereotypical portrayal in Aladdin faced the decrement by Arab- Americans • Disney theme park got delayed for 2 years because Kundun faced apprehension from Chinese govt. Disney had a much traditional approach based on myths, fairy tales and history whereas Nickelodeon’s targeted the kids by keeping pace with the time.
- 15. Challenges: Managing the Creativity • Traditional techniques for managing creativity gong show for brainstorming ideas across the divisions • Was a success for some projects Little Mermaid, Pocahontas • Major drawback was the important people pulling out of those meetings because nobody liked his/her idea getting dismissed so the group dynamics were always at stake. As a result 75 executives left the company in 1994-2000.
- 16. Learnings and takeaways • The Walt Disney has been extremely successful in the past 94 years due to the vision of Walt Disney himself and the strategic management skills of Michael Eisner • It is possible that the immense diversification within the company will be its downfall, as it may simply become too large to manage. However, it has managed to stay strong and will most likely continue on its upward path. •Largest media and Entertainment company •Strong Brand Equity •Innovation and Differentiation High Investment with high risk involved Frequent Changes in Senior Management Limited range of target audience Global Localization Diversification Business Entertainment Value Mobile First Generation Major Competitors (Universal Studios, Paramount Pictures) Government Policies Piracy The Walt Disney Company S O W T
Editor's Notes
- However his distributor hired most of the animators to shut Disney from Oswald. Though he thought to continue making Oswald shorts but the copyright was with the distributor. Initialyy licensing for cash requirements later only the best companies. No one had titles in the organization