Wednesday, October 08, 2014

If you want to be Disney, well…

I once worked for a small software firm that had it’s eyes on the prize of becoming “the next billion dollar software company.” (Actually, saying that I “once worked for” this outfit makes it sound like I was in and out. In fact, I spent the better part of a decade there.) I joined in 1990, and, at the point, the billion dollar software company was Microsoft.

To say that we never quite reached our lofty goal is, ahem, an understatement.

I believe that we peaked at stated revenue of $40M, but this number was reached only because our ultra-crazy, ultra-conniving CEO counted money he managed to personally suck out of our investors as revenue. In actuality, I believe that our high water mark in terms of revenue earned the old fashioned way, by actually selling goods and services, was close to $10M. A far piece from $1B.

But a man’s reach – and a company’s, too – should exceed his grasp and all that.

Rovio, like my little software company, has a BIG AMBITION.

And their BIG AMBITION is not to be the next Microsoft. It’s to be the next Disney.

But Angry Birds has, apparently, been trying to build its empire one angry bird at a time. And it’s not working out quite as well as they wanted. As of last week, the company was mulling lay-offs of one-sixth of its workforce.

It’s been clear for some time that the best days for Rovio’s original business—smartphone games—were probably behind it. The premier Angry Birds game peaked in 2012, and the company’s decision to use the same characters in new titles hasn’t produced any Angy birdsblockbusters. Neither of its two newer releases, the racing game Angry Birds Go! or a game aimed at girls called Angry Birds Stella, are among the 250 highest-grossing smartphone games in the U.S. (Source: Business Week.)

(As an aside, it’s actually pretty stunning that there are enough smartphone games out there that someone keeps track of the 250 highest-grossing ones, isn’t it? Sometimes, I do just have to show my age. Say it loud, say it proud: I’m an old geezer.)

Apparently, Rovio hasn’t been able to keep up with changes in smartphone gaming, namely a shift to no upfront fee, but charging “for extra lives or other digital merchandise within the games themselves.”

(As an aside, I can’t imagine paying for digital merchandise, unless it’s something consumable, like a book, a song, or a greeting card. Sometimes, I do just have to show my age. Say it loud, say it proud: I’m an old geezer.)

What Rovio has done to rev up its revenue is to expand in physical merchandise – surely you’ve seen at least one kiddo with an Angry Birds backpack – and is working on a movie.

This isn’t all that terrible a strategy, at least in the short term. Consumer products now make up nearly half of Rovio’s revenue.

But here’s the thing.

Not only didn’t the Disney Empire get to be the Disney Empire overnight. It also didn’t do it by relying solely on Mickey Mouse, which was, more or less, Disney’s Angry Bird.

Within a few years, Disney had introduced a few more characters who became staples, including Donald Duck.

And it branched out into non-Mickey, non-Donald cartoons, like the Three Little Pigs. (Who’s afraid of the big, bad wolf?) Not to mention full length features: Snow White, Pinocchio, Dumbo, Fantasia, Bambi, Cinderella, Alice in Wonderland, Lady and the Tramp, Peter Pan. 

Beyond Mickey Mouse watches, I don’t know how much merchandising was initially done around any of the characters in these movies, but, with the exception of Fantasia, they all had merchandisable characters, most of which have stood the test of time. Stuffed Dopey doll, anyone?

By the mid-fifties, Disney had a TV show – The Mickey Mouse Club – and the merchandising had definitely begun. (C.f., Davey Crockett coonskin caps.)

Disney also started producing full length “real” movies, like Old Yeller. (“Here, Yeller. Come back, Yeller. Best doggoned dog in the west.”)

Then Disneyland opened. The opening was, I believe, televised. It might have been brought to us in The Wonderful World of Color, which was the Disney Sunday night show for years, but in our house, I was watching the opening of Disneyland in black and white. Which was still plenty enthralling.

All this is to say that the Disney Empire wasn’t built on Mickey Mouse’s narrow little shoulders alone.

From the get-go, Disney was adding away.

The kid who hated Donald Duck might like Scrooge McDuck.

If you thought Bambi was a sap, you could fall in love with Dumbo.

All those Mouseketeers to develop a crush on. (My heart throb was Tim Considine, the cutie-pie who “starred” in Disney’s Spin and Marty series.)

And so on down to every little boy in the world wanting to be Buzz Lightyear, and brides-to-be wanting to wear a gown just like Princess Elsa’s in Frozen

Angry Birds?

I suppose you can vary the color and the expression a bit, but, basically, yawn.

I’m no business genius, but the way to build a Disney Empire is to do what old Walt did: experiment and diversify.

As Walt’s Cinderella taught us, “A dream is a wish your heart makes.”

But a business, it seems to me, is a wish your brain makes. (That and a little bit of luck…)

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