Pixar case analysis

For the exclusive use of m. alabdalwahab, 2019. 9-709-462 REV: JANUARY 15, 2010 JUAN ALCÁCER DAVID COLLIS MARY FUREY The Walt Disney Company and Pixar Inc.: To Acquire or Not to Acquire? In November 2005, Robert Iger, the newly appointed CEO of the Walt Disney Company, eagerly awaited the box office results of Chicken Little, the company’s second computer-generated (CG) feature film. He knew that, for Disney as a whole to be successful, he had to get the animation business right, particularly the new CG technology that was rapidly supplanting hand-drawn animation.1 Yet the company had been reliant on a contract with animation studio Pixar, which had produced hits such as Toy Story and Finding Nemo, for most of its recent animated film revenue. And the co-production agreement, brokered during the tenure of his predecessor, Michael Eisner, was set to expire in 2006 after the release of Cars, the fifth movie in the five-picture deal. Unfortunately, contract renewal negotiations between Steve Jobs, CEO of Pixar, and Eisner had broken down in 2004 amid reports of personal conflict. When he assumed his new role, Iger reopened the lines of communication between the companies. In fact, he had just struck a deal with Jobs to sell Disneyowned, ABC-produced television shows—such as “Desperate Housewives”—through Apple’s iTunes Music Store.2 Iger knew that a deal with Pixar was possible; it was just a question of what that deal would look like. Did it make the most sense for Disney to simply buy Pixar? Walt Disney Feature Animation Walt Disney Feature Animation began with the production of Snow White and the Seven Dwarfs in 1934. Toys and memorabilia based on the movie’s characters were stocked in stores such as Woolworth’s around the film’s release, a move that became a trademark of Disney’s strategy. After many early successes, the animation division struggled for decades after Walt Disney’s