Mickey D's breaking up with Disney?

[crazy4wdw]

Mickey D's breaking up with Disney?

Hamburger chain may look for other movie marketing partners as exclusive 10-year deal nears its end.
June 6, 2005: 8:44 AM EDT

NEW YORK (CNN/Money) - After a decade-long exclusive relationship with Disney, McDonald's is signaling it may be ready to play the field and work with other studios to develop movie-themed merchandise for its Happy Meals, according to a published report Monday.

With the marketing pact between the two companies set to expire next year, the Wall Street Journal, citing people familiar with the matter, reported that the world's largest fast-food chain has been courting a few of Disney's animation rivals, including DreamWorks Animation SKG (Research) and Pixar Animation Studios (Research), in a bid to revamp its movie-related promotions.

DreamWorks Animation CEO Jeffrey Katzenberg earlier this year addressed McDonald's marketing managers at a meeting in Chicago where he gave an overview of the company and its strategy for tapping promotional and licensing partners to help sell its movies, the report said.

DreamWorks was the studio behind "Shrek" and other animated hits.

According to the paper, the McDonald's-Disney agreement, set in 1996, made sense a decade ago when Disney was the king of the animation business with blockbusters like "The Lion King." Since then, McDonald's (Research) has promoted only Disney (Research) movies, television shows and theme parks.

But eventually, McDonald's was also forced to promote Disney flops like "Treasure Planet." The Journal said franchisees have complained the unsuccessful tie-ins are partially to blame for declining Happy Meals sales.

At the same time, the Journal said Disney is looking for a change, pointing out that the 10-year deal has limited the studio's flexibility in picking release dates for movies in an increasingly crowded marketplace.

Citing sources close to the situation, the report said the agreement has locked Disney-owned TV networks into selling some advertising time to McDonald's at below-market rates.

Still, the Journal said, the burger chain represents a powerful launching pad for studios seeking the family audience, while movies are an equally valuable tool for drawing customers into a fast-food restaurant.

 

[jimh13432]

It would be one of the first positive steps of Disney in quite some time. Now all we need to do is get the french fri stands out of the parks.

 

[mitros]

That's my question, will McDonalds vanish from the resort?

 

[sotoalf]

Ding dong the witch is dead!

 

[YoHo]

While I'm all for McDonalds being removed from the parks, I don't see how in any way you could see this as a good thing or a good move by Disney from a sharp pencil perspective.
McDonalds was money in the bank.
What this article is saying is that Disney makes bad animated movies, so McDonalds thinks they are a waste of money.

Reading comprehension people.
McDonalds is leaving because they think Disney blows chunks, This isn't Disney kicking them out. Disney would love that money.

 

[Peter Pirate]

They (McDonalds) feel they can can forge a more lucrative agreement with another studio. Another studio that may or may not have as successful of batting average at the theatre but will give them a better ROI. They care NOTHING about anything other than their ROI. If Dreamworks (for instance) can improve the bottom line to MickeyD's they don't care whether the movies are more successful or not...Note: Maybe the movies WILL be better, maybe they won't, but McD's doesn't care and isn't making a judgement. But believe me, if McD's makes a change and Disney scores BIG with 'Chicken Little' (for example) and reups with PIXAR, there will be some heads rollin' at Mickey's (D's).

For Disney to allow a distancing of themselves from corporate hounds purposly (no matter who's making the first move) would not be a good thing from the Corporate POV but it would lend itself to more autonomy in the likes of creative decisions at feature animation.

Mr. Iger's reaction to such a development will be the most important issue here.

 

[Uncleromulus]

An additional reason for McDonald's declining "Happy meals" sales could be their poor food and service. Can't see cutting a deal with another company would help that!!

 

[bicker]

I'd want to see McD's non-Happy Meal sales trend for the same period -- seems to me that some parents may have figured out that it was less expensive to buy their children regular adult meals than to feed each two Happy Meals. After all, McD's poor food and service never held them back before, so it isn't likely to be the cause of falling Happy Meal sales now.

 

[Bstanley]

More parents may also be figuring out that a childhood full of Happy Meal Trans-fats is riskier than handing a kid a loaded .45...

Really guys - McDonald's has stated exactly why they don't want an exclusive agreement with Disney - a Disney Animated Movie is no longer the sure thing it was thought to be in 1995 when the agreement was signed. McDonald's doesn't want to abandon Disney, they just want to be able to pick and choose the way they did before the agreement. They'll pay more overall for the flexibility, but apparently they feel it's worth it.

 

[titan247]

Whoo hooo! All for this!

Get all of those nappy McDonalds logo's out of the park!

 

[YoHo]

Thanks BStanley, I knew somebody would understand.

And Mr. Pirate, are you suggesting that Disney's Animation division was hamstrung by the requirments of McDonalds? Is that really what you are saying? That MickeyDs dictated Animation? That's crazy.


Anyway you slice it, this is McDonalds Corp saying Disney isn't good enough anymore to justify this kind of deal.

That's a black mark against Disney, even if ultimatly, it means one of the many bad managment decisions of the past, namely Mcdonalds in the parks gets overturned.

 

[sotoalf]

McDonalds is leaving because they think Disney blows chunks, This isn't Disney kicking them out. Disney would love that money.

Well, yes, and both Disney movies and McDonald's blow chunks. I wish the movie dept and McD's would go down with the ship.

 

[Peter Pirate]

Crazy you say Yoho? Perhaps your pal Mr. Voice would like to weigh in on this one...? Voice? Oh Voice?

 

[raidermatt]

Certainly this isn't a surprise. I remember reading articles several years ago about how McD's was not thrilled with the way the deal was working out, with them getting Atlantis and missing out on Shrek.

I'm with the rest of you guys... the sooner we get McD's out of the parks the better (though I'm not at all convinced as yet that will happen).

As Yo,Ho and BS said, the key here is why McD's doesn't want to re-up, or at least wants to consider other options. Yes, Captain Pirate, you are right that McD's is looking for ROI (provided there is a minimum level of scope).

But the reason they aren't happy with the ROI they are getting from Disney is that Disney movies aren't what they were when they made the deal. In fact, Disney is a distant #2 in the animated marketplace, and there can even be legitimate debate as to whether they are #3.

Back when Disney was the undisputed #1, McD's probably would take a lower ROI (in percentage terms) from Disney than from somebody else because there was nobody else who could provide the scope Disney could. Getting an extra 20% for you buck from somebody else doesn't do much good if its 20% of nothing.

In box office terms, Disney is a 2nd rate option right now without Pixar.

Yes, a big hit in Chicken Little would help, but lets be honest, you were saying the same types of things before Home on the Range, with its music by Menken. Until that hit happens, or Disney/Pixar re-up, Disney doesn't have anywhere near the leverage it once did. And we know that even if Pixar signs a new deal with Disney, certainly McD's will want different terms for Pixar films than for Disney films.

Also, let's be real here, if Chicken Little is a hit, it merely helps to level the playing field a bit for Disney.

And THAT is the real point here. Its a sad commentary that Disney animation has reached this stage.

Yes, its true we don't know what's going to happen in the future. Disney could re-up with Pixar with far less favorable terms than they enjoy now. Yes, Chicken Little could do well, but no reasonable person could seriously make a case for EXPECTING it to be a major hit.

Yes, it will be interesting to see how Iger reacts to McD's, but I think its more important how he handles animation. Make good movies and much of the rest of this junk falls into place. But I think we are still yet to see what Iger's true intentions are with animation.

If he's merely waiting until Eisner is truly gone, I'm not sure that bodes well. After all, if he can disband Eisner's Strategic Stormtroopers, why couldn't he also start re-tooling animation?

Perhaps he's waiting to see what CL does, but I don't really see that as a plus either. It shouldn't really matter what CL does. Clearly animation is in trouble at Disney, and has been for years. There's no need to wait to start dealing with the issues.

If CL does well, will he think the status quo is acceptable? Certainly that's dangerous, to judge based on one hit rather than on all that's happened before.

And what if it fails? How will he react? Make sweeping changes (and if so, what changes)? Or simply decide its not worth the effort?

To me, these are the real important questions... How is he going to handle the creative content issues the company is experiencing?

Whether he re-ups with a particular marketing partner is hardly something to really be concerned about.

 

[Peter Pirate]

Uh, that is really what I meant Matt. That is, what Iger see's as the key. If he see's the missed corporate tie in, that's bad. If he see's a way to allow less creative restraint on animation (or films in general) due to commercial tie ins (s ME did), that's good. So I guess for the Iger take, we agree.

 

[Bstanley]

If Mr. Iger can see beyond the symptom of losing McDonald's to the disease of mediocre animated films that would be a leap in the right direction fer-shere.

But there are probably a dozen guys telling him how to improve things and if you laid them all end to end they would point in a dozen different directions...

Mr. Iger has certainly said enough kind words about J. Lasseter that you get the impression that he understands the importance of a good story-teller and the value of a good animated division. But it remains to be seen if he'll step up to the bar and rejuvinate Disney Animation or just 'outsource' it.

 

[Planogirl]

It sounds like some of you aren't familiar with the changes at McD's. I see nothing wrong with a Happy Meal consisting of a tiny hamburger, fruit and low-fat milk which is readily available now. McD's has been trying to improve their image for a while now. Interesting, improving their image....

 

[Plus4206]

There's something very "Eisner-esk" about McD's decision. Our sales are falling, it must be Disney's fault, not our product (Happy Meal).

 

[Bstanley]

Well how about that ... you're correct Planogirl I haven't been to McD's since my kids stopped wanting to go there several years ago. Good for McD's!

 

[raidermatt]

Uh, that is really what I meant Matt.

Oh.

Neeever mind.