The Free Hand of Mickey Mouse & The Hobbyist Printer
The effects of at-home 3D printing on licensed merchandise through the vantage point of Disney
The Hobbyist 3D Printing Landscape:
The falling cost of 3D printers from $2,000 three years ago to entry-level models costing $200 today, coupled with the abundant supply of plastic raw materials and a growing peer-to-peer sharing market of printing templates has proliferated the quantity of at-home hobbyist printers (“3D Printing Price”, 2018). Toys and figurines are an easy gateway into 3D printing for many home-users as they use cheap materials like plastics costing around 75% less than purchasing a comparable figure from licensed toy dealers, and the designs are relatively simple (Wright, 2018). Naturally, instead of creating original characters, many users focus on creating new versions of their favorite characters. Parents are even using 3D printers to incentivize learning computer skills and software by creating a family toy-design project of their child’s favorite character (Kelley, 2018). While these prospects sound innovative and positive, the home-user is effectively counterfeiting. The small scale and individual nature of at-home toy counterfeiting makes it extremely difficult to counteract, while still significantly affecting the intellectual property holder’s revenue potential.
Disney’s mission statement: “To use our portfolio of brands to differentiate our content, services and consumer products, we seek to develop the most creative, innovative and profitable entertainment experiences and related products in the world” (“About Leadership”, 2018). Effectively, their business model is to leverage their original characters and expertise in fantasy story-telling into a wide array of consumer experiences from movies to theme-parks and toys. Controlled and licensed toys are a core component of the Disney machine; as of June 2018, consumer products accounted for 11% of operating income and produced the best margins of Disney’s top-four business segments (Noonan, 2018). At-home 3D printing stands as a direct threat to Disney’s value proposition, as it has potential to undercut their competitive advantage in the toy industry.
Disney’s Plan – A Mickey Mouse Trap:
Disney is known for aggressively pursuing and prosecuting any copyright infringement. Famously, they threatened to prosecute daycares that had painted Disney characters on their walls without approval (Rocketlawyer, 2015). Disney plans to continue to fight the infringement war aggressively to retain the value on their trademarked property. The hobbyist 3D printing space is no exception. In the short-term, Disney realizes that litigating individual cases of infringements is near impossible and is not pursuing a litigation strategy for non-resale units. However, the relative calm on litigating individuals does not mean all is quiet on the 3D printing front.
Looking towards the long-term, they are aggressively developing technology and applying for patents that would shut down 3D printers if any design similar to a Disney character was detected. Another patent would imbed a design flaw into the printed product of any Disney like character (Brinkman, 2017). As with any new disruptive technology, it is yet to be seen which side the law will favor and if Disney can legally make 3D printers actually shut down. Regardless, Disney is doing all it can to position itself to have a strong platform to combat individual cases of infringement.
Strategy Recommendations – Let It Go:
In the short-term, Disney should abandon its corporate strategy attempts to thwart at-home, non-resale 3D printing of its branded characters and work to embrace the coming 3D printing wave. They should engage the growing 3D printing community through holding open innovation contests for the best 3D printed designs and implement a corresponding online marketing strategy. For example, they could give awards, such as a free trip to one of their amusement parks, for a chosen 3D contest winner in exchange to the rights to sell the design template back to the community. Additionally, contest participants would have to post photos of their designs on social media. The strategy would have the synergistic effects of promoting the Disney brand organically while capturing market value from the hobbyist 3D printing community.
Long-term, Disney should work to position itself as a leader in the 3D toy printing world. In addition to using the 3D community as a source of open innovation and promotion, they should invest in making their own kid-focused printers with corresponding kid-friendly software programs for designing. Disney could also sell special plastic and material kits with unique colors and properties to accompany the package.
To Infinity and Beyond:
3D printing is emerging as a disruptive technology that will change the landscape of branded consumer goods. Disney’s legal trench-warfare over home-printed plastic BB8s and Elsas serve as vantage point into the coming war over branding. As the technology and materials used further develops, what will this mean for the concept of creating value through branding as a whole? For example, imagine a world where you could 3D print Moncler coats, Chanel handbags, and the latest Nike shoes for near the cost of the raw materials. Is the solution to embrace this trend and attempt to still capture some of this at-home market through engaging the community, move more into selling the design templates, and employing open innovation or is it to try and restrict and regulate the at home 3D printing trend? (800 words)
“3D Printer Price: How Much Does a 3D Printer Cost?” 3D Insider, 7 Sept. 2018, 3dinsider.com/cost-of-3d-printer//.
“About – Leadership, Management Team, Global, History, Awards, Corporate Responsibility.” The Walt Disney Company, www.thewaltdisneycompany.com/about/.
Wright, Ian. “Should Toy Manufacturers Be Worried About 3D Printing?” Biomedical Engineering Jobs | ENGINEERING.com, www.engineering.com/AdvancedManufacturing/ArticleID/15299/Should-Toy-Manufacturers-Be-Worried-About-3D-Printing.aspx.
Kelly, James Floyd. “Get Kids Designing With ‘3D Printing Projects’.” GeekDad, 11 Apr. 2018, geekdad.com/2018/04/get-kids-designing-with-3d-printing-projects/.
Brinkmann, Paul. “Disney Seeks Patent to Block 3D-Printed Knockoffs.” OrlandoSentinel.com, 9 June 2017, www.orlandosentinel.com/business/brinkmann-on-business/os-disney-3d-printing-20170609-story.html.
Noonan, Keith. “How The Walt Disney Company Makes Most of Its Money.” The Motley Fool, The Motley Fool, 1 June 2018, www.fool.com/investing/2018/06/01/how-the-walt-disney-company-makes-most-of-its-mone.aspx.
RocketLawyer. “Why Disney Threatened to Sue Daycare Centers.” TheSelfEmployed.com, 6 July 2015, www.theselfemployed.com/law/disney-threatened-sue-daycare-centers/.
Student comments on The Free Hand of Mickey Mouse & The Hobbyist Printer
This is a really interesting article and issue for Disney. As you mentioned, the Consumer Products and Interactive Media division contributes approximately 12% of operating profit for Disney. I think the intellectual property issue at hand though is more than just that though – there are massive synergies across the Disney empire and the company is obsessed with managing its brand and experience for its consumers. Some poorly produced 3D printed Disney toys not only detracts from direct consumer products sales but also dilutes the overall brand. For this reason, I really like the idea of Disney branded printers but don’t agree with the open innovation contest and dropping attempts to thwart at-home 3D printing. I think Disney should continue to aggressively pursuit IP infringement, to the fully extent allowable by law.
There’s definitely an interesting legal question with IP infringement in 3D printing. If a consumer has bought a printer, uses software, and downloaded an illegal Disney print online, which of the 3 parties to the act (printer, software, online print) are also liable? I think the online print publisher should definitively be targeted for copyright infringement and distribution of that material should be curbed through cease-and-desist letters (and potential lawsuits). The printer hardware is probably not directly liable but what’s most legally ambiguous might be the software (which might be produced by the same hardware manufacturer but can also be separate). The US courts have clearly held torrent websites liable to the aiding and abetting of illegal digital content distribution (and shut down the ones without proper controls), and I think there might be an argument to hold 3D printing software providers to the same standard on IP infringement.
Finally, if you’re a big Disney fan like I am, I would highly recommend the book Disney Wars (https://www.amazon.com/dp/B000FCK0IU/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1). It’s a fascinating account of Disney’s board-level strategy and infighting.
I find intellectual property protection a fascinating topic, especially when it comes to the burgeoning 3D printer market. I agree that Disney might need to rethink how they can tackle this issue in such a way that they can harness the momentum of this industry growth vice trying to push back against it. This topic reminds me a lot about the issues with shared music sites that caused a lot of controversy among music artists. If Disney were to pursue legal action, they would be unable to go after all individual infringements, but they could go after a random selection to set an example. This was actually a tactic used by major music labels to try and deter illegal downloading of music. However, as you mentioned, this can also hurt the brand and could be interpreted as “going against” a technological movement. I would instead do as you propose, sell the IP designs at a very reasonable price and allow consumers to enjoy the characters without having to break copyright rules. This is a quick, cheap and effective way of penetrating the market with a strong brand. The only concern is that Disney could lose control of the brand if such IP designs are altered, but this would seem to be an issue no matter what the creative medium (i.e. anyone could draw a Disney character to their own liking, so what’s the difference with a 3d print). On a related note, I believe that Disney delayed the expiration of patents on some of its most iconic characters (i.e. Mickey Mouse), but this is only a matter of time before it becomes public domain. Perhaps this is an ideal time for Disney to tap into open innovation while they still have control.
Fantastic topic about Disney!
About Disney’s position, I partly agree with you that Disney should work to position itself as a leader in the 3D toy printing world, because Disney do have advantage in toy world. But I am thinking about what is Disney’s competitive advantage in using 3D printing. Should they just outsourcing this part of business or just selling the IP to others? I think this is an interesting topic deserves more discussion.
Although the situation is quite problematic for Disney, the company should not fight against trends, but try to exploit them. One way, as you and Nicholas mentioned, is to sell IP rights for printing. I would put a very low price for each type of a toy to make it affordable hence decreasing customers’ motivation of producing the design by themselves. Additionally, I would make a public claim that the IP rights will be issued, for example, 6 months after the release of a certain movie. Many children will not wait 6 months and would “demand” a toy right now, which can protect part of physical toys’ sales. Moreover, a sustainable competitive advantage of a physical toy is that it can be designed in a more sophisticated way. For example, a toy may have a rifle, which can shoot, or a cotton dress. These things are impossible to replicate on a home 3-D printer, so Disney needs to make the toy range more “technologically advanced” and appealing to customers.
Thank you for the note. I am not sure Disney has a choice in this situation. They need to embrace 3D printing as an emerging and disruptive technology that consumers will quickly adopt. In the ideal environment they would be able to restrict other companies/consumers from 3D printing their consumer products, but this seems like a daunting task given the fact that they would have to go after potentially hundreds of thousands of patent infringement violators. In addition, restricting and/or suing some of your most valuable customers would not bode well for not only the consumer products division but also the studio, parks/resorts, and Disney-specific cable networks.