By Jonny Lupsha, Wondrium Staff Writer
In 1991, Disney and Pixar signed a deal that would make history. The contract they entered into changed the direction of feature film animation forever. It led to the production of Toy Story, among other films.
To date, the animation company Pixar has released 23 feature films with smash hit franchises like Toy Story, Monsters Inc., Cars, and The Incredibles, as well as standalone films like Up, Brave, Wall-E, and Inside Out. Their movies have won 12 Academy Awards and, starting with the 2010 film Toy Story 3, four of their films have grossed more than $1 billion each.
Thirty years ago, Pixar had already wowed the world with short animations and commercials, including the Listerine ad “Boxer,” inspired by Raging Bull, in which a bottle of Listerine pummels an unseen enemy—gingivitis. Its success helped Pixar seal a feature film agreement with their recent partner Disney, leading to the first-ever, fully computer-generated animated feature film, Toy Story—which was also the first animated feature to earn an Academy Award nomination for screenwriting.
In the video series Critical Business Skills for Success, Dr. Michael A. Roberto, Trustee Professor of Management at Bryant University, explained how Pixar went from a relatively minor investment by Steve Jobs into Disney’s animation titan.
An Out-of-Work Steve Jobs Walks into an Office…
Steve Jobs bought Pixar from George Lucas in 1986, working with Disney on a project called CAPS—the Computer Animation Production System. However, not much happened between Disney and Pixar until 1991 when Steve Jobs and Pixar wanted to make a feature film that was entirely rendered with computer graphics—the first of its kind. So, the former CEO and founder of Apple approached Disney and its at-the-time CEO, Michael Eisner, to talk distribution, and they came to an agreement.
“Disney was in the driver’s seat and they extracted some significant concessions from Steve Jobs and Pixar,” Dr. Roberto said. “They said, ‘If the contract ends, and when it ends, we get to retain the characters that we worked on together and continue to use them in sequels and within our theme parks, even if you, Pixar, eventually move on to work with another movie studio.’
“And that was very powerful: Steve Jobs needed Disney much more than Disney needed Pixar, at that time.”
By the end of the year, Pixar gained increased notoriety for animating the computer-generated elements of the legendary ballroom dance scene in the 1991 film Beauty and the Beast.
Toys, Bugs, Monsters, Fish, and Superheroes
A decade or so later, the tables had turned. Films by Disney Animation Studios—including Fantasia 2000, Atlantis: The Lost Empire, and Treasure Planet—had failed to make the kind of box office returns for which Disney had hoped. Meanwhile, Pixar had released six incredibly successful films including Toy Story, Finding Nemo, Monsters Inc., and The Incredibles.
“At this point, Disney really needed Pixar in a way they didn’t a decade earlier, because Disney Animation had fallen on hard times,” Dr. Roberto said. “They needed a fresh infusion of characters to fuel synergy in the theme parks, and on cable television, and elsewhere. But did Pixar need Disney? Could Pixar really walk away?”
Dr. Roberto pointed out that Disney and Pixar were codependent, like an oil refinery and a pipeline. They had to come together in a merger to achieve the kind of synergy they needed. What did that mean for their properties at the time?
“Now the Pixar characters are leveraged much like the Disney characters across that range of businesses,” he said. “Pixar was more valuable as part of the Disney family because Disney could fully exploit the value of those characters in a way few other firms could do.”
Disney bought Pixar for $7.4 billion in 2006.