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.

Mattel Hopes For A HIT

 Via: Wikipedia

It was announced yesterday that Mattel, the all-conquering toy manufacturer licensing company has acquired what’s left of HIT Entertainment, the intellectual property holder for many established children’s characters and shows such as Thomas the Tank Engine, Barney, Bob the Builder anf Fireman Sam.

It’s kinda funny how, as an adult, all these characters you loved as a kid suddenly become “properties” rather than actual characters. They can be bought, sold or licensed to anyone and everyone who’s willing to pay. They have to make profits and should the company go bust, they can be scooped up in the resulting fire sale.

In some ways it’s disheartening but in reality its not a surprise. Pretty much any show you see on TV these days is either owned by a large company or whose rights are held by one. As much a we’d like to believe that Thomas is really just a story invented for grandchildren, that is all in the past.

It will be interesting to see how well this deal plays out in the coming years though and whether or not the synergy to be gained from having your properties in-house will pay off for Mattel.

J. Katzenburg Places A Smart Bet on Netflix


The latter half of 2011 hasn’t exactly been very kind to either DreamWorks or Netflix. The former saw it’s stock slide after poorer than expected first quarter results and the latter has been taking a hammering from just about everyone after they raised prices and then announced that they were splitting their streaming and DVD services across two separate companies.

Despite these setbacks, things keep moving along which leads us to yesterday’s announcement that DreamWorks has agreed to make it’s entire catalogue available on Netflix starting in 2013.

While there’s not much to say about the deal itself (you can read the entire press release or Variety’s take on it for the details), the very fact that it was made is significant for the simple reason that DreamWorks is the first major studio to sign directly with Netflix.

Until now, that major studios have treated Netflix almost like an annoyance that keeps reminding them that the media landscape is changing beyond their control. Collectively, they’ve tried to keep as much of their content off of Netflix as possible. Heck, they’ve even tried to keep DVDs off the service by instituting the pointless 28 day delay for new releases.

DreamWorks is the first to realise that they can stand to benefit from simply having their content available for people to see. New releases from Disney will likely disappear from Netflix as the Starz deal expires in Marc, and if that’s still the status quo come 2013, DW will be in a market where it’s main competitor is not.

This is the kind of innovation DreamWorks needs to invest in if it is to continue to exist as an independent company, indeed, I called for it just a few months ago when Paramount broke off talks to continue their distribution deal.

The proliferation of Netflix on mobile and TV platforms also ensures that DW’s content is everywhere they are and reaches the largest audience possible. It doesn’t matter if the quality is not top-notch, the convenience factor of being instantly available will override that in a heartbeat.

A lot of industry folks will be watching these developments very closely because if it turns out to be mutually beneficial to both companies, you can expect a lot of similar deals to follow.

Fast Company Profiles Disney’s Rich Ross (and Misses the Point)

Fast Company recently ran a profile on Rich Ross, the current head of the Walt Disney Studios (i.e. the division that actually makes the films). The article itself is well worth a read seeing as it’s slightly above the usual blind admiration that non-trade publications and outlets are infamous for.

The article points out some bleedingly obvious things, but still manages to miss the point of exactly why Ross is a TV guy running a movie studio.

The movie division has not been Disney’s most profitable arm for many years. Yet it remains the company’s big intellectual property “wave maker,” to use the phrase you hear a lot these days inside Disney’s executive suites.

Unfortuntaley, “making waves” is defined as finding a hit franchise (read: Pirates of the Caribbean) and running it into the ground. This is somewhat unfortunate as Tangled did quite well (considering) and while it was unproven, it was a solid film that was always going to do well.

This brand stewardship is the source of controversy surrounding Ross, Iger, and Disney in general these days. A lot of movie fans–ticket buyers, critics, and industry professionals included–hate seeing films reduced to such crass commercial terms. Hollywood still promotes itself as our manufacturer of dreams, relishing the cultural currency and aesthetic cachet that comes with the territory.

Arguably, this is true, except for the small matter that this has always been the case. Hollywood has never made a movie for the fun of it. Films are made for one reasons and one reason only: to make money.

Having said that, there is a fine line between making films for the audience and making films for the studio and it would appear that that line has been crossed this decade of the new Millennium. The old adage of Walt Disney seems to have been lost:

We don’t make movies to make money.
We make money to make more movies.

Notwithstanding the small fact that making more movies will make you more money, but I digress.

So how exactly has the Fast Company article missed the point when it comes to Ross’ promotion? Well, it muses over the fact that he is from a background in television but completely fails to opine that most studios in Hollywood are run by TV folks these days (yes, Bob Iger was at ABC prior to Michael Eisner’s departure).

For that, we need to visit a second article by Edward Jay Epstein in Adweek that chronicles how the vast majority of revenue for the big 6 comes not from the movies themselves but from TV rights to said films. Such an arrangement has (according to the article) assured that any movie put out by a studio has a solid ability to be sold or packaged for TV. The result is that a TV person familiar with the medium is best placed to run the show, as Epstein puts it:

They know a crucial reality: whatever hurts TV’s ability to sell ads, hurts their own bottom lines. Consequently, when new-age players such as Netflix, Apple, Google, or even Hulu (Hollywood owned) threaten to undercut the ad base of the traditional TV networks, they’re also threatening to gut Hollywood’s golden goose

Hence Ross’ promotion from Disney Networks to the hallowed movie studio.

 

 

Why Animators (and You) Need To Create A Network

Last night I attended a networking event put on by Loyola University here in Baltimore, where I currently undertake an MBA course of study. Now I’m not one to readily go out and ‘network’, I can be tremendously shy and nervous at events like these, however, I did find last night a great help insofar as persuading me that I need to attend more events like this (if that makes sense).

The most important lesson I took away from the evening was that relationships can matter a whole lot when it comes to business. Although this is kinda sad in a way, it is the truth, and thankfully, there is plenty you can do about it to help yourself get where you want or need to go.

For animators, creating a professional and personal network should be one of their highest priorities. You’ll likely already have one from school, but it is important to create one outside of that, either from the neighbourhood you live in, organisations like ASIFA or the Animation Guild, a drawing class, or even just the folks you work with.

One of the points that was hammered home last night was to build and maintain relationships. One of the panelists put it like this:

It’s not who you know, it’s who knows you.

That’s a great quote and pretty much sums up how you can determine your place in the labour supply pool. If no-one knows you, then there’s a good chance that you can become isolated professionally and that can have detrimental consequences when it comes time to look for a job or even climb the career ladder.

ASIFA-East President and one of the nicest guys I’ve ever met, David Levy, often mentions networking over on his blog, Animondays. His reason is more practical than most. As a New Yorker, the tight-knit animation community flourishes because of personal relationships. There are no really large ‘faceless’ corporations operating in the city so a fair amount of the time, he is working directly with an individual or small studio. In such a situation, personal relationships can (and do) count for an awful lot. Animondays has plenty of advice so check it out (if you don not do so already).

Relationships are also something that can slip away easily. I know myself that I am a horrible communicator. If you ever get an e-mail from me, I can come off as whiny, needy, hyperactive or just plain ignorant. If you don’t receive a reply from me, I more than likely neglected to take the 5 seconds to reply.

I know these are things I need to work on, and it can be hard when you’re working or going to school full-time to justify spending an evening or afternoon schmoozing with other people in the field. However, once you create a relationship, it is imperative that you take the small amount of time to maintain it. E-mails now and then, or even the occasional lunch can work wonders.

However, it would seem that the benefits are well worth the time put in, and like a couple of the panelists were saying, the more people who know you’re out of work, the greater the chance they know someone with an open position that needs to be filled.

So quit making excuses for yourself. That TV show or computer game can wait this evening. Head on out there and meet someone in the same boat as yourself! You’ll be surprised at they great kinds of people you’ll come across.