Background
According to Roy O. Disney, Walt Disney was inspired to create a sound cartoon after watching The Jazz Singer (1927). Disney had intended for Mickey Mouse to be the new star character to replace Oswald the Lucky Rabbit after he lost the rights to the character to Charles Mintz. However the first two Mickey Mouse films produced, silent versions of Plane Crazy and The Gallopin' Gaucho, had failed to impress audiences and gain a distributor. Disney believed that adding sound to a cartoon would greatly increase its appeal.
Steamboat Willie was not the first cartoon with synchronized sound. Dave and Max Fleischer's Inkwell Studios had earlier produced seven sound cartoons, part of the Song Car-Tunes which started in May 1924. However the Song Car-Tunes failed to keep the sound fully synchronized, while Steamboat Willie was produced using a click track to keep his musicians on the beat. As little as one month before Steamboat Willie was released, Paul Terry released Dinner Time which also used a soundtrack, but Dinner Time was not a financial success.
In June 1927, producer Pat Powers made an unsuccessful takeover bid for Lee DeForest's Phonofilm Corporation. In the aftermath, Powers hired a former DeForest technician, William Garrity, to produce a cloned version of the Phonofilm system, which Powers dubbed "Powers Cinephone". By then, DeForest was in too weak a financial position to mount a legal challenge against Powers for patent infringement. Powers convinced Disney to use Cinephone for Steamboat Willie before Powers and Disney had a falling-out over money, and over Powers hiring away Disney animator Ub Iwerks in 1930.
Read more about this topic: Steamboat Willie
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