Marketing ties with McDonald's hit lean times
For 10 years Disney and McDonald's appeared to have a beautiful billion-dollar marriage. Happy Meals bore little figurines of Nemo, Mr. Incredible, and Peter Pan.
But no more. This is one relationship that's ending because of the children.
Disney is not renewing its billon-dollar, cross-promotional pact with the fast-food giant, which ends with this summer's release of Cars and Pirates of the Caribbean: Dead Man's Chest. The reason, in part, say multiple high-ranking sources, is the family-friendly entertainment giant wants to distance itself from fast food — and its links to the epidemic of childhood obesity.
Disney's not the only studio that thinks french fries loaded with trans fats may be too hot to handle.
DreamWorks is working with McDonald's to promote Shrek 3, due out in 2007. But according to one top-level studio source, there is already internal debate about whether the lovable green ogre should steer clear of chicken nuggets and Big Macs in favor of the healthier fare on McDonald's menu, such as salads. Compounding the issue is the fact that Shrek is, after all, overweight.
The ending of the McDonalds-Disney partnership comes at a time when the processed and fast food industries are under fire on a number of fronts because of growing concerns about childhood obesity. Just last week, former President Bill Clinton succeeded in yanking sugary sodas from elementary school campuses.
But some say the more discreet actions of the movie industry could ultimately have a much greater impact, especially if other corporate giants follow suit.
"I think it would have impact in contributing to the cultural change that is necessary," says Dr. J. Michael McGinnis, the chairman of a National Academy of Sciences panel that just released a study showing how food marketing affected children's diets. "The committee thought it was important for the use of cartoon characters that appeal to children only to be used in the marketing of healthy products."
One of the industry's most prominent critics, Fast Food Nation author Eric Schlosser, said it will be hugely significant if the Hollywood studios don't want to be associated with Happy Meals. "It will put more pressure on McDonald's to change what they sell in Happy Meals. The obesity issue would be irrelevant if the food in the Happy Meals was healthy."
This month Houghton Mifflin releases a new book by Schlosser and co-author Charles Wilson: Chew on This: Everything You Don't Want to Know About Fast Food, that has already put McDonald's on edge.
Disney declined to comment about the end of its arrangement with McDonald's. The company has not signed any new promotional deals with any fast-food providers even though its recent purchase of Pixar Animation Studios gives it an even bigger slate of potential family-oriented blockbusters to market to youngsters.
In a conference call with analysts last August, Steve Jobs, the chairman of Pixar and now Disney's largest shareholder, was asked about the end of the McDonald's deal, and signaled the company's ambivalence about the fast-food sector: "There is value in [fast food tie-ins]. But there are also some concerns, as our society becomes more conscious of some of the implications of fast food."
Skipping the fast-food sector would certainly impact Disney's promotional strategy, says analyst Lowell Singer, from A.C. Cowen. "Fast food has been a very important promotional partner in promoting films to children. As the animated marketplace gets more competition over the next few years, Disney will need to be much more aggressive and creative in reaching children though other promotional outlets."
Restaurant analysts don't expect the Disney decision to affect McDonald's, which is free to work with other movie studios, as well as toy companies as disparate as Lego and Build-a-bear. In fact, while McDonald's relationship with the entertainment giant boasted hit promotions for such films as 101 Dalmatians, and Lilo and Stitch, some franchisees began to chafe when the studio churned out clunkers like Treasure Planet. The company also had to abide by Disney's strict rules regarding use of their characters, which were not allowed to be seen eating McDonald's food.
While even nutritionists caution that fast food isn't the only culprit when it comes to childhood obesity, it's certainly a factor.
Happy Meals are specifically marketed to children between the ages of 3 and 9. A regular six-piece Chicken McNugget Happy Meal with fries and Hi-C contains 620 calories, 28 grams of total fat, and 5 grams of trans fat. In recent years, McDonald's has also added healthy alternatives such as apples and low-fat milk.
All about the toy
At the end of the day, what often sells a Happy Meal is the toy, not the food. A good toy promotion can double or triple the sales of Happy Meals.
Blame impressionable young minds and "the `nag' factor," said Prof. Jerome Williams, an advertising expert at the University of Texas.
"Kids see a movie, and see it's being promoted with a particular product, they'll nag their parents about it," he said. "Studies have shown that, after a while, parents will give into their children. They're not so much expressing a preference for a Happy Meal but for the character the Happy Meal is associated with."
According to study released last month by the National Center for Health Statistics of the Center for Disease Control, 19 percent of children ages 6-11 are overweight, and 17 percent of teenagers are overweight.
Those figures may be conservative, said Prof. James O. Hill, director of the Center for Human Nutrition at the University of Colorado. He says the new governmental data suggests that as many as 40 percent of young children are overweight, and about 20 percent fall into the obese category.
But Disney isn't divorcing itself from McDonald's, either. The fast-food giant will continue to be a staple in the theme parks. They're also leaving open the possibility of McDonald's promotions geared towards adults.
"Our relationship was ongoing before the agreement and will continue after," said Dean Barrett, senior vice-president of global marketing for McDonald's.
Other factors contributed to the unraveling of the McDonald's-Disney alliance.
For its part, Disney grew disgruntled with some of McDonald's more recent advertising efforts, and had problems with the fast food giant's toy production schedule, according to a source. The studio had to lock down release dates at least 18 months ahead of time to accommodate McDonald's needs. If the studio moved the date, it had to pay a steep penalty to McDonald's.
Hollywood and fast food have been closely aligned since the 1980s, with almost every major film targeting children boasting a fast food tie-in of some sort.