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After Walt Disney’s first cartoon company, Laugh-O-Gram, went bankrupt in 1922, Disney moved to Hollywood and found his niche. He created Mickey Mouse (originally named Mortimer) for the first sound cartoons in the late 1920s and developed the first feature-length cartoon, Snow White and the Seven Dwarfs, completed in 1937.

For much of the twentieth century, the Disney Company set the standard for popular cartoons and children’s culture. Nonetheless, the studio barely broke even because cartoon projects took time (four years for Snow White) and commanded the company’s full array of resources. Moreover, the market for the cartoon film shorts that Disney specialized in was drying up, as fewer movie theaters were showing the shorts before their feature films.

Driving to Diversify

With the demise of the cartoon film short in movie theaters, Disney expanded into other specialized areas. Its first nature documentary short, Seal Island, came in 1949; its first live-action feature, Treasure Island, in 1950; and its first feature documentary, The Living Desert, in 1953. In the same year, Disney started Buena Vista, a distribution company. This was the first step in the studio’s becoming a major player in the film industry.

Disney also counted among the first film studios to embrace television. In 1954, the company launched a long-running prime-time show, and TV became an even more popular venue than theaters for displaying Disney products. Then, in 1955, the firm added another entirely new dimension to its operations: It opened its Disneyland theme park in Southern California. (Walt Disney World in Orlando, Florida, would begin operation in 1971.) Eventually, Disney’s theme parks would produce the bulk of the company’s revenues.

Capturing Synergies

Walt Disney’s death in 1966 triggered a period of decline for the studio. But in 1984 a new management team, led by Michael Eisner, initiated a turnaround. The company’s newly created Touchstone movie division reinvented the live-action/animation hybrid for adults and children in Who Framed Roger Rabbit? (1988). A string of hand-drawn animated hits followed, including The Little Mermaid (1989) and Beauty and the Beast (1991). In a rocky partnership with Pixar Animation Studios, Disney also distributed a series of computer-animated blockbusters, including Toy Story (1995) and Finding Nemo (2003).

Since then, Disney has come to epitomize the synergistic possibilities of media consolidation. It can produce an animated feature for theatrical release and DVD distribution. Because it owns ABC, it can place a series based on the movie on ABC’s Saturday-morning schedule. It can release a book version of the movie through its publishing arm, Hyperion, and air “the-making-of” versions on cable’s Disney Channel or ABC Family. It can also publish stories about the movie’s characters in Disney Adventures, the company’s popular children’s magazine. Indeed, characters have become attractions at Disney’s theme parks, which themselves have spawned lucrative Hollywood blockbusters like the Pirates of the Caribbean series. Some Disney films have had as many as seventeen thousand licensed products—from clothing to toys to dog food bowls. And in New York City, Disney even renovated several theaters and launched versions of Mary Poppins, The Lion King, and Spider-Man as successful Broadway musicals.

Expanding Globally

Building on the international appeal of its cartoon features, Disney extended its global reach by opening a successful theme park in Japan in 1983. Three years later, the company started marketing cartoons to Chinese television—attracting an estimated 300 million viewers per week. Disney also launched a magazine in Chinese and opened several Disney stores and a theme park in Hong Kong. Disney continued its international expansion in the 1990s with the opening of EuroDisney (now called Disneyland Paris). In 1997, Orbit—a Saudi-owned satellite relay station based in Rome—introduced Disney’s twenty-four-hour cable channel to twenty-three countries in the Middle East and North Africa.

Facing Challenges and Seizing Opportunities

From 2000 to 2003, Disney grew into the world’s second-largest media conglomerate. Yet the cartoon pioneer encountered major challenges as well as new opportunities presented by the Digital Age. Challenges included a recession, failed films and Internet ventures, declining theme-park attendance, and damaged relationships with a number of partners and subsidiaries (including Pixar and Miramax).

By 2005, Disney had fallen to No. 5 among movie studios in U.S. box-office sales—down from No. 1 in 2003. A divided and unhappy board of directors forced Eisner out in 2005 after he had served twenty-one years as CEO.⁵ The following year, new CEO Robert Iger repaired the relationship between Disney and Pixar: He merged the companies and made Steve Jobs, founder of Pixar and Apple Computer, a Disney board member.

The Pixar deal showed that Disney was ready to seize the opportunities presented by the Digital Age. The company decided to focus on television, movies, and its new online initiatives. To that end, it sold its twenty-two radio stations and the ABC Radio Network to Citadel Broadcasting for $2.7 billion in 2007. Disney also made its movies and TV programs (and ABC’s content) available for download at Apple’s iTunes store, revamped its Web site as an entertainment portal, and in 2009 joined News Corp. and NBC Universal as a partner in the video-streaming site Hulu.com. In 2009 Disney made another big investment by purchasing Marvel Entertainment for $4 billion, bringing Spider-Man, Hulk, the X-Men, and other superheroes into the Disney pool of characters, providing additional financial assets even when other projects, like their costly underperforming movies Mars Needs Moms and John Carter, grossed less than anticipated. Disney mourned the death of Steve Jobs in 2011 but continued producing animated movies from Pixar and its in-house studios and had an enormous Marvel-branded hit with The Avengers in 2012. Disney also expanded its products globally, adding a fourth ship to its international cruise line and a new nationwide Disney channel in Russia, and starting construction of the Shanghai Disney Resort in China, scheduled for a 2015 opening.