What else could Disney have done with 4 Billion dollars?

By Dave Callan via The Guardian

OK, so by now we all know that Disney is coughing up just over $4 Billion for Lucasfilm with the entire amount (half in cash, half in Disney stock) going entirely to Mr. Lucas himself who wisely maintained ownership of the entire company. Much analysis has been done by this point with plenty of people falling on both sides of the “is it a good thing?” line. However, what isn’t being asked is what else could Disney have done with 4 Billion dollars? This post proposes a few ideas.

1. Release a LOT of films (or TV shows for that matter)

Four Billion dollars. That’s $4,000,000,000.00 or a heck of a lot of money. The most expensive film in the world cost not even a quarter of that and the vast majority cost only a fraction of that amount. When Disney bought Pixar a few years ago, the point was raised that for the $11 Billion they paid for that studio, they could have released a ton of films instead, with the theory going that however good Pixar was, Disney could have easily caught up with better products.

The same holds true now. Although studio accounting is notoriously murky, even a film like Toy Story 3 or Tangled, both rumoured to have cost in and around $300-350 million each, could have been made 11 times over what Disney just paid Lucas; all in the hope that the Star Wars franshise will pay dividends. The real question is, will it pay ones larger than releasing 11 films would? I’m going to say no.

Eleven chances at getting it right can be worth far more than that, especially given the potential for the films to live on after the original. Even if you had, say, three duds in there, that still leaves 8 potential Lion Kings, right? How much dough has that film brought in over the years? Oh sure, Star Wars does too, and likely will for some time to come, but that is just one idea/concept. If you go in a different direction each time, you discover many brilliant ideas you can build upon.

2. Expand the parks even further

Disney is the master of the theme park but even the company’s Imagineers have limits. Investing in the existing parks (or even a new one, say in South America) would go even further to bringing in the dough, but more importantly, the customers. Just think, an entire continent could be waiting to discover Walt’s dream. Would $4 Billion get a project started? It surely would, even in this day and age. You wouldn’t even have to create new content! The existing stuff that’s already paid for will do just fine (with some regional adjustments of course).

4. Give everybody in the company a raise.

I’m deadly serious. With about 156,000 employees, $4 Billion would be enough to give everyone a bonus of nearly $26,000. Heck even  just the cash they’re paying out could give everyone $13K in their back pocket. How do you think that would affect morale and productivity within the company? How about instead of a cash raise, they use the money to give perks to valued employees, maybe a day off for employee of the month or an extra week for employee of the year. Or give everyone a paid lunch break?

These are just a few of the ideas that employees could be rewarded and would all enhance their working lives. Do you think happier employees are more productive? You’d be right if you said yes, just look at DreamWorks; a studio that’s considered one of the best companies to work for in the entire country.

5. Make a Serious Effort to Transition the business model.

OK, a bit left of field with this one, but imagine the kind of experimentation that Disney could do with $4 Billion. Right now everyone and their cat is trying to figure out how to make internet/online content work and while some people are making progress, it’ll really take a big investment from an established company to truly crack the nut. Disney wouldn’t even have to spend the $4 Billion or maybe even half that to figure it out.

The studio has the content, it has people willing to pay for it, and it has the resources and brains to make something work. All it has to do is stump up the finance to get something great together. And before you say it, no, I’m not talking about Key Chest; I’m talking about a Hulu-like variant that will give consumers what they want. The money would cover the losses that would be likely during the initial phases of the project.

Just think, if Disney could get a decent platform together that is popular with customers, it could license it, share it and get everyone on board. It’s exactly how Microsoft steamrolled Apple. The latter wanted to control everything, the former was happy just to control that key that made it all work; and they made sure that they did. Disney could do the same, and make money in a similar manner by charging studios access to the audience.

Conclusion

The fact of the matter is, someone, somewhere within the Disney machine ran the numbers and algorithms and determined that Lucasfilm was good value for money. That’s really it at the end of the day. People will proclaim that it was a perfect merger that fits both brands, but at the end of the day, Disney is banking on Star Wars continuing to mint money for decades to come. Whether that will be the case is yet to be seen. What is known, is that will $4 Billion spent, Disney (and its shareholders) will be praying that it does, because spending that kind of money in one go is an awful lot like going all in at the poker table.

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