Chapter 14: Times of Change, Times of Troubles
Excerpt from The King is Dead: The Walt Disney Company After Walt Disney, an Unauthorized History by Sue Donym and Arman N. Said
“Take Home the Magic!” read the November 1982 advert. The full-color splash page featured Mickey’s magician’s hat from “The Sorcerer’s Apprentice”, in the center above a green wire-frame plane leading off to the horizon. From out of the hat magically flew three paired VHS & Betamax videotape covers on one side and three grouped Atari 2600, Intellivision, and ColecoVision game cartridge covers on the other, all dragging tails of light like mystical comets. It was one of the first physical advertisements to acknowledge Disney’s halting foray into the world of home entertainment.
Disney management had been reluctant to enter into the growing home entertainment industry, which had begun its slow conquest of people’s screen time in the ‘70s and had emerged into the ‘80s going at light speed.
At this point in time, Disney’s bread-and-butter remained the periodic theatrical re-release of their animation “Classics”. Once or twice a year one of the Classic movies, be it
Snow White,
Fantasia, or
Robin Hood, would be returned to the big screen. It was a strategy that had worked since the 1940s, so why should they, the managers thought, risk that by releasing the movies on
tape? If you can see
Cinderella any time you want in your living room, then why would you pay to see it in the local cineplex? You only get paid
once for a tape, after all.
And as for videogames, well, the concept was as terrifying and alien to management as the Giger-designed xenomorph from the 1979 film.
Seriously, where else would you want to go for a VHS tape? (Image source “longisland70skid.com”)
In March of 1980, Disney finally took a halting step towards home movie releases. They formed a limited partnership to distribute home movies with the
Fotomat company, best known for the film development booths that sprouted up in parking lots outside of every grocery store in the US. They released ten live action movies in VHS and Betamax format, exclusively for rental through
Fotomat. These included some of the live action or hybrid movies such as
Mary Poppins and
Pete’s Dragon, but none of the vaunted (and vaulted) animated Classics. As one might expect from such an awkward arrangement – who gets movies from a photo hut? – the arrangement failed to produce sufficient revenues. The failure can largely be seen in hindsight as a self-fulfilling prophesy.
By comparison, future Disney executive Jim Henson had embraced home video, releasing
The Muppet Movie in 1980 on VHS and Betamax less than a year after its theatrical release. The sales from both private citizens and rental companies were a strong and it became a steady source of profit for Henson Associates. When Henson joined the Disney board in the fall of 1980, he was rather shocked to discover that they weren’t expanding their home video market and pushed for doing just that as a director[1].
(Image source “retromedialibrary.fandom.com”)
Disney began expanding their video releases in 1981, both in number and in location, but with the list price of $79.95 to discourage families from purchasing it, assuming that the rental market would be the real profit driver and would still keep the film “special” by limiting viewings. They even released their first “Classic”:
Dumbo, in June of ’81, again at $79.95 to skew the sales towards rental companies. Ron Miller and Creative Director Jim Henson urged faster movement and more affordable prices, but under Card Walker, the slow, hesitant pace continued. The company again stressed that saturating the market with home video versions of the Classics would devalue them. Henson disagreed. He felt that home media viewing and theatrical viewing were entirely different experiences, one close and intimate and one big and shared, that complimented rather than competed with one another.
At the urging of Al Gottesman and David Lazer, Henson tried an experiment: he re-released
The Muppet Movie to theaters in September of 1981. It made $16 million in quick profit, despite the “saturation” of the movie on home video, and on top of the millions it made every year in VHS/Betamax sales. Still, the Disney management remained entrenched in their opinions, dismissing the
Muppet Movie re-release as a “stunt” and noting that Cinderella made $28 million upon its rerelease the same year.
In 1982 Henson formally joined the company as CCO. He partnered with Ron Miller to push for broader, faster release of home videos. Fears of lost quality, he argued, could be mitigated through quality control. He’d always maintained a firm grip on merchandising for
Sesame Street and The Muppets, refusing any product that didn’t meet his exacting quality standards. They could, he argued, do the same with video. Disney made the halting expansion into personal home video sales, selling non-classic titles at a reduced rate of $29.95 to renters and private individuals alike on VHS, Betamax, and even Discovision[2] formats. The Classics would remain tightly held, but the lesser titles would be released. Naturally, these did not sell well for the same reasons that they didn’t perform well at the box office to begin with. Still, certain releases like the
Herbie the Love Bug series,
Freaky Friday, and
Escape to Witch Mountain made fair returns and the venture turned a small profit.
Educational? (Image source “retromedialibrary.fandom.com”)
Alice in Wonderland tapes, released in the summer of 1982, were the big exception, and sold well not only in suburban communities where families where common, but also saw surprisingly high sales figures in university towns, where the median age was in the 20s. “Maybe they’re being used for educational purposes?” wondered Card Walker. He couldn’t understand why Henson and Lazer started sniggering when he said that. The question of why college students were buying and renting the
Alice in Wonderland animated feature would remain a mystery to him.
When the conservative Walker retired from the Chairmanship in 1983, Miller, Henson, and Wilhite took the opportunity to increase the number and frequency of releases for lesser titles and compilation videos. The big question remained what to do with the Classics locked away in the Vault. Periodic theatrical re-releases of the Classics remained a steady source of income and their forced scarcity remained the cornerstone of this strategy. They assigned David Laser and Stan Kinsey with the task of finding a workable solution that would maintain the sanctity of the Classics. After consulting with managers across the company, they presented the Board of Directors with the idea of a “staged, limited release”[3]. The Classic movies would be released on home media on a limited time, limited release schedule, typically about six months after the corresponding Classic movie appeared in the theaters on re-release. New families could then use the theatrical release to “test-view” the movie with their kids in the theater prior to a purchase of the home media. This created the illusion of scarcity while also creating the illusion for Disney managers that the movies’ “special” nature was being preserved.
Still, the board was not convinced and the Classics remained off limits, even though Kinsey estimated that
Cinderella alone would likely make over $100 million per annum if sold on video for $29.95. The board, in particular Roy E. Disney, remained reticent about selling the Classics, but agreed to an experiment. They re-released
Dumbo on video in 1983, but this time at the $29.95 price. It sold out all 1.5 million+ copies for a gross revenue of nearly $45 million, far more than was earned by its 1981 high-cost sale and its 1976 theatrical re-release combined. The board relented. Other Classic titles would follow this success at a rate of two “limited releases” per year, including, most notably,
Sleeping Beauty for Christmas of 1984 (it sold out all 3 million copies, generating far higher profits than its usually anemic theatrical runs). However, three titles (ironically dubbed the “Holy Trinity” by Lazer) would remain off limits:
Snow White,
Cinderella, and
Fantasia, which were “only properly viewed on the big screen” according to the board
[4].
Home video would soon become a steady and reliable source of strong profits for Disney, with revenues in excess of $150-$200 million per annum, proving that the value of the film library was far higher than previously estimated. The ultimate death of the Betamax and Discovision platforms would even simplify things for Disney, who could then concentrate on just VHS production and sales, which reduced overhead and further increased profit margins. Disney fans would come to view the periodic, limited releases of films from “the Disney Vault” with a mixture of both anticipation and frustrated cynicism.
Mickey Mouse Game & Watch (Image source “highscore.com”)
In 1981 Disney also made a halting advance into the world of videogames. Despite the growing popularity of home “cartridge” game players like the Atari Video Computer System (later dubbed the 2600) and the continued success of arcade games, they chose instead to partner with a Japanese card game company named
Nintendo who also produced small, handheld “Game & Watch” LCD games. These were cheap, limited, and played only a single game. Jim Henson found them underwhelming, though, admittedly, he’d never really considered videogames at that point[5]. “Mickey Mouse” was released on a “wide screen” handheld in 1981 while “Mickey and Donald” and “The Dark Crystal” would follow on “multi-screen” in 1982. They sold well enough in Japan, but sales in the US and Europe were unimpressive
[6].
(Image source “vgmdownloads.com”)
In 1982 Disney decided to get involved in the arcade game marketplace as well, signing a deal with
Bally Midway to develop a game based, naturally, on the videogame-based movie
Tron. Released in the fall of 1982 in time to serve as an advertising tie-in to the upcoming movie,
Tron the arcade game was a smash hit, making over $50 million by the end of 1983[7]. The gameplay took players through an impressive five[8] sub-games: I/O Tower (a timed race to a set point while dodging or shooting “grid bugs”), Light Cycles (a “snake game” where the player must block opposing “light cycles” with the beam from his own), Battle Tank (a maze and tank game), Disks (a game where the player throws his light disk at an opponent), and MCP (where the player must break through a rotating shield to destroy the “MCP”). The game won numerous awards and demonstrated the viability of the arcade game as a market for Disney products.
By 1982 Henson had also started looking into the arcade videogame market. The products had improved greatly in just the last few years. Pac Man Fever had swept across the world and a fat little plumber named “Mario” was repeatedly rescuing the same damsel from the fierce “Donkey Kong”. While on site at Disney to discuss the Game & Watch deal, Henson asked visiting Nintendo game designer Gunpei Yokoi about this latter game and how it worked. Yokoi was enthusiastically happy to describe the basics of the system, being sure to not give away any sensitive company secrets while doing so.
In addition to the Game & Watch game, the two came up with an idea for an arcade game based upon
The Dark Crystal movie, which was exceedingly popular in Japan. Since Henson Associates still owned the property rights for
Dark Crystal (Disney controlled distribution rights for the movie) he was free to do so without Disney’s approval, though he did give then-President Ron Miller a courtesy call first. Yokoi got Henson in touch with Donkey Kong creator Shigeru Miyamoto. Henson presented Miyamoto with three ideas for possible gameplay scenarios based upon events in the movie. Miyamoto said, “that’ll work”. “Which one?” asked Henson. “All of them!” said Miyamoto, enthusiastically. This became the basis for the game’s three sub-game approach.
“The Dark Crystal” arcade game allowed players to inhabit Gelfling hero Jen through its three screens of action. Sub-game one featured navigating past rocks and dodging fearsome Garthim as you ran through a scrolling cavern to the end. If you get grabbed by a Garthim, lose a life and start over. Otherwise, you get a reward screen showing Kira entrapped by the Skeksis Scientist, with text describing how soon the crystal will be used to steal her life essence for the Skeksis to consume. Sub-game two featured a race against the clock, avoiding the energy blasts from the diabolical Skeksis Scientist as you break the five “chains” bonding Kira to the chair, all while the window to the Dark Crystal slowly opens, waiting to steal her life essence. If you get blasted or grabbed by the Scientist or the clock runs out, lose a life and start over. Otherwise, you rescue Kira in a heartwarming reward screen. Sub-game three featured Jen, crystal shard in hand, attempting to dodge Garthim, energy blasts, and grasping Skeksis to reach the Dark Crystal in the center before the three suns align. Captured or blasted by the enemies or the time runs out, lose a life and start over. Reach the crystal in time, you’re rewarded with a short animation of the urRu appearing on screen and the light from the reunited crystal merging the two races back into the spirit-like urSkeks. But before you can bask in the glow of your victory, it all starts over. Repeat sub-games one through three, with the difficulty increasing each time, until your lives run out and Game Over.
Despite the middling US interest in the movie it was based upon, “The Dark Crystal” 1982 arcade game, with its three-game approach that combined elements of running games, puzzle games, timed games, and dodging games, became a big hit on both sides of the Pacific (and Atlantic!). The reward screens and quasi-narrative structure – the latter a facet that Jim Henson particularly loved – earned the game numerous awards from the videogame industry. Sales were high around the world, particularly in Japan, earning around $46 million and allowing Henson to pay down debts, shore up his own company’s finances, and give his employees a large bonus.
Sorcerer’s Apprentice 1983 (Image source “disney.fandom.com”)
Disney management took notice, and, based upon the success of the “Tron” and “Dark Crystal” games, signed a multi-game arcade game deal with Nintendo and multi-game console deals with Atari, Intellivision, and ColecoVision. Three games and their “ports” were planned. The first would be a port of “Tron”. The second would be “The Sorcerer’s Apprentice”, where players, as Mickey from his
Fantasia appearance, try to capture magical falling stars before the waters rise too high. The third, a tie-in to the movie’s 1982 re-release, was “Robin Hood and Little John”, who must 1) run through the forest dodging arrows, 2) shoot arrows in a contest against the Sheriff of Nottingham, and 3) rescue Maid Marian from the castle
[9].
Atari VCS, Intellivision, and ColecoVision (Image sources “funstockretro.co.uk”, “intellivisionamico.com”, and “cleanpng.com”)
The success of the “Dark Crystal” arcade game also resulted in Henson being approached by Atari, Intellivision, ColecoVision, and even Commodore for a port of the game. The Intellivision and ColecoVision ports were fairly well done, and Henson subsequently greenlit a ColecoVision “mini-Arcade” version from them as well. However, Henson was unimpressed with the poor quality of the Atari port[10] and instead agreed to work with game designer Howard Scott Warshaw to develop a Dark Crystal walk-around “puzzle game” in the vein of Warshaw’s earlier “Raider of the Lost Ark” game. It would have to wait until Warshaw was done with his current project, a puzzle game based upon the hit movie
E.T. The Extraterrestrial, which he was rushing to complete by Christmas of that year.
What could possibly go wrong?
Disney and Henson had great hopes for these games. Alas, their timing could not have been worse.
The Intellivision and ColecoVision ports of “Tron” and “The Dark Crystal” and the Intellivision, ColecoVision, and Atari cartridges of the Disney “Robin Hood” game all sold fairly well that Christmas, though none of them could compete with that Christmas’ seeming hit game, “E.T. The Extraterrestrial”, which sold out quickly upon release.
Alas, the success of “E.T.” was short lived. Rushed to meet the Christmas deadline, “E.T.” was buggy, confusing, and utterly frustrating for players[11]. Sales plummeted, as did sales of the poor-quality Atari ports of “Pac Man[12]” and “Tron”. They were the first victims of what would later be called the “Great Videogame Crash of ‘83”, the bursting of a bubble built upon market saturation, sagging quality, and customer burnout. While “E.T.” would become the unfortunate poster child for the crash, the ultimate causes were systemic rather than the result of a single poor game.
For Disney, though, it was a painful lesson in the fickle nature of the marketplace, whatever the medium.
* * *
Stocks at a Glance: Walt Disney Productions (DIS)
July 5th, 1983
Stock price: $94.24
Major Shareholders: Henson family (9.3%), Roy E. Disney (3%), Disney-Miller family (11%)
Outstanding shares: 34.5 million
[1] Disney in the early 1980s was pretty unique in its resistance to home video, which pretty much every other studio saw as free money from what just a few years earlier would have been a dead product line.
[2] An early Laser Disk system.
[3] Disney eventually came to this strategy in our timeline after the Eisner/Well takeover, of course. Here there’s just a larger driving force in finding a solution sooner. I know a lot of you wanted me to “kill the vault”, but that’s honestly a bridge too far. It wasn’t actually greed that drove the practice as is commonly thought (it may have reduced profits!) but the Disney board’s fixation with protecting the “specialness” of the movies “like Walt would have wanted”. The almost fetishistic reverence in which Disney held the Classics, particularly Snow White, Cinderella, and Fantasia, is a lot of inertia to overcome. Sorry!! For the record I never promised a Utopia.
[4] The board pushed back against the release of these three titles in our timeline when Eisner and Wells took over and pushed home video. Eisner, however, forced the issue and the three titles were released.
[5] While Henson Associates was an early adopter of the Apple II in the late ‘70s, he first got involved in videogames in 1983. Read about it here:
https://www.henson.com/jimsredbook/2013/05/55-61983/
[6]
Mickey Mouse and
Mickey & Donald were made in our timeline too.
The Dark Crystal game is a butterfly.
[7] Slightly better than our timeline since
Tron the movie did better too.
[8] In our timeline, in the rush to get
Tron out by summer to compete with
The Secret of NIHM (and screw over the “traitorous” Bluth) the “fifth sub-game”, “Disks of Tron”, was not yet ready, and would be released as a separate cabinet in 1983. In this timeline Walker uses
A Muppet Mystery! as his revenge instrument, letting
Tron release as originally scheduled for Christmas. Ergo, more time to finalize “Disks” before the fall release of the Tron game.
[9] Of these games, only the Sorcerer’s Apprentice game was made in our timeline, appearing, unfortunately, in early 1983.
[10] Atari ports were notoriously bad and Henson, a real stickler for quality in anything he put his name on, including 3rd-party merchandise, would reject anything that didn’t meet his exacting standards.
[11] I’m here to testify that everything you’ve ever heard about E.T. the Atari game is largely true. It was actually a pretty amazing accomplishment for the time, particularly considering the ludicrously short window that Warshaw was given. It had multiple interacting screens that were arranged “3D” (the world was a cube of 2D screens), a challenging mix of chase game and puzzle game that was ahead of its time, and, once I finally took the time to read the effin’ manual and figure out how to play, it was actually a cool game: gather the “phone” pieces, make the “call”, and run to the woods in time to get “rescued”. It was hugely rewarding to finally win. That said, on Christmas day in ’82 when you first opened the box, stuck it in the console, and tried to just “play”, it was distilled frustration. Most games of the era were pretty obvious in their gameplay, but E.T. required you to (gasp) read and figure it out. It was also hard AF. The damned scientist and agent constantly thwarted your attempts to do anything, Elliot was hardly any real help at all, and the bugs that kept you eternally stuck in the effin’ pits, unable to escape, slowly starving to death, were maddening. Had Warshaw been given enough time to work out the bugs, it might have been a watershed moment in home gaming. Alas, in this timeline and in ours, it’s a cautionary tale.
[12] This port sucked hard. Looked wrong, sounded wrong, played wrong. I can still hear its clunky sounds in my head to this day. “Doo-DEEE doo-DEEE! Donk-donk-donk-donk…”