Disney’s Frozen is now the top grossing animated film of all time (almost $800 million in revenue so far). But that is only the box office proceeds. The Lion King brought in over 2 billion and the box office was just a small part (see the HBS Lion King case for a breakdown). Of course, they will leverage the characters across their entertainment assets (frozen cruises, stage shows, theme parks, broadcasting, etc.). This might make one think that the bulk of the additional returns stem form their diversification strategy. In fact, most of the revenue will come from merchandise sales where the manufacturing is outsourced. Because Disney owns the rights to the characters, they have bargaining power to appropriate most of the profit — no need to vertically integrate. For a rare discussion of management policies to maximize cross-business opportunities, see the Lion King B case (The Synergy Group). Interestingly, Disney has loosened their copyright grip to allow the many spoofs that have overtaken YouTube (click here for a listing). They now see this as free advertising that pumps up the demand for merchandise. This all makes for a nice classroom discussion as well as a host of entertaining videos (like the one below).
Contributed by Russ Coff