Disney And Pixar Case Study

In the world of family-oriented and cartoon animation, there are no two companies more well known and loved such as Disney and Pixar. Both of these entertainment giants are responsible for a culture where animated characters and films are cherished and sought after. Although the movies produced by the two companies are fun and loving, they’ve also had great achievements in their industry. Disney and Pixar have partnered to have great successes such as Toy Story and Cars, while also experiencing high tension and conflict due to contractual disagreements. In 2005, Robert Iger was appointed the CEO of Disney. Since then, Robert Iger has been attempting to revive relations with Pixar in an attempt to reunite the two media and entertainment companies.

During this time, Pixar was able to produce short films and improve animation by using 3D computer-generated models. This brought the company attention and eventually, Disney’s undivided interest. In 1991, Disney and Pixar entered into a multi-film contract which brought great success to both companies. This lead to another ten year, multi-movie deal. However, increased interaction between the companies would lead to increased disagreement and tension. Pixar wanted control and ownership over the movies it created along with entitlement to more revenues from its products. Disney saw this as Pixar’s attempt to take ownership of the distribution of the films. This would violate the original contract between Disney and Pixar, which already entitled them to future profits. In total, Pixar would be entitled to about 40% of the profits from their ten year deal, while Disney would collect 60% of profits. This division in ownership of content and Pixar’s increased demand for higher profits was the reason for the split between Pixar and Disney’s business relationship. Can Disney restore its business relationship with Pixar in a way

It can be argued that the increased synergy would surpass the financial investment and risk. However, in this particular case, it does not make financial sense. It may even be wise for Disney to continue a partnership with Pixar in order to learn from its entertainment rival. It is important for Disney to respects the influence and expertise of Pixar in the animation industry. Disney should not allow for tangible profits to stand in the way for potentially much larger profit producing knowledge a partnership with Pixar can provide. Furthermore, Disney has capital to invest into making their animation department similar to, if not better than Pixar’s. It can lure away the best talent, innovate the software industry, and imitate successful policies that Pixar has implemented. Taking into account the risk, cost, and uncertainty of a Pixar merger; it seems reasonable to assume that it would be less costly, less risky, and more beneficial for Disney to transform its animation department. Doing so would allow it to compete with the ones of Pixar, or even surpass it rather than purchasing