Wald Disney-Pixar Acquisition

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Walt Disney Company and Pixar Inc. Executive Summary: Walt Disney Company owed most of its recent success and income through its alliance with Pixar Inc. As the CG technology was changing the animation industry and supplanting the hand-drawn animation, it was apparent that Walt Disney has to get its strategy on track if it wants to remain successful. There is increasing competition from other production houses and Disney’s successful relationship with Pixar is coming to an end as the contract is about to expire. There is little scope for future collaboration that has been created by the newly appointed CEO of Disney, Robert Iger. Although a line of communication has been opened between the two companies after the fallout in 2004, Robert Iger has to decide between creating/renewing the deal and acquiring Pixar altogether. The following write-up is an analytical review of the situation and suggests possible ways of handling the situation from the perspective of Walt Disney Company. Situation Analysis: 1. Competition in Industry: The animation films generated highest returns among all movie genres and hence attracted lot of competition. Moreover, with increasing access to technology the barriers to entry were further reducing. Walt Disney and Pixar faced competition from Sony, Fox, Lucasfilm, DreamWorks, Paramount, MGM, Universal etc. Hence, competition in the CG space was fierce. 2. Power of the technology: Many of the big production houses including Disney lacked the technological expertise to compete with smaller firms such as Orphanage, Wild Brain Inc etc in terms of quality of the movie. Hence, these small animators were cutting deals with bigger corporations giving them only the distribution in exchange for decreasing fee amounts. Not only was the production cost low for the technologically superior firms, their development time was also

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