The Disney Purchase of Lucasfilm: What Does It Mean?

Disney’s $4.05 billion acquisition of Lucasfilm has generated more questions than answers. The Mouse has made it clear that they bought Lucasfilm for one thing, and one thing only: the Star Wars property.

But Lucasfilm’s business also includes other components such as Skywalker Sound and the visual effects studio Industrial Light and Magic (ILM). The fate of these entities remains unknown and will likely remain so for the foreseeable future.

For example, what to make of ILM’s promising start as a producer of animated features? Don’t forget that ILM’s first original film Rango won an Oscar earlier this year for Best Animated Feature. But Disney already owns its own feature animation studio as well as Pixar. It hardly needs a third studio, especially one that offers an original take on computer animation that could make the work of its other studios look formulaic by comparison. In other words, it’s a likely bet that ILM won’t be making any more animated features of its own.

However, ILM will likely continue creating the visual effects for the Star Wars films that Disney plans to start releasing in 2015. According to Variety:

On the Star Wars movies, Lucasfilm has long relied on having the resources of ILM inhouse to control vfx costs. A Lucasfilm spokesman said [Kathleen] Kennedy will continue to have autonomy to use ILM on future Star Wars films. However, that doesn’t guarantee that all work will be done in San Francisco. ILM has offices in Singapore and Vancouver and has alliances with companies in Beijing and Europe. It will continue to leverage those alliances and offshore locations to keep costs down.

And what about the visual effects work that ILM creates for other studio’s films? In his initial statements, Disney chairman-CEO Robert Iger gave a less than ringing endorsement of ILM’s business model.

The LA Times quoted Iger saying, “Our current thinking is that we would let it remain as is. They do great work. They do work for multiple studios. It’s been a decent business for Lucasfilm and one we have every intention of staying in.” The emphasis on the words ‘current’ and ‘decent’ are mine, and it’s not too difficult to read between the lines, especially when the NY Times added that Iger wants to “reap the value” it can from ILM.

History is not on ILM’s side either. In 1996, Disney acquired another respected visual effects studio DreamQuest. It merged it with its own in-house computer animation department and renamed it The Secret Lab. The Lab’s most notable effort was the feature film Dinoasur before the division was shuttered in 2002. It will be tougher to dismantle ILM, but there’s a good chance that Disney will explore some type of reorganization/merger/consolidation/sale of the studio in the coming years.

The same questions exist to a lesser degree for Lucasfilm’s storied gaming division, LucasArts. That division has struggled in recent years, as the LA Times reported:

LucasArts is currently operating without a permanent president and has not made a new game since 2010′s poorly received “Star Wars: The Force Unleashed II.” This year it announced a new title in the works, “Star Wars: 1313,” but because that game is intended to carry dark themes and be rated M (the video game equivalent of R), it may not fit into Disney’s intent to position “Star Wars” as a family entertainment brand.

Despite its recent missteps, LucasArts (and now Disney) owns a back catalog of beloved gaming classics like The Secret of Monkey Island, Grim Fandango, Full Throttle and Maniac Mansion. It’s hard to imagine what Disney will do with those titles, though Monkey Island creator Ron Gilbert tweeted a tongue-in-cheek suggestion earlier this week:

Finally, the question that many are asking is how George Lucas will spend his newly earned wealth. Lucas, who was already a billionaire before the sale, is now officially the wealthiest artist in the United States. Because he owned 100 percent of Lucasfilm, he will receive the entire $4 billion himself, roughly half in cash and the rest in Disney stock, turning him into Disney’s second-largest non-institutional shareholder with approximately 2.2% of the company.

It might be expected that Lucas would spend his money on silly douchebag toys—Lucas has reportedly spent millions on picture frames for his vintage European movie poster collection—but instead he plans to do something far more worthwhile with the bulk of his cash: philanthropy.

Education is a passion for Lucas, and he made a pledge in 2010 to dedicate the “majority of my wealth to improving education.” After this week’s sale to Disney, Lucas reiterated that goal. “As I start a new chapter in my life,” he said, “it is gratifying that I have the opportunity to devote more time and resources to philanthropy.” If he ends up following through on the pledge, this may end up being one of the few corporate mergers that has a happy ending after all.


  • Good Question

    I really do hope he spends a good percentage in philanthropy. How insanely awesome would it be (though admittedly farfetched) if he help fund or support independent animation artists/filmmakers with all that dough to offset StarWars Babies and Jedi Kids or whatever Lego Chewbacca Adventures crap they plan on shooting out? A mini-private kickstarter of sorts right? :) I know, I’m a dreamer lol

    Either way, the ILM question was a big one with me as well. For the last few years it appears (from the trenches) that ILM has been transitioning it’s main business model from initial VFX handler to a sort of middleman. Using the name of ILM and then outsourcing to “smaller” studios under NDA lock downs. How do I know? I’ve worked at more that a few of these studios on “ILM films” for a couple years now. I think they’ll keep ILM around but just fast track the already progressing business plan of outsourcing larger and larger portions of FX work while living off the ILM brand. I mean, who wouldn’t want ILM heading up their VFX films right? Even if in name only…

    • beamish13

      I sincerely hope Lucas uses his money to finance the kind of projects he godfathered during the 80′s like TWICE UPON A TIME, MISHIMA: A LIFE IN FOUR CHAPTERS, and POWAQAATSI.

  • Sotiris

    You talked about ILM but what about the fate of Lucasfilm Animation? Up until now, the studio only focused on Clone Wars but it reportedly has original projects in the works. Brenda Chapman is working as a consultant on one of those.

  • Lazyboy

    About the games : Disney killed the Split/Second franchise so I’m pretty sure they will do absolutely nothing for the games. Except Star Wars games, of course.
    Just like Microsoft killed Rare’s Pefect Dark and Killer Instinct franchises.

  • http://celtherapy.net Kev

    When companies get purchased, some parts (if not all) get shut down. The Lucas Film and ILM as we know it were forever changed as soon as the ink was dry. I do not think this is a good thing for the industry. As we all know, if it’s not “Family Friendly,” it’s not Disney. I thought The Force Unleashed was a great property, with an awesome story. But because of the mature content, you can guess what will happen to it. Same with Clone Wars series. Even though I feel like it is watered down already, some episodes have some “whoa” moments. Im sure Disney will change it even further. Don’t get me wrong, this is not a rant on Disney. This is a company that I have loved for many years. Now as an adult, I see the business side. I know they want to keep the cash coming in.
    My point is that animation is so much bigger than the family friendly box that Disney puts it in.

    • Nick

      ” As we all know, if it’s not “Family Friendly,” it’s not Disney.”

      Some of the most violent films in the past 20 years have come from Disney-owned Miramax.

      • http://bakertoons.blogspot.com/ Charles Brubaker

        Disney also has Touchstone Pictures as well. They use that name whenever they release family un-friendly films.

  • http://www.timreckart.com Tim Reckart

    Wow, I hadn’t even thought of the consequences for ILM’s feature animation division. I thought Rango was so promising partly because it seemed to have launched a photo-realistic “house style” for ILM. It’ll be a real shame if Disney lets that die.

    I hope they’ll recognize the value of diversity and let ILM animation keep its identity, like they did with Pixar.

    • http://Rango dk

      Rango was a work for hire job just like any vfx show. The IP was brought in already boarded, designed and prevised by Gore & Co (Crash & crew). Which is probably why it was done at ILM instead of Lucas Animation.

  • http://cartoonsforbreakfast.blogspot.com Brian C.

    The biggest question on my mind has been about the fate of the massive Star Wars fan audio and video collection. George Lucas was surprisingly cool about letting fans use his films, music and other properties in unlicensed ways. Can we expect Disney to be as relaxed about it or will they extend their strict copyright protection policies to Star Wars as well?

    • Alberto

      Do you mean the Disney that has sued Day Care centres for painting their characters on the walls?

  • http://dtoons.com Dtoons

    So in terms of “animation studios” Disney now has….
    Walt Disney Animation Studios
    Disney Television Animation
    DisneyToon Studios
    Pixar
    Pixar Canada
    ILM
    Lucasfilm Animation
    Lucasfilm Animation Singapore

    They haven’t owned that many studios since…the 90′s?

    And what about Indiana Jones? Does Disney have any plans for that?

    • Karl Hungus

      And Jim Henson Productions as well.

      • http://dtoons.com Dtoons

        Is that still operating?

        • http://mitchellsketch.blogspot.com Brian Mitchell

          Disney owns the Muppets, not the Jim Henson Company.

    • Sotiris

      You’re forgetting Marvel Animation Studios.

  • beamish13

    If Disney is really aiming for corporate synergy, they’ll have the good sense to pay Steve Purcell, who’s already on Pixar’s payroll, to make new games/shows/whatever with his property SAM & MAX.

  • Skip

    ILM’s animation department should produce animated films for an older audience, while Disney and Pixar put out the family related material.

  • Sarah J

    I hope Disney just lets LucasFilm keep doing it’s own thing. It’s gonna be disappointing if they try to make LucasFilm just do the type of stuff Disney would do. Especially with the animation, Disney makes great animated movies, but Rango was different but it was still an amazing film. I’d be a sad kitty if Disney decided that LucasFilm’s animation department could only do cutesy cartoony stuff.

  • Professor Widebottom

    I’m not a fan of big mega-monolithic mergers. It’s short term gains Disney’s ego and a bumper crop of blight for everyone else. It’s going to give Disney a form of corporate mad cow disease, as it consumes everything and consumes itself. I predict more ugliness and ham-fisted product from Disney. Lucas could have upped his philanthropic usefulness without selling the whole thing to Disney. I think he’s lost his mind and should have consulted with me before making this move with the *real* dark side.

  • http://deleted OtherDan

    Those pictures of Lucas look like some kind of a hazing.

  • http://vfxsoldier.wordpress.com/2012/11/05/lucasfilm-employee-terminated-after-tending-to-pregnant-wife/ Slave laborer