Disney Vs Pixar

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Q.2. Should Pixar sell to Disney? What are its alternatives?

Ans. Pixar should consider some of the points before denying the offer made by Disney-

- Disney has the best distribution channel and marketing strategy and it usually focus to a large customer segment of family/children who can be a potential source of revenue generation for Pixar.

- Also, Pixar has a threat that Disney might tarnish its brand value by producing cheaper sequels of its movies.

- Pixar can also utilize Disney’s competence to create animated cartoons and can gain much more share in the multimedia field.

ALTERNATIVES TO PIXAR:

- Its 10 years of proprietary software system can help them to merge with any other animation company to generate revenues.

- Pixar can have tie-ups with big companies like Coca-Cola, Listerine and Lifesavers to create animated commercials for them.

- Other alternatives that Pixar has are Sony, Warner Brothers and 20th Century Fox studios.

Given the scenario, Pixar needs Disney for their growth in the animation industry and thus, it should consider the have alliance with Disney.

Q.3. Does this deal meet the “better off” test? The “ownership” test? Why?

Ans. Better off test:

Pixar and Disney can utilize the synergy in between them by having a good relationship which is beneficial to both the firms. Pixar & Disney can leverage on their strengths by having a mutual understanding of the benefits of the acquisition. Pixar can have the control over its GC technology whereas Disney can have control over its marketing and distribution channels which is its key strengths. Both the companies can have their separate units too. Disney should try to utilize the competencies and skills Pixar has to increase its efficiency and quality. Pixar has a very powerful brand image. Maybe Disney can utilize this brand value while promoting its movies. It will benefit both the parties. Thus, Disney can increase its market share by collaborating with Pixar. Thus it passes the better-off test.

Ownership test:

Pixar and Disney can leverage their strengths to compete against other players in the market and can grab the major market share. Thus there are chances that they can renegotiate on their existing contracts and work as partners. Also, Pixar and Disney can make an agreement according to which they can operate on their competencies. Freeriding is not an issue in this case since Pixar has its own market share and Steve Jobs is very much interested to use the distribution channel of Disney. Thus a good contractual agreement can be formed and it does not pass the ownership test.