Disney's "The Lion King" (A): The $2 Billion Movie case study discusses the company's CEO and his strategy in the making of "The Lion King". The film became the second highest-grossing film, drawing $740 million in worldwide box office sales.
Jeffrey Rayport; Carin-Isabel Knoop; Cate Reavis
Harvard Business Review (899041-PDF-ENG)
August 17, 1998
Case questions answered:
- Describe Disney pre-Eisner and by 1994.
- Describe Eisner’s strategy for re-inventing Disney and identify the risks that attended it.
- Explain how The Lion King exemplifies internally, to licensees, and to customers, how the process was managed.
- Identify the key factors that enabled Disney to create a Lion King franchise.
- Can The Lion King precedent be replicated?
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Case answers for Disney's "The Lion King" (A): The $2 Billion Movie
1. Describe Disney pre-Eisner and by 1994.
Since the beginning, the Disney brothers rant their company as a flat, informal, and nonhierarchical organization. None of the people inside of the organization had titles, they all call each other on a first-name basis.
Disney had three business segments: creative content, broadcasting and theme parks, and resorts. The creative content segment was the basis for the other segments. Creative content creates the films that then broadcasting put them in television programs and then the films were in theme parks with merchandising, children music, among other things.
Disney had full control over animated films, they didn’t want to license their film’s characters to other companies. Disney was very protective of its creative products.
After the death of its founders, Disney was having some troubles. Its productions were not mostly successful. Many people within the industry doubted Disney. They thought they were not keeping up with the changing times and that they were losing their appeal.
Other key facts:
- Snow White: first Disney animated movie.
- Stock prices were coming down
- Income decreasing
- Start-up mindset
- Old technology
- Lack of “heart”
- The animation wasn’t a priority. Priority: Theme parks.
- Not licensing/strong control
2. Describe Eisner’s strategy for re-inventing Disney and identify the risks that attended it.
In 1984, Disney made changes to its top management. Frank Wells became COO, Disney appointed Michael Eisner, former president of Paramount, as CEO. Then, Eisner recruited Jeffrey Katzenberg to be president of Disney Studios.
On the re-invention of Disney, Eisner focus on switching Disney from content creator to content creator and distributor of the content. Eisner invests heavily in the distribution unit inside the US and abroad. He started controlling all the value chain.
Eisner’s business model made Disney acquire the capabilities to assemble its own movies in-house, focus on producing low budget but moderately profitable films that helped the company spread its financial risk, and keep the costs down.
Instead of the company hiring talent agency to provide with scripts and actors, Disney hired a team of full-time scriptwriters (doing not only existing fairy tales but also own stories) and also hired some actors (down on their luck actors). That way, Disney would benefit from the profits instead of the talent agency, and also, they didn’t have to pay the fees of talent agencies. Business expansion: media, tv, publishing, merchandising, etc. Synergies. Expand the customer base to include adults.
Another big change was that…