Disney and Pixar

Disneyand Pixar

Disneyand Pixar

Thevalue of Pixar is higher than that of the Disney when theorganizations are in an exclusive relationship. Pixar offerstechnical knowledge while Disney contributed creativity in the formof stories. Both technical skills and the technical expertise areindispensable to develop the animation movies that have made thecompanies renowned. One of the major characteristics of thetechnical developers is that they take a creative story and thenimprove the storyline to make it interesting. On the contrary, thecreativity group (Disney) focuses on inventing interesting storylinesthat can make hit movies. However, Disney lacks the technical supportrequired to develop the movie ideas it creates. This makes Pixar anindispensable partner for the two businesses interdependent on thecontent of the other to generate income.

Anincompetent technical team can mess up even a good storyline.Consequently, a skilled technical staff integrates creativity andvast technical knowledge. This implies that Pixar staff could createa storyline and then develop it into a movie because they have thetechnology and skills for making computer-generated graphics (CGI)movies. On the contrary, Disney lacks the technical information so itcannot generate income without Pixar.

Asa result, Pixar can generate higher income value case the twobusinesses operate independently. In fact, Disney generates incomefrom the CGI movies Pixar develops through distribution rights andtaking the risks of the film production. This implies that thecompany pays the whole cost of developing a potential project, inexchange for taking the exclusive rights for distribution and anyother sources of revenue the movie generates. However, Disney cannotsurvive on its own since it lacks a reliable animation studio to dothe technical development tasks Pixar handles in its CGI business.

Sincethe Pixar and Disney businesses are more valuable when theorganizations do business in an exclusive relationship, the latter(Disney) can only make profit through the negotiation of a newcontract. The Disney business should take the risk of financing theupcoming CGI films so that they can have the full distribution rightsand revenue the movie acquires. Otherwise, if Pixar takes the risksof financing new movie projects, Disney will only earn 8% revenue forits distribution services. This implies Pixar will take over 90% ofthe developed movies.