Walt Disney: Acquisition and Its Alternatives

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On January, 2006, Walt Disney acquired Pixar Animation Studios by paying $7.4 billion in stock. This event indicated a significant vertical integration of Walt Disney, and also a collision between technology and entertainment. Given the operations and corporate culture of Walt Disney and Pixar, I will focus on the reason for acquisition and analyze the alternatives. Walt Disney is one of the largest media corporate in the world, while Pixar is a top digital animation studio. The history and evolution determine both of their strength and weaknesses. For Walt Disney, the film production dates back to 1934, when they successfully produced Snow White and the Seven Dwarfs. In seventy years, they accumulated abundant movie industry experience and knowledge. Furthermore, they obtained a variety of distribution channels such as theaters, DVD and cable channels. However, their management was structured as top down, which restricted the creativity of individuals in terms of the storytelling and animation ideas. In addition, they developed little 3D technology, so they lost market share in animation and competitive advantage from the 1990s. Unlike Walt Disney, Pixar developed its proprietary software system for ten years and took a leading position in 3D film making. In addition, they had technical personnel most with PhDs. The weaknesses of Pixar were the lack of experience and limited revenue sources. Their strength and weaknesses together promoted their relationship and two agreements. However, negotiation of agreement renewal failed, when Pixar required control over the future movies and television rights. It is this moment that Disney began to think about acquisition, which would provide Disney with a lot of benefits. First, it would bring in the core 3D technology software and creative personnel. Secondly, the animation films would attract more customers to their retail stores and theme parks, which can generate the corporate synergy. Finally, Steven Jobs’...
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