Disturbing as these developments might have seemed to the studio
owners, there was at least one man in the audience that night who had a
more optimistic appreciation of the future: Walt Disney. Tellingly, perhaps,
he won no Academy Award that night. Instead, the Oscar for best
animation was awarded to the Warner Bros. cartoon Tweetie Pie.
Considered something of an oddball by the hardheaded moguls, the
boyish-looking Disney had chosen to remain outside the studio system.

Although his animation studio by now employed more than one thousand
artists and technicians, he was not even a member of the Movie Producers
Association or the distributor of his own movies. Instead, he relied
on RKO to get his films into theaters.

Disney had a different strategy from the other studio heads. Unlike
them, he did not have any stars under contract or own any theaters. While
their studios made their money from ticket sales, he made most of his
from licensing Mickey Mouse and other characters for toys, books, filmstrips,
and newspapers.

To the other studio heads’ mystification, he was enjoying success with
his seemingly crazy ideas. In 1934 Disney had begun work on a featurelength
cartoon that the chiefs of the conventional Hollywood studios derided
as “Disney’s Folly”: Snow White and the Seven Dwarfs. At the time,
the major studios believed that adults, not children, were the principal
audience for movies, and that cartoons, which usually ran no more than
five minutes, were merely adjuncts used to entertain children during
weekend matinees. So Disney’s announcement that he would make an
eighty-three-minute cartoon out of a Grimms fairy tale seemed like
madness. Apparently confirming his perceived lack of touch with reality,
Disney planned to spend three times the average Hollywood budget making
the film. With the continuing Depression threatening their viability,
the studio heads could not fathom how he could ever earn back this sum
at the theaters.

But Disney was working from a different concept: he believed that
children, with adults in tow, could be the driving force of the entertainment
industry. His surprising success with Snow White and the Seven
Dwarfs—which would become the first film in history to gross $100 million
—demonstrated that the potential of the child audience had been severely
underestimated by Hollywood: in the case of Snow White and the
Seven Dwarfs, children were going to see it over and over again, just as
they did with other cartoons. (Children’s tickets on the average cost only
twenty-five cents; approximately 400 million of them had been sold for
Snow White between 1937 and 1948).

Snow White and the Seven Dwarfs was more than just a successful boxoffice
event, however. It was also the first film to have a soundtrack—
including such hit songs as “Someday My Prince Will Come”—that
became an enormously successful record, as well as the first film to have
a merchandising tie-in. And, most important as far as the Disney model
was concerned, it had multiple licensable characters—Snow White, seven
dwarfs, and a wicked witch—who took on long lives of their own, first as
toys and later as theme-park exhibits.

With Snow White and the Seven Dwarfs, Disney had done more than
define a new audience for movies; he had suggested the future course of
the entertainment business overall. In it, the real profits would come not
from squeezing down the costs of producing films but from creating out
of them intellectual properties that could be licensed in other media over
long periods.

But even as the studio system tottered under the tripartite threat of
television, HUAC, and an antitrust lawsuit in 1948, this was not a future
Hollywood saw or, if it did—as when Louis Mayer was advised by his top
executive that MGM was pursuing “business that no longer exists”—
wanted to embrace. Disney was regarded by the moguls who still ruled
the industry as a whimsical eccentric. Little did they suspect that his Pied Piper strategy would prevail and that they themselves would soon
enough be dancing to his tune.