What Pixar is worth
Some worry that Pixar’s approaching summer release, Up, will squander Disney’s money, that Disney paid too much for Pixar in the first place:
Some industry watchers, a few of them still griping about the hefty $7.4 billion that Disney paid for Pixar in 2006, are fretting about the film’s commercial potential, particularly when it comes to benefiting other Disney businesses. — Pixar’s Art Leaves Profit Watchers Edgy, nytimes.com, April 6, 2009
What would have been a good price? Disney’s golden goose—the company’s animation department—hadn’t laid many appealing eggs for years, and morale was low. If Pixar is able to spark a creative renaissance at Disney, which appears to be the case, how much is that worth?
Revenue from the Pixar theatrical releases plus merchandising has already passed $6B, plus Pixar’s films have inspired themed rides and other tie-ins for Disney. And the films, because they’re based on stories people actually care about, have restored some of the luster to the Disney brand lost with lackluster derivatives like The Lion King 1 1/2. What’s that worth?
The Pixar acquisition also kept Pixar from going to a competitor. What’s that worth?
While some seem eager to get Pixar to release its own The Lion King 1 1/2…
Richard Greenfield of Pali Research downgraded Disney shares to sell last month, citing a poor outlook for “Up” as a reason. “We doubt younger boys will be that excited by the main character,” he wrote, adding a complaint about the lack of a female lead.
…it’s reassuring that someone at the company understands the true Disney magic:
John Lasseter, a co-founder of Pixar and now Disney’s chief creative officer, routinely says in interviews that marketability is not a factor in decisions about what projects to pursue. Instead of ideas that feel contemporary, he aims for stories that are rooted in the ages.
“Quality is the best business plan” is one of Mr. Lasseter’s favorite lines.
Why do you quote analysts? You would be better of quoting the mentally insane people that you see waiting for the bus. These analysts have an agenda and they never take responsibility when they are wrong. Can you imagine what Disneyland would be like if an analyst ran it?
Part of the calculus for Pixar’s worth relates to the
longevity of corporate copyright, which is good for
a monopoly of 90 years. In contrast, patents only
last 20 years. Already, many of Disneyland’s traditional
cartoon characters have been supplanted by those
from Pixar. These will last generations. Amortize
the evergreen library, with sequels, merchandizing
and international uptake over this 90-year timespan.
Disney lost its magic and its animation soul by chasing dollars and listening to unqualified hacks like Richard Greenfield. Lasseter’s got it right. Let’s hope the suits at Disney listen to him, because now they’re getting the magic and the soul back, and with that the money comes, too.
Easy to understand why Jobs and Lasseter got on so well.
Both do what they believe is right and never chase after yesterday’s public opinion…