How Disney Turned Itself Around in the 1990s

We talk with author and media theorist Douglas Rushkoff, who has published 10 books on media, culture, and technology. He joins us to discuss his most recent work, Present Shock, about living in today's immediate, always-on world.

In this video segment, Douglas explains why Disney's (NYSE: DIS  )  attempt to leverage its legacy products and characters didn't work, and how "living in RAM" succeeded where Mickey was doomed to fail. The full version of the interview can be found here.

A full transcript follows the video.

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Brendan Byrnes: Another example from the book, you cite Disney, how they ran into trouble in the mid-1990s in their theme parks especially. Michael Eisner asked the CFO to come in and try to turn that around, and it's something you called "living in RAM" is how they went about it. Could you talk about that, and what that means for Disney?

Douglas Rushkoff: There's one way for Disney to make money, and the way they were looking to do it in the late '80s and early '90s was by selling off their historical assets on a certain level, or selling them out. "Oh, here's Mickey again." "Here's Cinderella." "Here's Sleeping Beauty," and throwing their old products out there as much as possible.

They were, in some sense, emptying the vault and spreading thin their old stuff, their legacy, all that. The parks started to suffer, actually, as a result of that. The parks started to decay, and they just weren't as interesting to people.

What they decided to do was to reverse what they were doing. Instead of looking at their value as being their vault of mythology, they started looking at their value as their front-line employees. They reversed, really, the dynamic of the company.

They saw management as, management's only job is to serve the front-line employees, and the front-line employees are the ones who are going to understand what the customers actually want, what's actually happening here. All the innovation really came from there, back.

It was an interesting model to use, because rather than being a historically based company, they became a real-time based company, that was based in what we now call customer experience, or brand experience, but is the lived, real-time experience of the customers.

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  • Report this Comment On June 26, 2013, at 1:29 AM, DocEagle wrote:

    Those comments are nothing but gobbeldy-gook. The company didn't turn around in the 90s, it stagnated. And it didn't change until they finally pushed Michael Eisner out the door. It was Bob Iger and--believe it or not--Steve Jobs who turned the ship around.

  • Report this Comment On June 26, 2013, at 2:57 AM, EC82 wrote:

    This guy doesn't understand a damn thing (and with all due respect, DocEagle, it wasn't really all Eisner's fault). What Iger has turned into purely an "asset management" company used to be incredibly creative. From 1986 to about 1999, the company could do virtually no wrong at the box office, PARTICULARLY with animated features, but even with live action films. It grew its theme parks from two in Florida, one in California and one in Tokyo to four in Florida (plus two water parks and dozens of hotels), two in California, two in Tokyo, two in Europe, two in China. Its consumer products division grew from virtually nothing to a $3 billion division. More importantly, Disney was creating Aladdin, Beauty and the Beast, The Lion King, Pocahontas, The Little Mermaid ... characters that still bring in BILLIONS of dollars at retail worldwide. Disney was hardly "spreading thin their old stuff." The guy who is an alleged "expert" here should really brush up on his Disney history. That happened for a VERY short time in the late 1970s and early 1980s, but even then Disney was creating EPCOT Center, Tokyo Disneyland, Touchstone Pictures, The Disney Channel ... the myth that Disney traded only off its legacy is just that: a big, untrue myth!

  • Report this Comment On June 26, 2013, at 6:52 AM, tylatz wrote:

    One word. Competition. Disney never had stiff competition in the animated movie niche until the 80s. It's because people like Don Bluth walked out and created quality animated movies that Disney was forced to rebuild their animation department or slide into obscurity. I disagree with EC82 and would say it wasn't until 1989 with the release of "The Little Mermaid" that Disney was back.

    Now I am unsure on the theme park side of things, but when you go for too long without creating exciting new franchises the "theme" does indeed stagnate. That is what Rushkoff is referring to in the printed excerpt, but I disagree with the reason for the turn around. It's because of the new franchises developed from 89-91 that gave them something new and recognizable to integrate into their theme parks. You can see that process happening again with Star Wars (ok, it's only new to Disney, but they are making more movies) and the construction projects they are undertaking at Disney World.

  • Report this Comment On June 26, 2013, at 8:03 AM, Mikurotoro1 wrote:

    I actually think that when it comes to being stagnant Nintendo is worse than Disney. At least Disney makes more new things than Nintendo and makes new things (new IPs) more often! With Nintendo we are stuck with Mario, Zelda, etc and they rely too much on those franchises instead of making new ones! Disney creates more new IPs (especially Disney Channel/Disney Junior and Pixar) than Nintendo. Look at the current situation with the Wii U, we have 5 so-called new Mario games and a new Zelda and nothing really NEW that isn't part of an existing franchise! People are getting sick of Mario but Nintendo doesn't really care. And the Wii U is failing! Take a page from Disney's book and create some new IPs already!

  • Report this Comment On June 26, 2013, at 10:48 AM, sagehopper wrote:

    Disney is something Walt wouldn't even recognize today.

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