Last week Disney executives held their annual Investor Relations Day and gave an update on all facets of their businesses: studio films, television networks, theme parks, and consumer products. The consumer product presentation was particularly interesting as the unit head, Andy Mooney, reported that in 2010 Disney made $7.3B in revenue based on licensed products related to Toy Story 3 alone. The number was particularly interesting because it was just a shade beneath the $7.4B Disney paid to acquire Pixar and all its valuable IP. For all the money that has been spent on digital media start ups, it is a clear illustration of just how valuable physical products can be.
Of course making products is hard. You will typically be dealing with people 12 hours ahead of you, without a common language. You will also be forced to deal with manufacturing complexity, international shipping, and the myriad of other difficulties that arise when peddling atoms.
To succeed it is important to have a passion for plastics and the desire to make great “Stuff”. Disney has John Lasseter, a Pixar founder that has a serious obsession with toys. The picture below is his office with a toy on every horizontal surface. His office is better stocked than any booth I saw at Toyfair. Clearly, he loves physical goods and can exert his influence over the direction of the company.