Disney's New Strategy

Robert Iger's free-spending ways have caught up to him. Having purchased Pixar and Marvel for a combined total of $10 billion, the studio has to start making some serious coin in order to pay off the purchases.

The strategy is to focus on $150 million films that can be heavily merchandised or films that cost less than $30 million. Anything that falls in the middle of those two budget neighborhoods is out, even if it's a proven money maker. The Proposal, a Sandra Bullock film that cost $40 million and that grossed $315 million worldwide won't have a sequel as a result of this policy.

New York magazine reports:

The franchise-intensive mantra came after Disney CEO Robert Iger admitted publicly and unflinchingly that 2009 had been "awful": Having started the year with Confessions of a Shopaholic (domestic gross: $44 million) in the worse recession of all time, it then summered with the costly $150 million rodent flop G-Force (domestic gross: $119 million), and spent the end of the year eating turkey upon turkey: The Bruce Willis action flick Surrogates (domestic gross: $38 million) was laughable; the comedy Old Dogs (domestic gross: $48 million) was not.

To help pay for the whopping $10 billion Disney spent acquiring Pixar and Marvel in recent years, Iger decreed that s the world's largest licensor of consumer products, Disney needs its film not to merely succeed in theaters, but to sell gobs of spinoff merch, as well: In 2008, the company sold some $30 billion worth of licensed consumer products, and suffice it to say, exactly none of that came from Sandra Bullock hand towels.

The problem, as I see it, is that this is a high risk strategy. G-Force proves that. It's at exactly the budget that Iger thinks is going to save the company. Flops at that budget level will hurt badly.

If Eisner's tenure was defined (at least initially) by how successfully he capitalized on Disney's brand, Iger's tenure is going to be defined by how his purchases affect the bottom line. He's dug himself a $10 billion hole and now he has to climb out of it.