Disney

"The emblematic example of this cultural change, for the better, is the odyssey of the little bear Paddington: a character born in publishing, he became the hero of two films produced by Studiocanal-the third installment will be released in 2022-then expanded into derivative products (plush toys, games...) before returning to the world of entertainment (video games, musicals, TV series)... "The model is Disney," explains Bolloré. Their inspiration was fading, they reacted. We need to seek out talents. Spot them, sign them, coach them. Especially at Canal and in its catalog, the source of all French cinema.""

"Most importantly, he will transform a bouquet of channels into a platform-an aggregator of content, as they say in the industry-offering not only Canal's programs, but also those of Disney or beIN, of which Canal has become the exclusive distributor for France."

"In that meeting we had also received our first lesson on live-action filmmaking. “Think of it as a portfolio business,” Joe had explained. “Each year a studio earmarks funds for a slate of films: low budget, medium budget, and big budget. Then we do the same with marketing, allocating amounts to market each film. We release the slate, hoping that we create enough hits to make up for the ones that don’t perform.” “How many films are in the slate?” Steve asked. “It depends,” Joe said. “There’s no magic number. It could be as few as a half a dozen, as many as fifteen or twenty. It depends on the year, the size of the studio, the sources of financing, and other factors.” “How do you know which might be the big films?” Steve asked. “We don’t know,” Joe confessed. “We like to think we do but we really don’t. It’s hard to predict the films that will break out. Sometimes you know a big star will assure a big opening, but even that doesn’t tell you how the film will ultimately perform.” “So it’s as much a financing strategy as a creative strategy?” I asked. “That’s right,” Joe said. “Of course, we try to make the best films we can creatively, but it’s all about assembling the right slate.” This was all new to us. Disney and the other studios were spreading money across a slate of films, hoping that some would break out and become hits, to make up for the ones that didn’t."

"Steve winced at this. He didn’t like it when I made any suggestion that Pixar might not be ready to go public. He was itching to go public as soon as we could. I had one foot on the brake, though. Pixar was frantically trying to finish Toy Story for its launch in six months. I didn’t want potential investors to see how precarious the project was. Worse, we didn’t have a business plan to confidently share with them, and I knew from my talks with Sam Fischer that Pixar’s share of the home video revenues under the agreement with Disney was very small, even if the market for home videos was big."

"“As you know,” Ed said, “we’re making a feature film due out in November. We’re also selling RenderMan software and making commercials. But we don’t really have a business plan for building the company. We could really use some help sorting that out.” “How does Pixar fund its business now?” I asked. Ed explained how it was very much just month to month. Disney paid for film production costs while sales of RenderMan software and animated commercials brought in some revenues. That wasn’t enough to cover Pixar’s expenses, though. “How do you cover the shortfall?” I asked. “Steve,” Ed explained. “Every month we go to Steve and tell him the amount of the shortfall, and he writes us a check.”"

"The impact of all these contractual provisions was crushing: until Pixar could release a film outside of the Disney contract, the most we could expect to earn from our first three films would be a few million dollars a year—and even then, only if those films ranked with Disney’s most profitable films ever. No one would invest in a company that had to perform at those levels in order to eke out a small profit. “Sam, did no one at Pixar understand these calculations?” “I’m quite sure Steve did,” Sam told me. “We walked him through all the terms and what they meant.”"

"We still needed a business plan, however, a road map to give Pixar a shot at success no matter how improbable. After examining a seemingly endless number of permutations, the plan we finally developed had four pillars. First, we had to increase Pixar’s share of the profits from our films. There was no scenario in which Pixar could become a viable business under the profit-sharing arrangement in the existing agreement with Disney. We tested many possibilities and concluded that the minimum profit share that Pixar would need to achieve its goals was 50 percent. Therefore, the first pillar of our plan called for increasing Pixar’s share of the profits to at least 50 percent, which was a four-or fivefold increase over what we had now. Next, to have any real shot at increasing our share of film profits, Pixar had to be willing to pay all, or a large part, of the production costs of its films. We had learned how Hollywood ran on essentially two currencies: money and star power. Either one was a ticket to bigger opportunities, bigger profit shares, and more clout. Those who didn’t have either remained at the whim of those who did. If we were ever to renegotiate our agreement with Disney, or work with any other film distributor when that agreement was over, to begin any conversation about a bigger share of the profits we had to be prepared to pay the production costs of our films. I discussed this with Steve one Friday when he was at Pixar. We were in his office, just down the hall from mine. “How much do you think we will need to raise?” Steve asked. “At least seventy-five million dollars,” I said. “Competition for talent, carrying costs, and increasing technical challenges are driving production costs up. It won’t be long before our budgets hit seventy to a hundred million per film.” “Will seventy-five million be enough?” Steve wondered. “It would let us finance half the production costs on two films,” I said. “That should be enough to get us started. That’s no small sum, though. It’ll scare away banks and private investors. We can only raise that much by taking Pixar public.” “Maybe we need more. It would be better to have a cushion of a hundred and fifty or two hundred million. Once we’re raising money, we might as well have a big war chest.” I certainly had no objection to raising more capital for Pixar. But our chances of raising money went down the larger the amount we sought. For an unproven company like Pixar, investors would prefer to see us put smaller amounts of money to good use before they ponied up more. This wasn’t the time to debate that, though. Steve and I agreed on the second pillar of Pixar’s plan: take Pixar public to raise money in order to build the studio and to fund our own films. Increasing our share of film profits and raising money wouldn’t be enough, though. We also had to increase the frequency with which Pixar released films. We were presently making one film at a time, which meant a film release every four to five years. There was no way to make the business work at this rate. Again, we tested different scenarios. The ideal rate of film releases, at least according to the numbers, was a new film every year. That seemed far out of reach from where we stood now, but any meaningful increase in how many films we produced would require a drastic increase in the size of Pixar so we could work on productions in parallel. Therefore, scaling Pixar to make films more often was the third pillar of the plan."

"Finally, if Pixar was to become a serious entertainment company, we needed people to know about us. Under the terms of the Disney agreement, Disney would have most of the billing, and we feared that few people would understand that Pixar was the creative force behind its films. As it was, the movie posters for Toy Story would say, “Walt Disney Pictures presents Toy Story,” or worse, “Disney’s Toy Story,” with Pixar’s name in small print. This would make it hard for the world to fully associate Pixar with filmmaking. “We have to change how the world perceives Pixar,” Steve said one evening when we were discussing Pixar’s brand. “Even if Disney gets the billing, people need to know that we made these films. We can’t build a company without a brand.”"

"As we often did, we wrote down the main points of discussion on a whiteboard. There was one in the front of the room, with a wooden casing around it. We had discussed all of these points before, but it was helpful to see them in one place. Steve took a whiteboard pen and made two columns: Disney and Pixar. Under the Disney column, he would write the points that gave Disney leverage. Under the Pixar column, he would write the points that favored Pixar. Point one for Disney: NO OBLIGATION TO CHANGE CONTRACT “We know there’s nothing that can force Disney to negotiate with us,” Steve said. “They have a three-picture deal and they can stick to that contract simply because they want to.” “They have us tied up for two more films,” I added. “They keep most of the profits, and we can’t talk to any other studios until we’re done. It’s a great deal for them. Why would they change it?” Steve added a second point in the Disney column: CAN INVEST IN COMPUTER ANIMATION THEMSELVES"

"Sam’s firm sent up the numbers. It was our first glimpse at the way films made money. At last, we could see how much studios kept from the box office revenues; what were reasonable assumptions for film marketing costs; when films were released in video, TV, and other markets; how much they made; the impact on profits of film production budgets and profit-sharing arrangements; as well as other details without which we’d never fully understand the business. To tailor the model to animation, we took up Disney’s offer to answer our questions about how the business of animated feature films worked. Before long we cobbled together our first model of how an animated feature film performed financially. It was rough and crude, at best. But it was ours. Over time we would learn how to perfect it. Right now, it was good enough to give us a start."

"Next Steve added to the Disney column: PIXAR ONLY ONE HIT “We’ve had only one hit,” Steve said. “Before we prove we can repeat it, Disney might be reluctant to change our deal.” This was the one-hit-wonder problem. One hit did not make for a track record. “Anything else in Disney’s favor?” Steve asked. “We’ve talked about this,” I said, “but maybe Eisner’s interest in animation is waning. He just bet big by buying ABC, which includes ESPN. Animation could be on its way to becoming a sideshow for him.”"

"There was another column, though. The first thing Steve wrote in the Pixar column was: IPO $ TO PAY FOR PRODUCTIONS “We can now pay for our own productions,” Steve said. “Disney doesn’t have to pay for all the costs.” This was why we had done the IPO. If money talked, we now had quite a bit of it. We anticipated that production costs for Pixar’s next film might approach $50 million, and production costs for future films more still. If we offered to put up half of it, this would surely get Disney’s attention. Then I added a second point: TOY STORY SUCCESS Steve wrote it in the Pixar column. “No one expected Toy Story to be so successful,” I said. “Least of all Disney.”"

"I felt patience was the key. Disney hadn’t said no. But Steve was not accustomed to being brushed off, and he didn’t like it. The more time went by, the more his frustration grew. Finally, one day in exasperation, he exclaimed to me, “I don’t know if I can work like this!”"

"STEVE JOBS IS BACK IN THE SADDLE AGAIN, BECOMING A BILLIONAIRE IN PIXAR IPO The article said: There are plenty of analysts who think the market’s valuation of Pixar, at a total of $1.46 billion, is a sign of investors gone mad. Disney will get 80% to 90% of the revenue from “Toy Story,” and has locked Pixar into a three-picture deal through at least 1999 that promises to be a lot more rewarding for Disney than Pixar.5"

"Disney was clearly better at distributing animated feature films than anyone else. It had extraordinary merchandising capability for churning out toys, clothes, and other branded items; it had the very best theme parks for showcasing the films and their characters; and the imprint of the Disney brand on an animated film gave it a cachet that no other studio could provide. Where else could Pixar find that kind of distribution clout? Disney might well conclude that Pixar needed Disney far more than Disney needed Pixar, and they might be right. It would certainly diminish our leverage with them."

"“If Disney makes a substantial investment in computer animation,” Steve said, “they may have no interest in extending their agreement with us.” “Disney has plenty of resources to do it,” I added. “Plus they also have time on their side. Their deal with us could buoy them for a few years while they build up their own capacity in computer animation. We’re basically giving them the lead time they need.” This was a potentially perfect strategy for Disney. They could use Pixar to tide them over until they no longer needed us, reaping most of the profits along the way. Then they’d have their own computer animation capability ready to go and could easily jettison Pixar. “Another point for the Disney column,” I added, “is that Disney will undoubtedly think it offers Pixar more than any other studio can offer, given its expertise in animated films.” Steve wrote in the Disney column: OTHER PIXAR OPTIONS INFERIOR"

"Steve wrote in the Disney column: ANIMATION MIGHT BE LOSING PRIORITY"

"The Disney column now read: DISNEY NO OBLIGATION TO CHANGE CONTRACT CAN INVEST IN COMPUTER ANIMATION THEMSELVES OTHER PIXAR OPTIONS INFERIOR PIXAR ONLY ONE HIT ANIMATION MIGHT BE LOSING PRIORITY"

"The solution was to find a way to diminish the risk that a small disappointment might cause the stock to plummet. There were two ways to do this. One was to use Pixar’s highly valued stock to purchase other companies. The effect of purchasing other companies would be to diversify from animation so that if animation experienced a downturn, it would not have as devastating an impact on the company. Diversification had been Walt Disney’s strategy all those many years earlier. The other way to diminish the risk was to seek a buyer for Pixar. If a large corporate conglomerate were to buy Pixar, Pixar’s stockholders would exchange their Pixar stock at its present soaring value for the stock of the larger corporation where they would enjoy much greater diversification. Over the years, Steve and I had speculated occasionally on how Pixar might ultimately end up being purchased by Disney, but we had never taken this on as a serious possibility."

"In contract negotiations, as in many other endeavors, the last 20 percent can take 80 percent of the effort. It is in the last 20 percent that the precise details are spelled out. One challenge is the inordinate amount of time spent on drafting contingencies that will likely never occur. For example, if an earthquake strikes Point Richmond and delays Pixar’s completion of a film, should Pixar be in breach of contract for delivering a film late? To what degree should Pixar be expected to protect against the risk of an earthquake? It’s actually not an unreasonable question, especially when making a film on the edge of the infamous San Andreas Fault. Or, if Disney and Pixar share the costs for buying computers to make films under the agreement, can Pixar use those computers for other, non-Disney projects? If so, should it reimburse Disney for that usage? Because it is possible to conjure up a virtually endless list of risks and contingencies, one of the marks of a good negotiator is knowing where to draw the line so that things can move forward. In negotiation, there is a constant tension between momentum and fear. It comes down to an exercise in risk management. One illustration of this idea came early in the draft agreement in a clause called “Treatments.” This provision said, simply, that for each picture under the new agreement Pixar would submit to Disney one or more film ideas in the form of a treatment. But what would constitute a treatment? Could it be one line on an index card: “A father goes on an adventure to find his son; oh, and they’re both fish”? That probably wouldn’t make the cut. So the agreement spells out the details: a written treatment less than three pages that can be the basis for a screenplay. But Pixar often presented its treatments orally, using sketches and short storyboards. What if that was the preferred method? The agreement needed to cover that possibility too. And Disney wanted to make sure that the treatments were for original stories, not sequels or prequels, so all that had to be defined."

"Steve was now Disney’s largest stockholder, and the value of his stock in Disney would eventually soar to over $13 billion, making his investment in Pixar by far the largest source of his personal wealth."

"there’s a way to convey that while also conveying that you trust the people who work for you, and preserving in them an entrepreneurial spirit. Dan Burke taught me that exact lesson early on in a way that couldn’t have been more opposite from the Strat Planning approach. I can’t recall exactly what it was in response to, but in one of our conversations about some initiative I was considering, Dan handed me a note that read: “Avoid getting into the business of manufacturing trombone oil. You may become the greatest trombone-oil manufacturer in the world, but in the end, the world only consumes a few quarts of trombone oil a year!” He was telling me not to invest in projects that would sap the resources of my company and me and not give much back. It was such a positive way to impart that wisdom, though, and I still have that piece of paper in my desk, occasionally pulling it out when I talk to Disney executives about what projects to pursue and where to put their energy."

"my goal is for Disney to be the most admired company in the world, by our consumers and our shareholders and by our employees. That last part is key. We’ll never get the admiration or the public unless we get it from our own people first. And the way to get the people working for us to admire the company and believe in its future is to make products they’re proud of. It’s that simple.”"

"Barrier. The Barrier in Cornered Resource is unlike anything we have encountered before. You might wonder: “Why does Pixar retain the Brain Trust?” Any one of this group would be highly sought after by other animated film companies, and yet over this period, and no doubt into the future, they have stayed with Pixar. Even during the company’s rocky beginning, there was a loyalty that went beyond simple financial calculation. To illustrate: in 1988, long before Disney began its association with Pixar, Lasseter won an Academy Award for his Pixar short Tin Toy, prompting Disney CEO Michael Eisner and Disney Chairman Jeffrey Katzenberg to try to recruit their former employee back into the Disney fold."

"Customers responded positively, encouraging Netflix to fuel the fire. The company negotiated in turn with each hardware vendor to achieve device ubiquity; they upped their commitment on content, eventually reaching deals with CBS, Disney, Starz and MTV in 2008–2009, and they constantly refined the backend technology needed to make streaming a seamless customer experience."

"Previewing the action he would take at NeXT in 1993, Jobs took Pixar out of the hardware business. He cut staff by two-thirds and narrowed their efforts to storytelling. The result was a major deal with Disney, and out of that came *Toy Story*, the first feature-length computer-animated film and a smash hit at the box office. Jobs, who owned 80 percent of the company, took it public, and instantly became a billionaire. Its success reframed the public perception of Jobs."

"Not because the crisis would have killed the LEGO idea. The LEGO brick, with everything it represents, would likely have continued to exist under the management of another company, such as Disney. Children still play with their fingers, whether it’s with sand, clay, or LEGO bricks. However, the LEGO brick would probably no longer have been an idea developed and sold from Denmark."

"Personal vehicles of players Player Personal vehicles created Bain Bain & Company; the unique Bain consulting formula; recommendations from client CEOs to other CEOs; Bain Capital Bezos Amazon; the Bezos business formula for Amazon Bismarck The Prussian state and army; North German Confederation; German state and military; successful wars against Denmark, Austria and France Churchill His opposition to Hitler; British state and Empire; their armies and people Curie Radium Disney Disney Studio; cartoons, movies and television; Mickey Mouse and later Disney characters; Disney’s personal WED corporation; Disneyland Dylan The folk movement; Columbia Records; songs and albums; fans Einstein Theory of Relativity; Zurich, Prague, Berlin, Caltech, Berkeley and Princeton universities; media Frankl Man’s Search for Meaning; lectures; awards; school of followers Henderson Boston Consulting Group (BCG); the Experience Curve and Boston Box concepts; Perspectives (short thought-pieces mailed to senior managers); BCG conferences Jobs Apple, NeXT and Pixar; Macintosh computers; Apple digital devices; Apple store; Apple apps Keynes The Economic Consequences of the Peace; King’s College Cambridge; The General Theory Lenin Iskra (Russian revolutionary newspaper); What Is To Be Done?; Bolshevik party; Russian state; military and secret police Leonardo His studio in Florence; his paintings, sculptures Madonna Record labels; albums, videos, movies; media; personal business ventures Mandela ANC; Robben Island prison; South African state Rowling Harry Potter Rubinstein Eponymous cosmetics empire; advertising and media; personality marketing and personal networking Paul of Tarsus City churches he founded; his letters (epistles) to them, Acts of the Apostles; Marcion and his pioneering New Testament canon Thatcher Conservative Party; British state and military; Falklands war; ‘Thatcherism’ programme in favour of free enterprise, against state business monopolies and abuses of trade union power"

"Disney was a harnesser and creator of visual and kinetic imagination, giving generations of children and adults part of their cultural heritage, and a spur to further originality and invention by many other ‘imagineers’, including many authors, film-makers and artists most beloved by children and adults today. His inventions are Disney’s legacy to the world, why he will always be remembered, and why, like every successful creator of unique characters, he still augments our imagination."

"Robert Evans was deep into his cocaine period, and you can see when you watch the movie today that every single person was glassy-eyed stoned. There’s so much false energy that you’d have thought we shot it at 33 ⅓ rpm and released it at 78 rpm. Jane and Michael Eisner and I were in Europe for a meeting with our international distribution company, and since the production was nearby in Malta, we thought we ought to go visit. They’d built an elaborate Popeye’s village there, and when we walked down into the harbor, it dawned on us that everyone in our made-up village—and I mean everyone!—was completely coked out. Keep in mind we were making *Popeye* in a coproduction deal with Disney—whose only concept of *coke* was the drink sold at Disneyland."

"We blew them out of the water with our much more adventurous and original cartoons, and the Disney Afternoon was soon toast. Then Disney, in malicious reaction, sued us in federal court for antitrust violations, saying we were an unfit broadcaster. They went for our very throat and tried to destroy us. It failed, but I didn’t speak to Michael Eisner for three years. So much for our own non-animated children’s games of friendly and brotherly competition."

"Ultimately, Wells graciously agreed to be president, but those complications were what had kept it all up in the air—and kept Michael unreachable. He didn’t want to risk his one firm job offer by telling me he was after the Disney job. I was at home on a Sunday morning when Warren Beatty called to say that Michael was going to Disney. The pieces in the disappearing puzzle of Michael now fit. Shortly thereafter Michael called me from his car to say that he’d just left the Disney board meeting and it was going to be announced that he was its new CEO. I was angry that he hadn’t told me the truth about his maneuverings, and I was terribly disappointed that he wasn’t coming with me to Fox, but of course he was right to take the Disney job. Even though Disney was a much smaller operation at that time and had been moribund in the last few years, it was also an extraordinary opportunity and Michael was right to do it. And what a beyond-spectacular success he was to make of it."

"Jeffrey was like a hummingbird. Compact and wiry with the work intensity of a beaver on speed, he started as my assistant, hired because I thought he was sparky and enthusiastic. He was the super-assistant of all time—he furnished our house in the Dominican Republic in three days, he got me diamonds for Diane’s birthday, he ran New Year’s Eve parties for me—whatever he did, he did with gale-force intensity. He was also irritating in his zealotry to run interference for someone who liked interfering—me. I had to get him out of my office just to keep peace with all the executives who resented his ambition, so I put him in the marketing department, hoping it would round off his roughest edges. Soon we moved him out to the studio in L.A. to get some production experience, which he sure did, eventually running Disney’s movie operation, founding DreamWorks, and becoming the most ferocious political fundraiser of the age."

"By the time I started, it was clear I wasn’t going to bring Michael Eisner with me, and because Disney was so alluring, Michael was able to get most of the Paramount executives over with him. I wasted weeks trying to convince them that Fox would be better for them, but by then Michael was able to show them that Disney had these extraordinary hidden assets that hadn’t been tapped since Walt Disney died."