Movies
So, what about the movies? At the Studios, we are bringing a more cost-effective approach
to the area of live-action moviemaking. We'd rather win both the Bank of America award and
the Academy Award. We certainly scored well on the Academy Awards this year, with 31
nominations -- far more than any other studio. As for the Bank of America award, during
the last two years, by instituting a smaller slate of films, lower production budgets,
consolidation of operations, reduction in talent deals and trimming of overhead, we were
able to reduce investment by $500 million. The economics of live-action film are
challenging. As Lew Grade once said about the making of the film "Raise the
Titanic": "It would have been cheaper to lower the Atlantic." However, we
believe we are bringing added discipline to this important realm of entertainment that
will pay off at the bottom line.
Another way we are working to perform more optimally is with our new strategy for Home Video. This market is in transition from videotape to DVD. We are recognizing this transition by making more titles available all the time, as is done in the music industry. This will allow consumers to continuously upgrade their Disney video libraries as they convert to DVD during the next few years.
Obviously, the advent of DVD has enormous implications for our library and our company. And, our recent release of "Tarzan" on DVD actually doubled our expectations. It now seems clear that "Tarzan" will sell well more than 1 million units on DVD, which means that roughly one in four owners of DVD players will be buying this title. Adding further significance to this remarkable performance is the fact that DVD will ultimately have substantially better margins than VHS.
Another favorable industry trend is the recent scaling back of animation production by a number of our competitors.
It reminds me of a kid who won a major league tryout during spring training. Each week, as his batting average and confidence soared, he e-mailed his mother. The first week, he wrote, "Dear Mom. Leading all batters. These pitchers are not so tough." A week later, he boasted: "Looks like I will be a regular outfielder. Now hitting .433." However, this was followed in the third week by this e-mail: "Dear Mom. They started throwing curves. Will be home Friday."
Now, most of the studios who tried their hands at animation have packed up and gone home. Because of this reduced competition, cost pressures are easing fairly dramatically in this all-important business which Disney continues to dominate.
Of course, ultimately, we cannot save our way to sustained success. The key to growth at The Walt Disney Company was, is and will always be the creation of great entertainment product. This is what has kept our theme parks growing. This is what has returned the ABC network to a leadership position. This is what will move our Studio and Consumer Products units forward.
We recently opened "The Tigger Movie," which was made for just $20 million ... and in just 10 days, it has earned nearly $24 million at the box office. Not only is this film headed toward strong profitability, but it carries important implications for our entire Winnie the Pooh franchise in Consumer Products, on Home Video and at our parks.
Our animated film for the holidays will be "The Emperor's New Groove," which is an outrageous comedy set in a mythical South American kingdom. It features the vocal talents of David Spade, who plays an arrogant young emperor who one day finds himself transformed into a llama by his royal advisor.
For summer of 2001, we have "Atlantis," which we believe will break new ground, as it will be our first true animated action adventure that will take audiences on an exciting journey to uncover the secrets of the fabled lost city.
For the Thanksgiving holiday, we have had the number-one film the last six years in a row. We think we have a good shot at extending this streak with this film that builds on one of our strongest franchises.
As far as I am concerned, the AOL acquisition of Time Warner demonstrates once again that content is king. Whether the content is a mouse named Mickey or a cute spotted puppy, its value is enhanced with the development of every new entertainment delivery system. The Internet is now proving this eternal fact all over again.
I recently came across an interesting quote on this subject. Let me read it to you:
"It is a curious thing that the more the world shrinks because of electronic communications, the more limitless becomes the province of the storytelling entertainer."
This was said more than 40 years ago. The speaker was ... Walt Disney.
As usual, Walt was right. As usual, he saw things before most others did. Now, to paraphrase Walt, the world is shrinking more because of electronic communications ... and the province of the storytelling entertainer is becoming more limitless.