Should Disney Buy Pixar

Should Mickey buy Nemo?

-a case analysis on the feature animation industry

Shown in the article “The Walt Disney Company and Pixar Inc.: To Acquire or Not to Acquire?” published on Harvard Business School on January 2010, the question that should Hollywood whale Walt Disney purchase the new giant, young but successful 3D animation star, was raised. The article first introduced Walt Disney’s hardship between 1994 and early 2000s, the age marked by the advent of feature animation movie, such as low sales in box office, departure of high executive and large and redundant staff base. Then the article briefly brought together the movie economics. An overview of history and corporate culture of Pixar Inc. and the relationship between Disney and Pixar was then followed in the article. Finally, the question was asked. How does Disney address its issues and keep its leadership in the new era of 3D animation movie industry. Should Disney just simply buy Pixar?

My answer is yes.

Pixar, by then leading 3D animation studio, was founded in 1986 by co-owner of Apple Computer, Steve Jobs, with featured blockbusters Toy Story, Toy Story 2, Finding Nemo, etc. Founded in 1923, Walt Disney was one of the oldest and largest media conglomerates in the world and it has dominated in television and feature film industry, distribution industry such as DVD, and theme parks and the other commercial products related to Disney characters.

Let’s reiterate Disney’s problems briefly. After its peak in Lion King (1994), we have seen a moderate sales curve in Disney’s new movies (see Exhibit 1). In the later 1990s, Disney built a “Secret Lab” to respond to the audience’s new taste towards 3D computer-generated (“CG”) movie, but the result at the box office was not pleasing either. After this failing attempt, Dinosaur, Disney focused back to 2D projects, like Atlantis: the Lost Empire. Also Disney started its cost-cutting policy to address its large staff, large budgets issue in the...