By Michael Briggin
When Walt Disney founded the Walt Disney Studios with his brother Roy Disney back in 1923, the original goal was for it to become the Disney Brothers Cartoon Studio. With just six years away from the beginning of the Great Depression, the Disney Brothers were ahead of their time and pioneered what would eventually become mainstream business models for animated feature films. In the decades of Disney running the company as CEO, the studio became a giant influence in innovation in Hollywood that no other major film studio could even match.
In the decades that have passed since Disney died in 1966, Disney Studios has moved in a completely different direction which has gone beyond what Disney originally envisioned. No longer is the company strictly an animation, live-action and theme park innovator. It’s now a media empire, something far different than what most baby boomers and gen xers who grew up with Disney even imagined.
With CEO Bob Iger recently announcing that he would resign, new Disney CEO Bob Chapek comes in to take the helm after Iger’s 15 years running the company. This may have come as a surprise to shareholders who have thought Iger was going to last longer as CEO but in truth, Disney needed a change for a very long time.
However, being that Chapek is a new CEO as opposed to Iger who, like his processor Michael Eisner was in the executive’s chair for over a decade, there’s a lot of ambiguity at this point as to what his tenure will look like. So far, in a recent Disney Board of Directors meeting, Chapek had this to say:
Chapek, who was surprisingly named CEO at the end of February with Bob Iger moving to Executive Chairman until the end of his contract in December 2021, said that Disney’s “best years are ahead of us”.
“There are so many opportunities on the horizon. As successful as the company has been, we’re almost 100 years, I think our best years are ahead of us because we’re in a position where we’ve got so many great creative engines to tell stories,” he said.] – Block Quote
Additional thoughts from Chapek on the State of Disney:
“Chapek, who most recently served as chairman of Disney Parks, Experiences and Products, and previously ran Disney’s parks and consumer products divisions, added that a digital future would also help Disney. The pair said that Disney+ had “greatly exceeded” its expectations.
“Now we have a distribution system so to be able to take that content and take it directly to all of you without necessarily having to go through a third party that somewhat limits what we can do. I have never been more excited,” he added.
Chapek admitted that he understood the “gravity” of filling Iger’s shoes but was looking forward to some “great years ahead”.
However, those of you baby boomers and generation xers who grew up in an era when Disney Studios was far more about film production than it was about being a media empire, you will know that how you grew up with Disney cartoons, films and the theme park is a much different experience than how millennials and centennials experience Disney these days. From what Disney Studios has accomplished, there’s a generational divide as well as mixed reaction as to what the real brand identity of Disney is these days.
Indeed, Guy Lodge of the Guardian points out what plenty of outsiders not influenced by Disney and its shareholders have thought all along:
“I believe in being an innovator,” Walt Disney once said, though he reckoned without the challenges of today’s cinema market, in which giving the people what they want amounts to giving them characters and stories they already know. That may be the most effective way of keeping the big-screen experience alive in 2019 – but it feels a hollow victory. Disney, of course, is hardly alone in this philosophy: it just has worked out more consistently than its hit-and-miss rival studios.
Yet as long as Disney maintains its box-office stranglehold – and you have to go back to 2014 for a year in which it didn’t top the annual chart – it will be regarded as the principal architect of an ever more uniform and homogeneous popular cinema. In March, Disney subsumed one of its most venerable rivals, completing its $71bn (£57bn) acquisition of 21st Century Fox, a deal that makes its 2009 purchase of Marvel Entertainment for £2.5bn look ever more of a bargain.
Save for the Spider-Man franchise – still owned by Sony – Disney and Marvel’s brands are now thoroughly and lucratively intermeshed, both commercially and aesthetically. Now, having shaken off the embarrassment of inherited duds such as Dark Phoenix, Disney will be aiming for similar synthesis with such upcoming Fox heavy hitters as Steven Spielberg’s remake of West Side Story and, of course, James Cameron’s looming trail of Avatar sequels.
This kind of Hollywood imperialism is not encouraging news if you fear that reduced competition begets reduced creativity, even as Disney’s substantial fanbase – umbilically bound by the childhood nostalgia in which the corporation trades – zealously cheers it on. What other acquisitions are on its wishlist? Are we seeing a return to the rigidly controlled Hollywood studio system of the 1940s and 1950s – only with one studio effectively as the system? If so, a movement not dissimilar to the demands to break up big tech currently rippling towards Silicon Valley might be in order.”
To Guy Lodge’s point, Disney Studios has not innovated like it used to not just during Walt Disney’s era but also in the Michael Eisner period after he and management’s decision making reinvigorated the company with releases such as Beauty and the Beast, The Little Mermaid and the Lion King, which made a far more significant impact at the box office and in name brand as classic animated films of the Disney plenty remember than most of what Disney produces these days.
In the past decade or so there’s a deeper-rooted problem with Disney Studios that has directly to do with how management at the company and the Board of Directors have influenced the decision making. Here’s a timeline of significant decisions made by the company to become more of a media empire than the traditional Disney of the past:
- August 1995 – Disney acquires ABC News.
- January 2006 – Disney acquires Pixar Studios.
- August 2009 – Disney acquires Marvel Enterprises, the comic entertainment production studio started by Marvel Entertainment Group, incorporated 1986 and which has featured many comic book films.
- December 2012 – Disney acquires George Lucas’ empire, including Lucasfilm but ends up laying off the entire LucasArts staff and outsources computer and video game production to Electronic Arts.
- February 2014 – Disney launches its own startup accelerator, the Disney Accelerator.
- March 2018 – Disney announces a strategic reorganization of the company’s direct-to-consumer services, technology and international media operations into a single, worldwide business to capitalize on growth opportunities.
- March 2019 – Disney acquires 20th Century Fox and this includes the independent film distributor Fox Searchlight Pictures which is now renamed Searchlight Pictures.
Additionally, you will notice that Disney Studios the last several decades has produced quite a number of live-action remakes of animated films like Dumbo and the Jungle Book as well as plenty of direct-to-video sequels to films like Aladdin, Cinderella and the Lion King. Even Pixar Studios has produced sequels to films like Cars and Toy Story.
What’s the pattern here? Disney Studios as a company is focusing more on adapting to the changing landscape of Hollywood and is aimed for long-term growth as opposed to having to grapple with the post-Walt Disney passing era of the 1970’s and 1980’s which put Disney Studios more in a decline of revenue than it ever was in a long time.
There’s also the increasing influence of the digital economy on the traditional film and TV exhibition models which as a result of the rise of Amazon, Netflix, Redbox as well as YouTube is causing the once dependable consumer to flip in a different direction.
Thankfully, in recent years Disney has seen its revenue surged to record levels. Arguably, on many levels Bob Iger’s leadership in his tenure as CEO has produced results from a revenue standpoint. 2019 featured a whopping 69.57 billion revenue generated for the company.
There are many reasons why companies historically speaking have acquired and merged with other companies but plenty have really changed a whole lot in terms of purity when it comes to how a founding company’s first CEO saw a different vision than what the CEO of recent years would view things. With Disney, the acquisition history suggests a much different kind of plan with acquisitions that Walt Disney never even thought of.
Looking at the history of the Hollywood film studio system, back when German-American filmmaker Carl Laemmle founded what would eventually become Universal Pictures, he had a history of buying nickelodeon film theaters around the United States. In terms of acquiring companies to the degree Disney Studios has been doing since the 1990’s, Laemmle’s business goals were similar in this aspect. Laemmle is credited as giving the rise to Hollywood and the commercialization of movies in a broader market than what French filmmakers George Melies and the Lumiere Brothers originally did back in their day.
The one difference though between Laemmle and Bob Iger is that corporate influence and demographics never were used in Laemmle’s era as much. The U.S. economy was also far more agricultural, more rural and in a different state than it is today. Directors, screenwriters and any creatives involved in film production were far more of stakeholders in Laemmle’s time as well as through decades heading to the 1980’s.
These days, if you look at the Board of Directors and the CEOs of Disney for decades, not a single one of them has had any direct hands-on experience working on an animated production in the capacity of directing, film editing, screenwriting or even voice over work like Walt Disney used to get involved with when he was running things at the Walt Disney Company. Most of the members of the Board are filled with executives and managers with traditional backgrounds coming into their respective roles.
Does this mean that Disney’s Board isn’t making smart decisions? No. They just happen to offer different perspectives of how Disney Studios should run things as opposed to how Walt Disney originally saw things.
However, if you look at the top grossing films in U.S. history, they were produced as pet projects by rebellious filmmakers. These films are Avatar, Star Wars: A New Hope, and Titanic.
James Cameron and George Lucas started off as filmmakers but never had an executive background. Their visions also enabled them to be multi-millionaires or billionaires, but they also did so without any acquisitions of companies. Not a single film made by Disney since the Lion King has ever reached gigantic levels of fame and impact like that film.
With Star Wars: A New Hope and Titanic, they ended up becoming massive multi-billion dollar successes at the box office and lasted months still producing considerable revenue for their respective studios when they were perceived by the financiers in their respective studios as set to fail at the box office. We have yet to see any such film these days generate the level of attention that those films have done.
This leaves the question: What should Disney do these days which is different?
Innovate more, acquire less. Also, involve stakeholders a lot more in the conversation of management decision making where they have a say in things as opposed to everything being done inside-the-beltway. We can’t predict what Disney will do in the years to come but we can however point out that it doesn’t hurt to let the innovators be the deciders of the fate of Disney once in a while.