M. Lakeisha Manigault
Professor Kristina Barnes
May 30, 2015
Disney and Pixar: Who Are They?
Disney is household name all around the world from its many films to its theme parks around the world. The company began with Walt Disney’s passion for cartoon animation. His first company Laugh-O-Gram began when he made a deal with a local Kansas City theater to screen his cartoons. Though the cartoons he and a fellow co-worker made were popular, the company was burdened with debt. (“Walt Disney,” 2015)1 Fast forward, Walt Disney is most notably known for the creation of Mickey Mouse that came as a result of his character, Oswald the Lucky Rabbit, being stolen through a previous deal. Disney and his brother Roy took Mickey Mouse and created commercial success and what we see and know today as the Walt Disney Corporation.
Pixar originally began as a technology company named Lucasfilm’s Computer Division in 1979. In 1984, Lucasfilm’s company debuts its first short film created with what was at the time ground-breaking technology such as complex flexible characters, hand-painted textures, and motion blur. (“Pixar,” 2015)2 In 1986, Steve Jobs saw potential in its technology and purchased the company for $10 million, renaming it “Pixar.” The company enjoyed many successes, including the release of one of the highest grossing animated film of all time, Toy Story 3.
Disney & Pixar, a Merger in the Making
In 1991, Disney entered into an agreement with Pixar for the development and production of three computer animated feature films. According to the agreement, Disney would produce movies to be developed and directed by Pixar’s John Lasseter. Part of the agreement was that Disney would fund production cost for movie rights, leaving Pixar with earned revenue of $56 million and the experience. The first movie was Toy Story, the highest grossing film of the year. In 1997 renegotiation of a new deal began, the new deal would include the last 2 movies in the previous agreement as the first two in the new deal.
Pixar was set to receive compensation based on the amount of money obtained from the distribution of and paraphernalia from the films. Including distribution fees, Disney would receive 87% of the distribution proceeds. Analysts felt that the agreement gave Pixar an expert partner in the film business with great marketing capabilities. The first film was Toy Story which was released in November 1995. It was the first computer generated animated feature film; it was one hour and twenty one minutes. The film was a major success grossing over $360 million in revenues. After Toy Story, Disney saw Pixar’s potential and extended its partnership to a partnership in which Pixar agreed to make five original computer animated films within the next 10 years. Unfortunately, the then CEO Michael Eisner and Steve Jobs couldn’t come to an amicable agreement. In January 2004, Pixar and Disney decide to separate leaving Pixar to look elsewhere.
Disney and Pixar, the Merger
In March 2005, Disney’s Board elected Robert Iger as the CEO of the company succeeding Michael Eisner on September 30, 2005. Since Steve Jobs the CEO of Pixar and Michael Eisner had their differences of opinions the succession of Robert Iger made the possibility of a merger look more appealing as Jobs and Iger had a positive relationship. The purchase is also the latest indication of a tectonic collision between technology and Hollywood. (“Disney buys Pixar – CNET News,” 2006)3 Many employees of Pixar thought that the culture would change from the close working relationships of in house directors to that of the large conglomerate of Disney. Fortunately, both Jobs and Iger agreed that the small company’s success came from its current culture and agreed it’d be best to keep it as it has always been. This meant leaving its headquarters in the San Francisco Bay area, Emeryville California to be exact. (“Pixar,” 2015)2
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