Walt Disney Company
History
Before Disney became the juggernaut it is today, it had modest beginnings. Started by two brothers, Walt and Roy Disney in 1923, its primary revenue was from selling cartoon reels to theatres at $1,500 a piece. These reels came to be known as the Alice Comedies - interestingly they sell for around $1 million a piece nowadays because of their historical value. After demand died out for Alice, Disney contracted under Universal Studios for the production of “Oswald The Lucky Rabbit”. Unfortunately, it did not end well for Disney as Universal ended up hiring out four of their lead animators and ultimately lost out on the contract.
Disney’s first major break came in 1928 in the form of the iconic cartoon character, which would go on to become Disney’s logo, Mickey Mouse. It was an instant hit. Such a great hit in fact that it promoted Disney to start a merchandising division to capitalize on the Mouse’s popularity. Mickey Mouse was published as a comic strip in the New York Mirror as well, leading to a greater boost in Disney’s popularity. This character alone drove Disney to collaborate with other filmmaking giants of the time such as Technicolor and Columbia Pictures.
Walt Disney presented his full feature-length animated film in 1937- Snow White and The Seven Dwarfs. By 1939 it had become the highest-grossing film of that year. Using the profits from Snow White Disney financed the construction of Walt Disney Studios in Burbank, California. The studio continued to release hit productions such as Pinocchio, Bambi and Dumbo. It further produced war-themed propaganda films during World War 2 which helped it stay afloat during a nationwide financial crisis.
Disney ventured into television with the help of the Coca-Cola company in 1951, with its premier film One Hour in Wonderland. After a shaky start, more people began tuning into Disney’s television series which prompted Disney to start the now-famous Mickey Mouse Club series. Further Disney expanded into the theme-park business by opening Disneyland in July of 1955. Until 1955 now Disney had contracted RKO productions as its distributor. After the contract expired Disney opened its own distribution branch - Buena Vista Distributions.
Many have called the 1990’s Disney’s renaissance phase. The Lion King, Beauty and Beast, Aladdin and other famous films propelled Disney to the forefront of the box office. Disney bought out Jim Henson’s muppets for $150 million. From 2001 - 2004 Disney faced a downturn in its profits. It was no longer able to appeal to its target audience and hence could not make the profits it used to. Many of Disney’s contracts also fell through including ones with Universal Studios and Paramount Pictures. Further, internal bickering among the board of directors led to confidence loss among investors which ultimately led to Disney’s stock plummeting to a 52-week low in 2001.
Disney’s history is full of ups and downs. From being a four-man operation to becoming a multi-billion dollar industry colossus: Disney demonstrates what an enterprise can face during its growth, and how it can come out of it.
Acquisitions
Disney is primarily known for the large volume of intellectual property it has acquired. To name a few, Disney owns Jim Henson’s Muppets, Star Wars, the entire Marvel cinematic universe, The Chronicles of Narnia and much, much more. But the ultimate question arises, why does Disney own so many franchises and what does it do with the ones which are no longer relevant?
The apparent answer to the first part of the question is to make more revenues. Which is, of course, correct. Through massive franchises like Marvel and Star Wars Disney is able to make massive profits, however smaller franchises such as Oswald the Lucky Rabbit don’t make much revenue at all. In fact, the point of such acquisitions is to expand the material Disney artists can work with. A large volume of intellectual property allows for a larger scope of creativity from artists, therefore larger profits.
By acquiring intellectual property Disney is ensuring that it doesn't make the same mistakes it made in the past. Disney’s entire value is dependent on how relevant it remains among its target audience. By having an arsenal of franchises, shows, characters and actors Disney ensures its relevance.
Financials
Disney’s net income in 2020 was $2,832 million. Compared to its prior net income of $10,334 million in 2019 it has experienced a drop of approximately 127%. This can be explained due to the COVID-19 outbreak which made Disney postpone many of its projects and lowered the productivity of its workers. However, Disney’s current assets have jumped from $23,527 million (2019) to $33,080 million (2020) indicating the company has braced for the pandemic by purchasing assets which they expect to produce more revenue in the future. Particularly, there has been an increase in the “Net Property, Plant & Equipment” section indicating that Disney is focusing on merchandise production and sales during the pandemic. Disney has also seen an increase in its long-term debt by $20,000 million, which shows that the growth in assets has been financed by debt.
Conclusion
When we think of Walt Disney we don’t think of its history or its animators, nor do we think of its assets or its net worth. When we think of Walt Disney we think of its characters from Marvel to Star Wars to Mickey Mouse. Walt Disney is one of the most easily identifiable brands in the world because instead of focusing on making the brand memorable, they’ve made their characters memorable. Disney’s value is not in the cash it holds, but in the characters, it brings to life.
Written by Rayandev Sen| Proofread by Alexey Dudarev
