2019 is undoubtedly another highlight moment for Walt Disney Company at the age of 96.

Walt Disney Company announced that his films grossed more than $10 billion that year-the first time in the world's film history that a single film company's annual box office reached a peak of more than 10 billion yuan.

Of all the billion-dollar films in the world this year, only Warner's "the Joker" has nothing to do with Walt Disney Company. The remaining six Avengers 4 ($2.798 billion), the Lion King ($1.66 billion), Captain Marvel ($1.13 billion), Toy Story 4 ($1.07 billion), Aladdin ($1.05 billion) and Frozen 2 ($1.218 billion) are all owned by Walt Disney Company.

Since 2016, Walt Disney Company has been firmly at the top of the six major film companies in ▼.

What's even more exaggerated is that if you include 20th century Foss, which was recently acquired by Walt Disney Company, Walt Disney Company's box office share in North America in 2019 is nearly 40%, almost Warner, Global and Sony Group Corp combined.

And Walt Disney Company's sphere of influence is not just the film industry.

From theme parks to derivatives sales, from streaming to IP licensing, Walt Disney Company is a well-deserved global media kingdom.

There are signs of all business success. What we are more interested in is why Walt Disney Company, as a genuine century-old store, can still launch the anime image of Princess Aisha, which is loved by children all over the world. And are the animated film "the Devil's Child of Nezha", which broke 5 billion yuan at the box office for the first time in China last year, and Bilibili Inc. 's New year's Gala, which recently caused a sensation on the Internet, are they signals of the rise of China's media giants?

In this issue of Guotai Junan's "the Power of Brand", our United Nations Taijunan social service team focuses on the entertainment giant Walt Disney Company, reviewing its 100-year history of ups and downs.

Guojun studied "the Power of Brand" series of reports: "the past of MUJI and the Future of Chinese Apprentices"

01 discover opportunities and constantly innovate the secret of Walt Disney Company's rise

Xiong Sanmu, co-founder of Whale Capital, once described why China's entertainment industry may be facing the same opportunities as when the US industry erupted:

In the economic downturn, the American entertainment giant Walt Disney Company ushered in its rapid development. It allows depressed Americans to enjoy a long period of entertainment in the cinema for only 10 cents.

In the late 1920s, the United States was mired in a financial crisis. However, the film industry has ushered in a big explosion, especially Walt Disney Company, which aims to create happiness, seized the great opportunity when the public needed to be happy when they were depressed, and became the only bright spot left in the gloomy American economy at that time.

To analyze Walt Disney Company's success at that time, innovation is an important reason that has to be mentioned.

While all the companies were working on silent cartoons, Walter pioneered the use of sound in the cartoon Steamboat Willie, and Mickey Mouse became a blockbuster.

While the color film was still in the stage of small-scale experiment, Walter had a discerning eye to apply the color film to the animated film for the first time, producing Walt Disney Company's first Oscar-winning film, Flowers and trees.

When the cartoon was only an eight-minute supporting role and everyone thought that no one wanted to spend 80 minutes watching a cartoon, Walter broke the rules and created Snow White and the Seven Dwarfs, which opened a new chapter in the field of animation.

With this series of innovative actions, Walt Disney Company movies are famous.

▼ Walt Disney Company's strategy of continuous innovation

During the 1940s and 1950s, due to the outbreak of the second World War, most of the popular films were patriotic films, and Walt Disney Company's animated films also encountered bottlenecks in this period. After World War II, when the baby boomers were born and the mass media returned to the era of entertainment, Walter found that a large number of admirers who went to Hollywood wanted to see stars, and they were always disappointed. Under such circumstances, he changed his strategy in time, and in 1955, Walt Disney Company Paradise in California, the first Walt Disney Company paradise in the world, was established.

The emergence of Walt Disney Company Paradise is another great success of the company's innovation strategy, and lays a solid foundation for Walt Disney Company to become an entertainment media kingdom in the future.

02 the knack of "destroying hegemony" in the merger and acquisition of Walt Disney Company

On March 18, 2019, Walt Disney Company announced the acquisition of 20th Century Fox Pictures, including its Fox Pictures, Fox TV division, FX cable channel, National Geographic Channel and other assets.

This is not the first time Walt Disney Company has made a big acquisition of a competitor.

In fact, this is Walt Disney Company's fourth film acquisition after Pixar Animation, Marvel Studios and Lucas Film.

In 2006, 2009 and 2012, Walt Disney Company acquired Pixar Animation, Marvel Studios and Lucasfilm for $7.4 billion, $4.2 billion and $4.1 billion, respectively. This enabled Walt Disney Company to expand the boy market and adult market, and greatly enriched Walt Disney Company's film IP resource chain-- the old animation IP belongs to Pixar, while live-action films. Marvel's superhero series and Lucas's Star Wars series are the most famous science fiction series IP in the world.

▼ Walt Disney Company has many famous production teams.

Take Pixar, for example, which was co-founded by Apple Inc founder Jobs and Ed and John of Lucas computer Animation Studio.

As early as 1991, Pixar began to cooperate with Walt Disney Company. In 1995, Toy Story, the world's first full-computer animated feature film produced by Pixar, was released, grossing $360 million at the global box office. Finding Nemo and finding Superman, produced in 2003 and 2004, are also landmarks in animated films.

Toy Story 3 became the first animated film to earn more than $1 billion at the global box office in 2006 after Walt Disney Company became the largest shareholder with a 40 per cent stake in Pixar for $7.4 billion.

▼ 1995-2015 Pixar animated feature film box office and outstanding performance

Marvel, another successful acquisition, is one of the two major comic book giants in the United States.

In the early days, Marvel's film rights were mainly licensed to third parties, but even if comic book-based films were popular, Marvel's box office share was very low. Marvel set up a subsidiary in 1996 to engage in film and television creation.

Since almost all of Walt Disney Company's business is closely related to animation content, and superhuman heroes such as Spider-Man compete with child cartoon characters such as Mickey Mouse, the acquisition of Marvel can not only offset this threat. it can also expand intangible assets with more than 5000 cartoon characters owned by Marvel, creating more opportunities for a lot of long-term growth and value in the future.

▼ 1998-2015 Marvel films box office and outstanding performance

The last acquisition target, Lucas, is the film company that occupies the trump card in the history of American science fiction. In 1977, Lucas's epic Star Wars 1 was released, grossing $770 million at the global box office, and Lucas Pictures trained a large number of Star Wars fans in the decades that followed.

In 1977-2012, the 35-year-old Star Wars series spent about $400m on production, compared with $4.4 billion at the global box office and more than $20 billion in derivatives.

After Pixar and Marvel, the acquisition of Lucas will help Walt Disney Company expand in the field of science fiction and enrich his layout in terms of film and television types.

▼ 1977-2015 Lucas film box office and performance is good

Although the three acquisitions cost Walt Disney Company a total of $15.6 billion, they are clearly worth it.

The production team with their own strengths, coupled with Walt Disney Company's original studio, formed a pattern in which Walt Disney Company's film and television entertainment plates gathered together and each had their own strengths, which consolidated the giant status of Walt Disney Company Film Industry. And accurate acquisition and good integration are also important driving factors for Walt Disney Company to achieve hegemony.

03 11 big IP pry Walt Disney Company the key to more than half of his revenue

Starting with IP and flourishing in IP, Walt Disney Company is a typical example of making the best use of IP.

According to the 2015 results, Walt Disney Company's revenue directly from IP includes theme parks (30.8%), film and television entertainment (14%), consumer goods (8.6%) and interactive media (2.2%)-it can be said that IP pried more than half of Walt Disney Company's business income.

▼ Walt Disney Company's series IP is rich in resources.

Source: Sohu.com Ltd Entertainment

▼ Walt Disney Company has many brands with annual sales revenue of more than 1 billion US dollars.

"Frozen", which was released in November 2013, set off a frenzy of ice and snow around the world, grossing 1.28 billion US dollars at the global box office and winning the top box office in the history of animated films. at the same time, it won the Golden Globe Award, Anne Award, Oscar Best Animated record Award and other awards.

And Frozen also had a great impact on Walt Disney Company's 2014 income. CEO Robert Iger specifically mentioned the contribution of Frozen in a letter to shareholders at the beginning of his 2014 earnings report:

Walt Disney Company's service income increased by $3 billion to $40.02 billion, driven by the global box office success of Frozen.

The extraordinary fate of ▼ drives the company's profits to grow substantially.

With the unprecedented success of "Frozen", we can see Walt Disney Company's profit model of the whole industry chain driven by IP-round income model.

# the first round of revenue: the movie box office

Walt Disney Company's strong IP creativity and development ability is the core of Walt Disney Company's whole industrial chain. "Frozen" was released in November 2013 and released in July 2014. It lasted 238 days. It grossed $400m in the US and $1.28 billion worldwide, while Frozen cost only $150 million to produce.

The film itself brought Walt Disney Company a profit of more than 1 billion US dollars.

▼ performed beautifully at the global box office.

Data sources: Box Office Mojo, Guotai Junan Securities Research

# second round revenue: DVD and pay TV / website

Walt Disney Company's domestic and global home entertainment distribution is usually 3-6 months after the release of each market cinema.

Home entertainment distributions are generally distributed in physical form (DVD and Blu-ray) as well as electronic format. The American version of Frozen DVD was officially launched on March 18, 2014 (108 days, about 4 months after its worldwide release). According to Amazon.Com Inc, "Frozen" Blu-ray DVD sold 7.16 million copies in its first week on the shelves, and the total annual DVD+BD (Blu-ray DVD) sales reached 18.265 million units, bringing Walt Disney Company another $338 million in revenue.

▼ DVD and pay TV / website are Walt Disney Company's second round of income sources.

Data source: company annual report, Guotai Junan Securities Research

# third round of revenue: incorporate IP elements into theme parks

Every time Walt Disney Company releases a movie, he adds new movie roles in Walt Disney Company Paradise.

The popularity of "Frozen" also makes the scenic spots with the theme of "Frozen" successively landing in various Walt Disney Company Paradise.

Ice-covered "Frozen" huts and talking Xuebao were added to Walt Disney Company Paradise in Los Angeles in 2014. In the traditional float parade, the protagonist of Frozen is also the first to appear. In addition, every night since the beginning of November 2014, Aisha, the protagonist of the cartoon, will use her magic to turn Walt Disney Company's signature Cinderella castle into an ice palace. This series of ice and snow elements have greatly increased the admission rate of Walt Disney Company Paradise.

Revenue from theme parks and resorts rose 7 per cent in fiscal 2014, including 8 per cent in the US, 5 per cent per customer and 2 per cent in visitors.

# fourth round of income: derivatives

1. Consumer goods: Frozen made a significant contribution to the consumer goods sector. Revenue from Walt Disney Company's licensing and publishing sector increased by 13% in fiscal year 2014, while retail and other revenue increased by 11%.

In addition to traditional consumer derivatives, Walt Disney Company also released 16 new Frozen-themed foods and health products for Frozen, including fresh fruit and grapes, fruit juices, yogurt, household OK tension and even dental floss.

The heroine Princess Aisha has earned $26 million in sales in the United States. The Princess dresses worn by Anna and Aisha, the protagonists in the film, have sold a total of 3 million pieces in the United States for $149.95 each, generating an income of about $400m for Walt Disney Company. 2. Theme games: after the success of Frozen, Walt Disney Company developed the related game Frozen: fun on smartphones, tablets and social networks, and entered the top 10 on Apple Inc's App Store downloads. In fiscal year 2014, Walt Disney Company's game revenue increased from $812 million to $1.056 billion, an increase of $244 million, mainly due to a 24% increase in sales of stand-alone games driven by games around Frozen. Social network games and mobile games increased by 10%.

3. Music soundtrack: Frozen soundtrack has been in the top 10 of the Billboard Billboard for 39 consecutive weeks since December 28, 2013. it broke the previous record of 10 weeks at the top of the animated soundtrack set by the Lion King in 1994, becoming the animated soundtrack that won the most titles in history-of course, the Lion King also belongs to Walt Disney Company.

The Frozen soundtrack became the best-selling album of 2014 with sales of more than 10 million US dollars per album, which will bring Walt Disney Company more than 100 million US dollars in revenue.

4. Broadway play: Walt Disney Company announced that Frozen will be put on Broadway in the spring of 2018, so that he can earn money through tickets. Prior to this, Walt Disney Company has put the popular animated films such as "Lion King" and "Beauty and the Beast" on the stage. Among them, "the Lion King" has been released on Broadway for nearly 20 years, with total ticket revenue of more than $6.2 billion and annual revenue of more than $300 million.

▼ created the income model of IP consumer goods.

# the fifth round of revenue: box office receipts from a series of movies

Now one of the magic weapons in the film market is the series-launching sequels to popular movies can not only save a lot of publicity costs, but also make the movie IP enduring. Animated IP like Frozen is even more worthwhile, because animated characters don't demand a higher salary when shooting a sequel.

Frozen 2, released in 2019, once again exceeded $1 billion at the global box office, not only becoming Walt Disney Company's sixth film to break 1 billion this year, but also successfully awakening the love of Princess Aisha among children around the world.

At this point, the rotation income of this new phase of IP can be launched again.

04 enter the game Walt Disney Company's reply of Qianzhou

However, under the aura, Walt Disney Company has also taken detours in the course of his development.

In the early days, Walt Disney Company entered the game market only through brand license. for example, when a new film was about to be released, Walt Disney Company contacted a game development studio and a distributor to authorize them to develop and distribute a game version of the movie.

Due to the great success of brand licensing for game companies, Walt Disney Company decided to increase investment, acquire and set up his own video game team.

▼ Walt Disney Company's game business is developing rapidly.

However, because the management of Walt Disney Company company is very risk-averse, they are good at the operation of process products such as movies and TV dramas, and games burn money quickly and make money slowly, and can not predict the success rate of game products, so Walt Disney Company's game project has always been unsatisfactory. in the decade from 2005 to 15, Walt Disney Company acquired and closed at least six game studios.

According to the company's financial report, Walt Disney Company invested billions of dollars in the video game business in the past few years but made a profit only in 2014, mainly because the market performance of "Walt Disney Company Infinite" is OK. But the game has also stopped operation, and the company has successively closed several previously acquired game studios.

In 2016, Walt Disney Company announced that he would stop all independent R & D and distribution of games and instead authorize them to operate.

05 sniper Netflix (NFLX.US) to enter the next ambition of streaming Walt Disney Company

In the past 90 years of development, Walt Disney Company has experienced several challenges of business changes, and is constantly acquiring new companies to adapt to the development of the new era.

In terms of interactive media, Walt Disney Company founded DisneyFamily.com (2007) and Disney YouTube Channel (2011), bought a 32% stake in Hulu Video (2009), and transformed into new media.

Walt Disney Company bought a 29 per cent stake in Hulu, a video site, for about $35 million in 2009, rising further to 32 per cent in 2012 as Hulu redeemed some of its shareholders.

The core competitive advantage of Hulu is that NBC Universal, FOX and ABC provide it with a continuous stream of genuine movies and TV series online broadcasting, making it one of the most successful commercial video websites.

▼ hulu has become one of the most successful commercial video websites

In March 2019, while acquiring 20th Century Foss, Walt Disney Company also took a stake in Hulu30%, increasing his stake in Hulu to 60%, making him a major shareholder in the streaming platform.

For Hollywood as a whole, streaming is the biggest threat to the industry-from cable to cinema, traditional distribution channels are being subverted by Netflix.

The number of people going to the cinema is decreasing, while on the TV screen, there are more and more blockbuster films such as Game of Thrones and House of Cards.

Therefore, for the current Walt Disney Company, streaming media platform "Walt Disney Company +" is the top priority.

Walt Disney Company's video service "Walt Disney Company +" was officially launched in November 2019, and took the offensive posture against Netflix-the membership price of Walt Disney Company + service is only $7, which is about half that of Netflix Inc.

In other innovative businesses, Walt Disney Company and Chinese Culture from Shanghai invested in Jaunt, a Silicon Valley-based VR company in 2015. VR is considered to be the next technology to change many aspects of human life, especially in the film and television industry. It is believed that VR technology will bring subversive growth to the entire film and television entertainment industry.

▼ Jaunt is an industry leader in VR

In the same year, Walt Disney Company invested twice in Vice Media,Vice Media, a new media that is very popular among young people. Videos with various "counter-mainstream" themes are popular among young people all over the world. Walt Disney Company got a 10% stake in VICE with two investments totaling US $400m.

▼ Vice is popular among young people around the world with various "counter-mainstream" videos.

Although these future investments have not yet been proved to be successful, Walt Disney Company's active investment of keeping pace with the times shows his enterprising spirit as a veteran enterprise for more than 90 years.

After launching the streaming platform Disney+ and earning more than $10 billion at the annual box office, time magazine's business person of the year fell on Walt Disney Company CEO Bob Iger on December 11, 2019.

In the award words, time magazine wrote:

In the past 12 months, Iger has completed its acquisition of Fox for $71 billion, opened two Star Wars theme parks, launched a Disney+ streaming service, took full control of Hulu, and released the highest-grossing film in film history, the Avengers: the final Battle. "

For the whole of 2019, Walt Disney Company's share price rose more than 30%, and its market capitalization exceeded 260 billion US dollars. It is clear that the capital market is equally satisfied with Walt Disney Company's performance.

The company, which is supposed to be in its 80s, is firmly at the forefront of the media and entertainment industry, which is changing the fastest and needs to cater to the tastes of young people the most.

Excellent innovation strategy, forward-looking M & A vision and omni-directional business areas are its enduring magic weapon.

In China, there are not many dazzling stars left when the media industry broke out in the last round. So who can really learn the essence of Walt Disney Company and build China's media and entertainment empire?