Walt Disney Case

The Walt Disney Studios was established as an animation studio in 1923 by Walt Disney and his brother Roy. They have four business segments which are media networks, parks and resorts, studio entertainment and consumer products and interactive. There were five studio ‘labels’ that together made up Disney Studios. Those consisted of Disney Live Action, Pixar Animation Studios, Walt Disney Animation Studios, Marvel Studios and Lucasfilm. Disney implemented a “tentpole strategy” that revolved around at least eight big movies each year.

With Disney’s current plan, they have been doing very well. If you look at exhibits 5a through 5e, you can see that all the movies produced by these five studio labels, have generated more total box office money than what the budget consisted of, except for four films (Treasure Planet, Home on the Range, Meet the Robinsons, Red Tails). With these tentpole movies with big budgets, Disney finances it themselves. This means when Disney is able to produce a hit movie, they are able to bring in higher revenues compared to the likes of Hollywood Studios, Universal or any other competitors since they partner up with others to finance their films.

Each year, Disney expects each of the five studios to produce at least one tentpole film. Typically, in a year they have one from Pixar, one from Disney Animation, one from Lucasfilm, two from Marvel and three from Disney Live Action. I think this is a fair number of movies as Disney has seen success with this strategy so far. It is a high-risk high reward strategy and Disney has been reaping the rewards. Even when a movie ‘flops’ in their eyes, it is still producing positive revenue for the most part. Looking at exhibit 2b, you can see that Disney puts out 10-14 films a year compared to other companies that can put out 20+ and Disney is always up there in terms of worldwide box office grosses. I would like to assume Disney’s tentpole strategy has been paying off short