Following the footsteps of Mickey Mouse series, a series of musical shorts titled, Silly Symphonies was released in 1929. The first of these was titled The Skeleton Dance and was entirely drawn and animated by Iwerks, who was also responsible for drawing the majority of cartoons released by Disney in 1928 and 1929. Although both series were successful, the Disney studio was not seeing its rightful share of profits from Pat Powers,[40] and in 1930, Disney signed a new distribution deal with Columbia Pictures. The original basis of the cartoons were musical novelty, and Carl Stalling wrote the score for the first Silly Symphony cartoons as well.[41]

Iwerks was soon lured by Powers into opening his own studio with an exclusive contract. Later, Carl Stalling would also leave Disney to join Iwerks' new studio.[42] Iwerks launched his Flip the Frog series with first voice cartoon in color, "Fiddlesticks," filmed in two-strip Technicolor. Iwerks also created two other series of cartoons, the Willie Whopper and the Comicolor. In 1936, Iwerks shut his studio to work on various projects dealing with animation technology. He would return to Disney in 1940 and, would go on to pioneer a number of film processes and specialized animation technologies in the studio's research and development department.

By 1932, Mickey Mouse had become quite a popular cinema character, but Silly Symphonies was not as successful. The same year also saw competition for Disney grow worse as Max Fleischer's flapper cartoon character, Betty Boop, would gain more popularity among theater audiences.[43] Fleischer was considered to be Disney's main rival in the 1930s,[44] and was also the father of Richard Fleischer, whom Disney would later hire to direct his 1954 film 20,000 Leagues Under the Sea. Meanwhile, Columbia Pictures dropped the distribution of Disney cartoons and was replaced by United Artists.[45] In late 1932, Herbert Kalmus, who had just completed work on the first three-strip technicolor camera,[46] approached Walt and convinced him to redo Flowers and Trees, which was originally done in black and white, with three-strip Technicolor.[47] Flowers and Trees would go on to be a phenomenal success and would also win the first Academy Award for Best Short Subject: Cartoons for 1932. After Flowers and Trees was released, all future Silly Symphony cartoons were done in color as well. Disney was also able to negotiate a two-year deal with Technicolor, giving him the sole right to use three-strip Technicolor,[48][49] which would also eventually be extended to five years as well.[41] Through Silly Symphonies, Disney would also create his most successful cartoon short of all time, The Three Little Pigs, in 1933.[50] The cartoon ran in theaters for many months, and also featured the hit song that became the anthem of the Great Depression, "Who's Afraid of the Big Bad Wolf".[51]