The Pixar Buy - Disney’s Creative Mojo?

On January 24, 2006, The Walt Disney Company (Disney) announced that it will buy Pixar Animation Studios (Pixar) for US$ 7.4 billion. In a statement, Robert A. Iger (Iger), President and CEO of Disney said, “With this transaction, we welcome and embrace Pixar’s unique culture, which for two decades, has fostered some of the most innovative and successful films in history.

The talented Pixar team has delivered outstanding animation coupled with compelling stories and enduring characters that have captivated audiences of all ages worldwide and redefined the genre by setting a new standard of excellence.

The addition of Pixar significantly enhances Disney animation, which is a critical creative engine for driving growth across our businesses. This investment significantly advances our strategic priorities, which include - first and foremost - delivering high-quality, compelling creative content to consumers, the application of new technology and global expansion to drive long-term shareholder value.”^[1]

Analysts have lauded Disney’s move as it was perceived to be slow in tapping into the power of digital technology and computer graphics animation (CGI). Though Disney had released “Chicken Little” in November 2005, its first CGI animation feature developed in-house, the movie was only moderately successful when compared to the super-hit blockbusters from Pixar’s stable like “Toy Story”, “Monsters Inc.”, “Finding Nemo”, and “The Incredibles”.

Pixar’s films had grossed around US$ 3.2 billion worldwide and proved that the combination of Pixar’s creative genius and Disney’s distribution and marketing strength was an excellent fit. With this deal, Disney can now leverage the popularity of Pixar’s animated characters and extend them to video games, broadband and wireless platforms, theme parks, and merchandise products. This deal was also an inkling of things to come as Hollywood and Silicon Valley were now converging together in a big way.

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^[1] “Disney to Acquire Pixar,” http://corporate.disney.go.com/news/corporate/2006/2006_0124_pixar.html, January 24, 2006.

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