Disney's Strategy

I read an interesting interview in Fortune magazine with Disney's CEO, Bob Iger. I like what he had to say and has made me enthusiastic about the future of the Mouse House. Here are my thoughts on the article:

One of my biggest complaints against Disney in the waning months of former CEO Michael Eisner's tenure was the legion of direct to video/DVD sequels. It all started with Return of Jafar and devolved into Cinderella II and III, Pocahontas II, Lion King 1.5, and even the Fox and the Hound II. Not only was the quality a mere shadow of its respective progenitor, but it also tarnished the original by association and cluttered retail shelves with a bunch of filler.

Unfortunately for me, it made a lot of money for Disney and Eisner clearly was not concerned with the impact on the Disney brand and what it represents. When Walt's brother and financial leader Roy decided to re-release Snow White in theaters to make money on the demand to see the movie again, Walt criticized him for getting into the sequel business. Walt was always looking to the future.

In the Fortune article, Iger echoed my own belief by saying that low quality and too much product is a deadly combination. Last year he pulled the plug on the sequel machine, so Cinderella III thankfully marked the end of that!

However, I do think that an occasional sequel is not a bad thing. I think that Toy Story 2 was superior to the original. It should be noted that Toy Story 2 was originally intended to be a direct to video release but after test screenings and positive response, they decided to release it in theaters instead. The domestic box office for Toy Story 2 was $246 million, 28% more than the original. Toy Story 3 is planned for a 2010 release and I can't wait to see it!

Iger's approach is to treat franchises like Toy Story and Cars as their own brands. Cars 2 is also being planned. It was interesting to note that not every animated film is considered a franchise by Iger. He explicitly named Ratatouille as one such film. It is a great movie, but we won't see Remy-themed attractions at the parks or sequels.

I think one of the biggest challenges is how to manage the Mickey Mouse brand. It is obviously nostalgic for the baby boomer generation, but the younger generations don't have much of a connection to Mickey unless you count the toddlers who love Mickey Mouse Clubhouse. The other challenge is reviving Disney's own animation unit. In my opinion, the last decent hit was 2002's Lilo & Stitch. Hopefully the fact that a traditionally animated short now precedes major Disney movie releases, such as Ratatouille and National Treasure 2, they can rediscover the magic.