IM 551 IT Strategy & Management Prof. Heeseok Lee KAIST Strategy Consulting Group Group members:

Transcription

1 Marriage IM 551 IT Strategy & Management Prof. Heeseok Lee KAIST Strategy Consulting Group Group members:

2

3 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

4 Growing Up!!

5 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 ba sed on creativity and memorable storytellin g Grown to be a vital competitor in the Broad casting & Entertainment industry Unique brand Entertainment giant Separates business into five segments

6 Growing Up : Core Business Media Networks ESPN ABC Internet/Direct Marketing The Walt Disney Studios Consumer Products Toys/ Apparel/Food / Books and Magazines Parks and Resorts Disneyland Resort Walt Disney World Resort Tokyo Disney Resort Disneyland Resort Paris Hong Kong Disneyland

7 Growing Up : Capability Bundling of Disney Films Video Videos Network TV Cable TV Hotels Cruise lines Merchandise Toy Story Animated Film Brand licensing NEW Retail Stores Publication Retail Store

8 Growing Up : CEO of Walt Disney 1. To foster an environment of creative innovation i n all aspects of the business 2. Global expansion, meaning to grow the business, p articularly internationally in the growing markets of China and India, while ensuring long-term, sus tainable 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

9 Pixel ar t

10 Growing Up : Pixar Pixar Inc. Industry CGI animation, motion pictures, software Founded February 3, 1986 Headquarters Products Key people Parent Emeryville, California, U.S. RenderMan, Marionette, Ringmaster Ed Catmull, Steve Jobs The Walt Disney Company

11 Growing Up : Pixar Pixar Inc. history 1979s 1980s 1984 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)

12 Growing Up : Capabilities People Technology Storytelling Culture

13 Growing Up : Disney & Pixar CAPS Feature film agreement Co-production agreement Renegotiation for distrib ution-only deal

14 Dating!!

15 Dating : Disney & Pixar ~ Co- Production Agreement Re- Negotiation Try Feature Film Agreement 1986 CAPS Colla boration

16 Dating : Disney & Pixar CAPS S/W Year 1986 Relationship CAPS Products Collaboration of the development of CAPS Production system used to make 2D cel-based animation movies The Rescuers Down Under, The Lion King

17 Dating : Disney & Pixar Feature Film Agreement In 1991, Disney & Pixar signed a deal to pr oduce the first full length 3D CG animated movie. Disney : Fund the production cost in return for owning the movie rights and retaining co ntrol over over scheduling Pixar : Earn a participation fee based on tot al revenue for the movie, hand had to fund t he overage if production costs exceeded a ce rtain pre-agreed budget Toy Story : Earned $350M, but Pixar only ea rned $56M from 1995 to 1998

18 Dating : Disney & Pixar Co-Production Agreement In 1997, Disney & Pixar signed a deal to pr oduce at least 5 original full-length animate d films for next 10 years Disney : Bought 5% of Pixar paying $15M f or $1M of its shares with warrants to buy ad ditional shares at higher prices Disney & Pixar : Share the production costs & revenue equally. Disney will fund all mar keting expenditures while Disney will receiv e distribution fee of 12.5% of the earnings. Disney: Retains the exclusive distribution an d exploitation rights Disney : $1.5B in operating income & $0.44 i n EPS increased

19 Dating : Disney & Pixar Re-Negotiation Try

20 Dating : Disney & Pixar Disney s SWOT Brand Power & Multiple Channels Experienced Well Established & Financials Lack of 3D CG Technology Too much Dependency on Pixar Too Children Related Images New Boom of Animation Advent of New Media Easier to Distribute Contents Pixar s New Move Other Competitors Piracy Issues

21 Dating : Disney & Pixar Pixar s SWOT Powerful 3D CG Technology Proven Capabilities Creative & Talented People No Distribution Channel Focused Business on Animation Too much dependency on Disney Big Boom of 3D CG Animation New Deal from Other Company Increased Business Opportunity Advent of New Competitors Commoditization of 3D CG Technology High Risk, High Risk

22 Before Marriage!!

23 Before Marriage Negotiation Breaks Down! We are ending talks with Disney! (Jan, 20 04) Disney board kicks out CEO Michael Eisn er over troubled Disney-Pixar relations Negotiations resumed in Sept followi ng departure of Eisner

24 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

25 Before Marriage Pixar animation has strategic im portance to Disney. Animation revenue Theme par k sales Broadcastin g sales Disney s first full computer version a nimation Chicken Little (2005) fared o nly marginally well.

26 Before Marriage Acquisition VS Alliance Warner Brother s Str ong Interest in Buying P ixar Strategic Importance of Pixar to Disney Rickety Relationship Between Pixar and Disn ey Sequential Synergies Soft Resources (creative manpower) Clash of Corporate Cul ture (studio vs. corporate behemoth)

27 Marriage Terms of the Deal (Jan., 2006) merges wi th Price tag: US$7.4 billion in all-stock deal Steve Jobs: Disney s largest individual shareholder with 7 perce nt stock, new seat on board of directors John Lasseter (Pixar s co-founder): Chief Creative Officer of P ixar and Walt Disney Animation Studios, Principal Creative Advis er at Wal Disney Imagineering Ed Catmull (Pixar president): President of Pixar and Walt Disn ey Animation Studios

28 After Marriage!!

29 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

30 After Marriage : Changes Published 3D Animation : After Acquisition, PIXAR&Disney publi shed 4 3D animations. Cars(2006), Ratatouille(2007), WALL-E(2008), Up(2009)

31 Happily Ever After!!

32 Happily Ever After : Synergies Growing Up Each Capability by Each Capability FINANCE BUNDLING MARKETING PEOPLE TECHNOLOGY STORY TELLING CULTURE Human Resource Management VISION CULTURE

33 Happily Ever After : Synergies Sharing each products and channels Disney PIXAR Make New product and Sell through New Channel NEW BUSINESS CHANNEL

34 THANK YOU!!!