Case Study #35
To Innity and Beyond: Pixar’s Journey to Reinvent Animation
In 1923, a budding entrepreneur named Walt Disney left Kansas for Hollywood to create animated movies.
Walt had worked as an advertising cartoonist but had little knowledge of the world of lmmaking. With
the help of his brother Roy, he produced his rst short animations via commissions from New York, but it
was not a particularly lucrative business.
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The Disney brothers eventually made a deal with Universal Studios to produce an animated series with
a new cartoon character named Oswald the Lucky Rabbit. The deal was a relatively small sideline
for Universal, but it was a big break for the aspiring duo and their little team of animators. Walt was
particularly excited to work on the Oswald cartoons—of the two brothers, he generally focused on creative
elements while Roy focused on nancial matters. When Walt and his chief animator presented their
rst short lm to Universal, however, the studio sent them back to the drawing board. Undeterred, Walt
reworked the character and in September 1927, Universal released the rst Oswald short lm. After that,
Walt produced a fresh Oswald the Lucky Rabbit short every other week for distribution by Universal.
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Despite the consistent work, the Disney brothers repeatedly clashed with
Universal, who eventually forced them out. However, Oswald had to stay
behind. The brothers had sold Oswald’s copyrights to Universal, so they
could not feature him in their future work. Walt never forgot losing control
of Oswald, so when he started his next animation project, he secured all
copyrights for his new main character: a charismatic mouse with large,
distinctive ears who looked strikingly similar to Oswald. That mouse, of
course, was Mickey Mouse, who made his rst on screen appearance in
November 1928.
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With Mickey and other popular characters, the Disney
brothers found quick success on their own. Beginning in 1932, Walt won the
Academy Award for Best Animated Short lm for eight years in a row.
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Still, critical accolades did not translate into substantial prots.
The brothers’ growing animation company, today called the Walt
Disney Company, needed to increase revenue. After seeing his
short lms played in succession in a French movie theatre for
the price of a full ticket, Walt realized there was potential for a
fully-animated feature-length lm, so in 1934, he launched an
ambitious project to make his rst animated feature.
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It took years
of work and signicant nancing during the Great Depression,
but in 1937, Walt released Snow White and the Seven Dwarfs.
The premier was a sensation.
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Snow White was a huge critical
and nancial success, becoming the highest grossing lm ever
at the time.
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At the 1939 Academy Awards, a young Shirley
Temple presented Walt an Oscar for “pioneer(ing) a great new
entertainment eld for the motion picture cartoon.” To the audience’s delight, Walt received a normal
sized Oscar accompanied by seven miniature Oscar statues, representing the Seven Dwarfs, on a stepped
platform.
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Case study prepared by Helen Scantlebury. Case study editor: Professor Christopher McKenna,
University of Oxford.
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June 2023
Snow White earned so much money for the Walt Disney Company that it built an entire new production
studio in Burbank, California, now called Walt Disney Animation Studios, or simply “Disney
Animation.”
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Disney Animation would go on to produce some of the most iconic and successful animated
movies of the twentieth century, including Fantasia, Dumbo, Bambi, Cinderella, Alice in Wonderland,
and Peter Pan. Disney Animation’s lms became cultural touchstones, while their characters—who never
aged and always remained the intellectual property of the Walt Disney Company—seemed to spin money
for Walt, Roy, and their investors. In the late 1980s and early 1990s, mega-hits like The Little Mermaid,
Beauty & the Beast, Aladdin, and The Lion King not only cemented Disney Animation’s reputation as
the world’s greatest animation studio, but undergirded what had become the Walt Disney Company’s
sprawling business empire of lms, television, music, theme parks, hotels, cruises, and merchandise. If the
Walt Disney Company was one of the last century’s most important entertainment corporations, Disney
Animation was its beating heart.
However, in the mid-1990s, Disney Animation’s run of success was about to hit a brick wall. Soon, an
upstart company called Pixar would completely reinvent animated lmmaking, while Disney’s Burbank
studio would struggle to survive in the industry it had pioneered. In many ways, Pixar’s rise in the 1990s
parallels Disney’s emergence in the 1920s and 1930s. This is the story of how Pixar grew to beat Disney
Animation at its own game, and then save the once-vaunted studio from the brink of irrelevance.
Creating Toy Story
Pixar began in 1979 as the “Computer Division” of Lucaslm, Ltd., a production studio headed by Star
Wars creator George Lucas. A special effects maven who loved employing cutting edge technology in his
movies, Lucas hoped to create a system that could digitally animate lifelike lm sequences. Lucas hired
computer scientist Edwin Catmull to lead the Computer Division, and after a few years, brought in former
Disney animator John Lasseter.
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While at Disney Animation, Lasseter had pitched an idea to create a
computer-animated lm, but the bosses at Burbank had other priorities.
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Lasseter soon found himself at
odds with Disney’s leadership, who red him. Lucas quickly scooped him up.
Under Catmull’s leadership and with Lasseter’s talent, the Computer Division made steady technological
progress in the early and mid-1980s. The team managed to produce several short, digitally rendered
sequences which broke new ground.
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But the Computer Division’s success took off in 1986 after Steve
Jobs, of Apple fame, purchased the division from Lucas and renamed it Pixar. Jobs’ initial business plan
was not to produce and sell nished animated lms, but to develop advanced animation technologies to
sell to production studios around the world. Then, it would be up to the studios to use Pixar technology to
animate their own lms. Still, in order to show clients what Pixar’s innovations could accomplish, Jobs
needed a sample lm to impress potential buyers. He thus commissioned Lasseter to produce a short lm
to debut at the world’s leading computer graphics conference, called SIGGRAPH.
Excited to make a splash at SIGGRAPH, Lasseter insisted the lm
have an engaging storyline despite being under two minutes long. He
proposed a story about two anthropomorphic lamps, inspired by the
one that sat on his desk, in which the smaller lamp plays with a beach
ball while the bigger lamp watches with surprise and bemusement.
The resulting Luxo Jr. lm astounded the SIGGRAPH crowd. With
imagery that looked realistically three-dimensional, the lm displayed
technological brilliance that no one outside Pixar had seen before.
Meanwhile, the audience fell in love with the heart-warming narrative
and remarkably cute characters. Luxo Jr. received a nomination for
Best Animated Short at the Oscars—the rst computer-animated
lm to ever receive such recognition.
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Just as Walt Disney’s Oswald
cartoons represented a milestone for hand-drawn animation, Luxo Jr.
was a landmark event in the history of computer animation.
Alongside Luxo Jr.’s success, 1986 saw Pixar make its rst big sale when Disney bought its Computer
Animation Production System (CAPS). CAPS had an integrated hardware and software package which
allowed artists to colour animated frames from scanned hand drawings and then record the frames onto
lm. Disney artists rst used the technology in the nal scene of The Little Mermaid, released in 1989.
They were so impressed by the results that the studio soon switched all its of feature animation work to
CAPS.
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In Disney’s 1994 lm The Lion King, for instance, the lmmakers credited CAPS with allowing
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them to stage a scene of huge herds of animals stampeding through dust-ltered light. The famous
sequence would have been impossible to create with hand-drawn cells.
Despite Disney’s success with CAPS, Pixar executives could not nd other buyers for their product. Their
expensive and highly advanced technology could not compete with cheaper and more broadly appealing
products from companies like Adobe.
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Still, Lasseter and his team of animators at Pixar continued to
produce their own successful short lms. At the 1988 SIGGRAPH conference, Pixar released Tin Toy
about toys that come to life, again astounding the assembled crowd. Tin Toy improved on Luxo Jr.’s “3D”
look and became the rst computer-animated lm to win the Oscar for Best Animated Short.
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Despite the
accolades, however, Tin Toy did not help Pixar’s nances much—short lms had little commercial value.
Indeed, Jobs personally funded Tin Toy, and continued to pour money into Pixar with no concrete sign of
future returns.
Pixar thus found itself at the start of the 1990s in a similar position as Disney in the early 1930s—enjoying
critical acclaim but struggling to turn a prot. And just like Disney, Pixar sought to solve its nancial
troubles by embarking on its biggest and boldest project yet: a fully computer-animated feature lm.
Catmull, Lasseter, and the growing team at Pixar had dreamed of producing a full-length computer-
animated lm, but funding remained a problem, so Jobs turned to Disney for nancial backing. Disney’s
own animation department had seen the potential for computer animation given their experience with
CAPS, but the company’s own computer animation capabilities were far behind Pixar’s, and executives
were nervous that wide audiences might not respond well to Pixar’s new and largely untested 3D look.
Disney’s ambivalence worked in Pixar’s favor—supporting Pixar’s lmmaking effort allowed Disney to
outsource the new technology’s high costs and reputational risks while beneting from the potential box
ofce rewards.
In 1991, Disney CEO Michael Eisner struck a deal with Jobs
for three computer-animated feature lms. Disney would
cover all production costs and manage the marketing and
distribution of the lms. In exchange, Disney would receive
some 90% of the revenues, have creative control over the
lms, and own the intellectual rights to Pixar’s characters—
just as Universal kept the rights to Oswald the Lucky
Rabbit.
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Moreover, the deal stipulated that Pixar could not
submit lm ideas to any company other than Disney during
the length of the contract, even if Disney rejected them
rst. Pixar’s animation division, wholly encompassing the
company’s key creative and technical talent, would have to
work exclusively for Disney until the end of the agreement.
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Though the deal heavily skewed in Disney’s favor, for
Pixar’s animators, the high price was worth the chance to
prove their dream of making a successful computer-animated
feature lm. It also meant Pixar’s original business model
had completely changed. The company was no longer trying
to sell animation technology for other studios to use—it was
producing and selling its own nished movies. Pixar thus
shut down its hardware division and got to work on its rst
feature lm: Toy Story. Sticking with a successful premise, Toy Story was an expanded and adapted version
of the award-winning Tin Toy. Lasseter led the Pixar creative team to develop the plot and complete
the animation while Jobs, who preferred not to meddle in their creative process, helped manage the
relationship with Disney.
Every few weeks, Lasseter and his team would present their latest screen tests and storyboards to the
Disney executives. While the technical aspects of the animation always impressed Disney’s bosses, the
suits often criticized Pixar’s proposed storylines. Disney’s lm division head Jeffrey Katzenberg was
particularly nonplussed by Pixar’s scripts. After each presentation, Katzenberg would give a long list of
storyboard notes for the Pixar team. He emphasised giving the two main characters—a pull-string cowboy
named Woody and space astronaut Buzz Lightyear—more “edge” in order to appeal to parents as well
as children.
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Using Katzenberg’s recommendations, the Pixar team developed the rst half of the movie
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destined to become Toy Story and showed it to Disney in November 1993. That preliminary version
included some of the nastiest, most unhappy characters ever shown in a lm destined for Disney release.
Woody and Buzz were entirely unlovable, and the storyline was tedious. Unhappy with the way things
were going, Disney halted the lm’s production.
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Faced with failure, Pixar’s team asked for time to rework the project without interference from Katzenberg
and other Disney executives. They returned to Pixar headquarters where Lasseter and his team entirely
rewrote the Toy Story script. Over the next three months, they worked in an open space in Pixar’s
animation department, which was full of cubicles that each animator could decorate as they wished.
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The
largely communal work environment allowed for frequent and easy collaboration between employees, and
the resulting script had a completely different feel from the one developed with the executives’ input. When
Pixar showed Disney the new script in February 1994, Woody had transformed from a despotic chief to
a wise leader, while the audience could feel more sympathy for his likeable co-star Buzz. The new script
satised Katzenberg, and he allowed production to resume with an aim to release the lm in late 1995.
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Disney decided the lm would have its North American release on the Wednesday before the November
holiday of Thanksgiving—an important time for American families to gather. The relatively small Pixar
team worked hard to complete the lm by deadline, always under the watchful eye of Disney’s bosses.
The movie got some star power on its side too. Woody would be voiced by Tom Hanks, and Tim Allen—a
leading TV actor at the time—would play Buzz. Still, the Pixar team was nervous about how audiences
and critics would react not only to their new animation style, but also to the story itself. Unlike Disney’s
recent lms—Pocahontas, The Lion King, Aladdin, Beauty and the Beast, and The Little Mermaid—Toy
Story included no princes or princesses. There were no dramatic castles or exotic, faraway worlds either.
Instead, Toy Story took place in a mundane suburb—hardly the fairy-tale setting audiences expected from
Disney. Even Jobs, who hoped to nally make a return on his large investment in Pixar, fretted over the
impending public response.
There was another reason for Jobs to be nervous. He desperately wanted to renegotiate
Pixar’s contract with Disney. The long struggle to complete the lm had led Jobs to
despise Disney’s control over its creative direction. Disney executives insisted on
exercising their contractual right to closely supervise seemingly every aspect of the lm.
Jobs felt Disney’s micromanaging hindered Pixar’s creative teams, who thrived when
they worked independent of outside inuences. As Toy Story’s production schedule
dragged on, Jobs yearned for more creative control for his people—and better nancial
terms for his company. Disney had no obligation to renegotiate, so Jobs came up with a
plan to bring them to the table.
Jobs decided he would take Pixar public one week after Toy Story’s release.
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If the movie was a hit, it
could spur a strong initial public offering, which would allow Pixar to raise enough money to no longer
rely on Disney to bankroll its lms. Then, he would have the leverage to demand better terms. As the
release date loomed, Jobs pitched potential investors with a story about his dream to make Pixar a pioneer
in a new era of animated entertainment, with triumphant lms and beloved characters adored across the
globe.
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It was an enticing pitch which alluded to Walt Disney’s sky-high hopes in the 1920s and 1930s.
But Jobs’ gambit rested on Toy Story’s box ofce performance. If the movie opped, investors would shy
away, and Pixar wouldn’t have the nancial leverage to seek a new contract.
Ultimately, any anxieties about Toy Story were unfounded. Disney and Pixar released the lm in cinemas
on 22 November 1995, and it was a massive success. Toy Story had the biggest Thanksgiving debut ever,
eventually grossing $360 million worldwide to become the third highest-grossing animated lm up to that
point behind Aladdin and The Lion King.
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The lm proved that animated features could entertain both
parents and children, and critics loved it too. Toy Story earned fantastic reviews both for its story and its
3D animation, with America’s leading lm critic, Roger Ebert of the Chicago Sun-Times, writing that he
felt “exhilaration” watching it.
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Toy Story showed that successful animated movies did not need to be
fairy-tales, but Pixar certainly had a fairy-tale feature lm debut.
With Toy Story’s runaway success, Pixar’s initial public offering far exceeded expectations, raising $139.7
million off a sale of 20% of the company. Shares opened at $22 and climbed to $39 by the close of the rst
day of trading—more than double Jobs’ target of between twelve and fourteen dollars.
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The massive IPO
was a huge victory for Pixar, beyond what most people imagined possible for a production company with
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only one feature lm credit to its name.
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Pixar no longer
needed to rely on Disney to nance the production of its
next lms, so in early 1996, Jobs approached Disney CEO
Eisner about renegotiating their contract, and the two parties
agreed to start talks in May of that year. Jobs had four main
aims: more creative control, better cinema release windows,
a true 50/50 share of prots, and equal branding on Pixar
lms and merchandise.
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In exchange, Pixar would fund
50% of future lms’ production costs.
Eisner considered Pixar’s requests carefully, knowing he
had no obligation to change the contract. Pixar’s creative
teams had proved with their Toy Story rewrite that they could
work more independently, and Disney could still retain nal
say on any lm, so Eisner agreed to Jobs’ rst demand for
increased creative control for Pixar. Disney could also afford
to give up one favourable release window every couple of
years—especially for what were likely to be highly-anticipated
3D-animated lms—so he accepted that demand too. Sharing
a higher percentage of prots would be a potential loss for
Disney, but continuing to fund all production, distribution,
and marketing for Pixar’s lms was costly as well, so Eisner
accepted Pixar’s offer to split production costs in exchange for
more equitable prot-sharing. However, the last demand for
equal branding proved a much more difcult issue for Disney, which wanted its name on Pixar’s lms. With
the two sides stuck, talks halted in November 1996.
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The threat of another competitor on the computer animation scene eventually forced Eisner to accept Jobs’
nal demand. In 1994, Eisner’s former colleague Katzenberg—who by then had left Disney—teamed up
with superstar director Steven Spielberg and famed record producer David Geffen to form a new studio called
DreamWorks SKG.
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With three big names behind it, DreamWorks, as it is now known, had the potential to
take the lead in the nascent computer animation space. Eisner knew there were only two lms left in Disney’s
current agreement with Pixar. If Pixar produced even moderate successes, then after its contract with Disney
expired, it might join forces with DreamWorks. Disney’s much weaker in-house computer animation
capabilities would be no match against both Pixar and DreamWorks. Eisner realized he needed to lock in a
longer-term deal with Pixar if Disney was to stay competitive.
In February 1997, Pixar and Disney signed a new deal for ve more original feature lms over ten years,
plus sequels if Disney commissioned them. The new contract gave Pixar more creative control, better release
windows, and equal share of production costs and prots, with all lms and merchandise branded jointly as
Disney × Pixar.
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Jobs had thus achieved all four of his goals. Like Woody and Buzz, Pixar fought a giant and
emerged victorious.
Pixar Thrives while Disney Struggles
The rst lm to be released under the new contract was Pixar’s second original feature, A Bug’s Life,
about a group of insects who come to the rescue of a threatened ant colony, scheduled for release in
November 1998. The lm included numerous technical innovations to depict large swarms of lifelike ants,
and expectations were high for Pixar’s sophomore effort. But this time, the company faced competition
from DreamWorks, which was preparing to release its own debut computer-animated feature. Katzenberg
wanted to one-up his former employer, so he moved the release date of the DreamWorks lm from March
1999 to October 1998—six weeks before A Bug’s Life was set to open.
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Further, the DreamWorks lm,
titled Antz, similarly followed a group of insects facing destruction. The Pixar team felt devastated—how
could a new studio come up with the same idea, and then move their release date to scoop them at the box
ofce? The answer lay with Katzenberg. While still at Disney, Lasseter had told him about his idea for A
Bugs Life, which Katzenberg then turned into Antz for DreamWorks.
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Despite the intense competition, Pixar released A Bug’s Life as planned in November 1998. While it did
not achieve Toy Story’s dizzying success, the lm was by no means a op and received good reviews from
critics and audiences alike. The quirky and upbeat A Bug’s Life also eclipsed the moodier, Woody Allen-
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voiced Antz, taking $363 million worldwide while DreamWorks’ lm only managed $172 million.
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Pixar
had established itself as more than a one hit wonder.
After A Bug’s Life, Disney wanted to further capitalise on Pixar’s original hit Toy Story and commissioned
a sequel, Toy Story 2. The sequel would fall under the new contract, though it would not count as one of
the ve planned-for lms.
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Other companies were also keen to take advantage of the Toy Story franchise.
Having declined to license Barbie for the original lm, toy-maker Mattel allowed its signature doll to
appear in the second lm.
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Disney initially drafted Toy Story 2 as a direct-to-video sequel, as the format
had been successful off the back of hits like Aladdin. Direct-to-video sequels were easy money-makers
as they were inexpensive to produce and market but popular with families—parents could keep children
entertained for hours with characters they already knew and loved. However, Pixar’s initial story reels for
Toy Story 2 impressed Disney executives so much that they agreed to a theatrical release. But it wasn’t just
the quality of the reels. The costs of both the creative talent and the technical innovations were too high to
rely on video sales alone.
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Toy Story 2 premiered in North America in late 1999 to outstanding reviews. Sprightly new characters
and emotional depth not often seen in children’s lms invigorated the franchise. In a deviation from the
norm, many viewers actually preferred the sequel to the original, with one critic calling it “a richer, more
satisfying lm in every respect.”
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The introduction of female co-lead Jessie attracted an even broader
audience than the rst instalment, and the lm grossed $485 million worldwide.
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With three successful feature lms completed, Jobs
decided it was time for Pixar to have its own purpose-built
headquarters. Edwin Catmull, head of Pixar’s technical
operations who led Lucaslm’s original Computer
Division, noted that Jobs “had this rm belief that the
right kind of building can do great things for a culture.”
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Jobs and his architects wanted the building to both echo
and support Pixar’s existing work culture. In particular,
Pixar’s collaborative ofce environment helped manage
tensions between creative, technical, and commercial
teams while simultaneously encouraging specialists to
push the boundaries of their elds. They thus designed
the headquarters to have a large central atrium to promote
unplanned interaction between colleagues, which Jobs
thought would spur creativity and generate new ideas.
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In the new millennium, Pixar’s executives expected
competition to intensify as more studios developed computer
animation capabilities.
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DreamWorks remained their main
rival, showcasing impressive technical skills in Antz and the
2001 hit Shrek, which opened in theaters and on DVD and
video on the same weekend.
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Shrek—about an ogre who
falls in love with a princess—became the second highest
grossing animated lm ever at the North American box
ofce, only behind The Lion King.
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However, worldwide it fell behind Pixar’s 2001 product, Monsters Inc.,
whose tale of bedtime beasts who learn to make children laugh instead of scream earned $525 million—
outpacing Shrek’s $488 million.
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With sky-high revenues for both studios, Pixar and DreamWorks vied for supremacy at the Academy
Awards. In 2001, the Oscars introduced a new category, Best Animated Feature, signicantly upping the
stakes for the animation industry. That year, there were three nominees: Nickelodeon’s Jimmy Neutron:
Boy Genius, Pixar’s Monsters Inc., and DreamWorks’ Shrek. Shrek won the Oscar, but perhaps as big a
story was the fact that the Academy did not nominate Disney’s two in-house productions—Atlantis: The
Lost Empire and Recess: School’s Out.
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Thus, the inaugural award for Best Animated Feature did not
even recognize Disney Animation, the studio which literally invented animated feature lms. It was a
remarkable display of how much the industry had changed in the six short years since Toy Story.
With Pixar and DreamWorks leading the pack, there was a feeling in Burbank that Disney Animation’s
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magic was fading. Even as the Walt Disney Company reaped the benets of its partnership with Pixar,
Disney Animation struggled to compete in the brave new world of 3D computer animation. Disney
Animation’s rst foray into the style—Dinosaur in 2000—was moderately successful at the box ofce
but had high production costs.
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The studio’s next three lms went back to classic 2D styles, but The
Emperor’s New Groove and Lilo & Stitch had only modest earnings, while Treasure Planet lost millions
of dollars.
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Disney started cutting back on its animation departments, and for the rst time in its history,
Burbank faced competition to attract top industry talent.
At the same time, the relationship between Jobs and Eisner
had broken down. The ve-lm contract between Disney
and Pixar was near completion, and Jobs made clear to the
Disney board that he would not renew any deal if Eisner
remained CEO. For his part, Eisner was not eager to renew
the partnership.
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The CEO was convinced that Pixar’s
success would run out, and predicted that after four hits
in a row, the studio’s next lm, Finding Nemo, would be
a op.
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He could not have been more wrong. Finding
Nemo premiered in North America in May 2003, with
global releases in the fall, and grossed over $900 million
worldwide.
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It would become the biggest lm yet in the
Pixar-Disney partnership, pushing The Lion King off the top
spot as the most protable animated movie ever. Finding
Nemo also became the bestselling DVD ever across all
genres, a title it held until 2010.
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To cap it off, Finding
Nemo won the Academy Award for Best Animated Feature,
beating Disney Animation’s Brother Bear.
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Inuential individuals at Disney became increasingly
frustrated with Eisner as CEO. After overseeing a string of
hit animated lms from the late 1980s to the mid-1990s,
Eisner had shifted his focus toward diversifying Disney’s
portfolio through expensive acquisitions like the purchase of TV network ABC. But the changing priorities
resulted in an apparent neglect of Disney Animation—once the company’s agship department. Dissenters
within Disney wanted to repair the relationship with Pixar and rejuvenate Disney Animation, which by
then had been gutted by cuts.
Most vocal in the anti-Eisner camp were Walt Disney’s nephew Roy and his fellow board member Stanley
Gold. In November 2003, Roy resigned from the board with a scathing open letter, and Gold followed suit
the next day.
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They then launched the ‘Save Disney’ campaign to oust Eisner.
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Roy insisted that unless
Disney Animation thrived at the forefront of the animation industry, the Walt Disney Company as a whole
would lose both its creative soul and nancial success.
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Roy and Gold garnered support from investors
and other board members, and in March 2004, 43% of shareholders rejected Eisner’s re-election as CEO.
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Unable to lead the company amid the revolt, Eisner announced his resignation effective late 2005.
Saving Disney
The board appointed Bob Iger as Eisner’s replacement, and he became Disney’s CEO in
October 2005.
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In the month prior, Disney opened a new theme park in Asia called Hong Kong Disneyland. Iger was
in attendance and noticed the opening parade featured few Disney Animation characters from the past
decade.
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Instead, most of the new characters in the parade were from Disney-Pixar collaborations like
Toy Story, Monsters Inc., Finding Nemo and The Incredibles. After the trip, Iger addressed his rst board
meeting as CEO, where he revealed that the malaise in Burbank was not merely anecdotal—Disney
Animation’s past 12 lms had lost $400 million total.
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Likewise, prots at merchandise stores, hotels, and
theme parks all agged.
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He also shared market research showing that mothers with children under 12
years old—the company’s key demographic—regarded Pixar more highly than Disney.
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The message was
clear: Disney Animation was foundational to the company’s success but was badly underperforming.
Iger offered Disney’s board three ways to turn Disney Animation around. Option one was to stay the
course. Burbank’s current management could remain and try to implement strategies to improve Disney
Animation’s output, as they’d been trying to do without success since the mid-1990s. Option two would be
to nd and hire new talent, but most of the industry’s best and brightest were already happily employed at
Pixar and DreamWorks. A third option would be for the Walt Disney Company to buy Pixar outright, thus
eliminating a competitor while allowing talent they knew well, in the form of Lasseter and Catmull, to try
to revive Disney Animation. The board favored the third option, but there was a key problem: Pixar was
not for sale.
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Even so, the board gave Iger permission to explore an acquisition deal with Jobs.
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From the start, Iger
indicated to Jobs that Disney was desperate—Pixar was not looking to sign another distribution contract
but to discuss a full-scale purchase.
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His candor did not put Jobs off. Instead, it gave the Pixar boss
the upper hand to dictate terms. In particular, Jobs wanted Disney to guarantee that Pixar’s culture and
operations would not change, and he drew up a list of culturally signicant Pixar events, issues, and items
which Disney had to promise to preserve.
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The list included everything from maintaining operations
at their current headquarters to retaining their own Pixar email addresses.
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These stipulations, backed
by contract, assured Jobs that Pixar would retain its identity and not be swallowed up by the Disney
behemoth. There may have been another reason for Jobs to consider selling Pixar— feature movie
production is high risk business involving spending huge sums of money for years to develop lms that
may not eventually succeed. Pixar had yet to produce a op, so Jobs had a chance to sell the company at
maximum prot before it had any blemishes to its name.
In January 2006, executives announced that The Walt Disney Company had bought Pixar Animation
Studios for $7.4 billion.
72
The stock deal essentially brought in Pixar’s top talent to run Disney’s animated
creative output. Jobs became Disney’s largest shareholder and joined the company’s board, while Catmull
became the new head of Disney Animation.
73
Further, Lasseter became Disney Animation’s Chief Creative
Ofcer, returning as a kind of prodigal son to help lead the studio that once red him.
74
Lasseter also
retained his position as Pixar’s Chief Creative Ofcer. The new corporate structure meant that just a
decade after Toy Story’s release, the upstart leadership of Pixar was in charge of reinventing the venerable
but outdated Disney.
With the Pixar bigwigs at the helm, Disney Animation nally began a
slow turnaround. Iger tasked Catmull with inspiring Burbank’s employees
and transforming the studio from an executive-led to a lmmaker-led
enterprise, and Catmull got to work wielding Disney’s considerable
resources. One of Catmull and Lasseter’s rst moves was to make some
last-minute changes on Disney’s upcoming Meet the Robinsons lm.
Lasseter then became a producer on Disney Animation’s computer-
animated Bolt.
75
Bolt did not receive the same rave reviews or box ofce
gures as Pixar’s Up, which was released the same year, but it did better
than other recent Disney Animation lms. As Burbank’s rst fully 3D
computer-animated feature, Bolt also marked the beginning of a new era
for the historic studio.
76
Still, Catmull and Lasseter didn’t seek to simply
remake Disney Animation in Pixar’s 3D image. For instance, the duo
revived the studio’s classic, hand-drawn animation style for 2009’s The
Princess and the Frog, featuring Disney’s rst Black princess. The movie
performed solidly, though not spectacularly, and earned a Best Animated
Feature nomination at the Oscars.
77
Disney Animation continued to regain its strength in the early 2010s. Computer-animated lms Tangled
and Wreck-It Ralph grossed around half a billion dollars each worldwide, with the latter also garnering a
Best Animated Feature nomination.
78
79
But Catmull and Lasseter at last completed Burbank’s return to
glory with 2013’s Frozen. Setting a new record for the highest grossing animated lm of all time, Frozen
pulled in $1.28 billion in global box ofce revenue, and nally earned Disney Animation its rst Oscar
for Best Animated Feature.
80
81
Frozen was no uke. Disney Animation won the top animation Oscar
again the next year with Big Hero 6.
82
Two years after that, the studio produced two more computer-
animated hits: Zootopia, which won Best Animated Feature and grossed over a billion dollars at the box
ofce, and Moana which took in over 600 million dollars.
83
84
85
2019’s Frozen 2 beat its predecessor’s
record to become the highest-grossing animated lm of all time, a title it still holds. In 2022, Encanto won
Disney Animation’s fourth Best Animated Feature award, and for the rst time, Disney Animation beat a
nominated Pixar lm, Luca.
86
If Disney’s early history inspired Pixar’s initial rise, Pixar’s successes and
fresh ideas brought Disney Animation back to the top of the industry.
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Meanwhile, Pixar continued to have success under Disney.
The terms as negotiated by Jobs ensured that besides
Catmull and Lasseter, Pixar workers were not drafted over
to Disney, so Pixar staff saw almost no change in their
day-to-day work following the acquisition. Instead, Pixar
continued to be Pixar, pushing technological and creative
boundaries even while the upper management engineered
Disney’s revival. Pixar lms won Best Animated Feature
for four years in a row between 2008 and 2011 with movies
as diverse as Ratatouille—about a French rat who dreams
of being a gourmet chef—and WALL-E, which chronicles
the adventures of a trash-collecting robot and his cockroach
friend.
87
Pixar’s 2015 release Inside Out, about a child’s
emotions come to life, and 2017’s Coco, about a Mexican
boy who crosses into the afterlife to chase his musical
dreams, both won the Best Animated Feature Oscar and
grossed over $800 million each.
88
89
Disney’s purchase of Pixar also helped boost the two
brands. Despite being in its third decade, Pixar still more or
less relied on a single-revenue source—selling movies. If
its lms opped, so might the company. The Walt Disney
Company, of course, had already diversied well beyond
lmmaking in the mid-20
th
century, which helped the
corporation survive when its animated movies struggled to
succeed. Disney’s vast network of properties thus helped
Pixar expand into other sectors as well. Indeed, once
permanently in Disney’s orbit, Pixar’s movies provided
plenty of fodder for Disney theme park attractions and
created endless merchandising opportunities. Perhaps
the most emblematic example of the mutually benecial
partnership was when Scottish princess Merida—the main
character in Pixar’s 2012 lm Brave—became the eleventh
ofcial “Disney Princess,” joining a group of iconic female
protagonists with merchandise produced under a special
label.
90
Merida is the only Disney Princess not featured
in a Disney Animation lm. After Disney Animation’s
turnaround, Steve Jobs reected on the results of the Pixar
acquisition. “My goal has always been not only to build
great products, but to build great companies,” he said. “Walt
Disney did that. And the way we did the merger, we kept
Pixar as a great company and helped Disney remain one as
well.”
91
When Jobs died in 2011, most of his $6.7 billion
estate was not stock in Apple or Pixar—the two companies
he is best known for—but in Disney.
92
To Innity and Beyond
Still, the rosy picture of unmitigated success obscures troubles at both studios. In 2017, the Harvey
Weinstein sexual abuse scandal rocked Hollywood, with Disney property Miramax at the center of the
storm. Within months of Weinstein’s ouster from Miramax, another scandal hit Disney when it emerged
that Lasseter had also been sexually harassing employees for years, and in 2018, Lasseter left both Disney
Animation and Pixar.
93
94
Lasseter’s departure also followed various on-screen duds under his watch. In
2015, Disney Animation lost almost 100 million dollars on a failed attempt to make a lm based on the
“Jack on the Beanstalk” fairy-tale.
95
The same year, Pixar had its rst op with its sixteenth lm, The Good
Dinosaur, which lost millions of dollars.
96
97
Since then, Pixar has struggled to come up with successful
original lms, instead falling back on the sequel strategy—releasing cheaper-to-make instalments of tried-
and-true franchises from the studio’s hit-heavy early years. Thus, Pixar bounced back from The Good
Dinosaur by releasing Finding Nemo’s long-awaited follow up, Finding Dory, which grossed over $1
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billion worldwide, as well 2018’s The Incredibles 2 which earned $1.2 billion worldwide as Pixar’s biggest
grossing lm ever.
98
99
All told, more than half of Pixar’s feature lms to date are part of franchises, and
over a third are sequels or spin-offs.
That doesn’t mean Pixar only relies on old characters and premises. But the studio has rarely produced
an original hit on par with its earlier lms. Amid the onset of the coronavirus pandemic and the rise of
streaming platforms, Pixar’s lms have done poorly at the box ofce, with ve in a row struggling to
make a dent in ticket sales. Even Toy Story spin-off Lightyear lost a reported $106 million despite being
released well after most of the world had moved on from pandemic-related restrictions.
100
Still, Pixar has
managed to achieve critical success with lms like 2020’s Soul, which follows a piano teacher’s quest
for jazz stardom and won Best Animated Feature. Indeed, despite its mixed record in the late 2010s and
early 2020s, Pixar remains the undisputed animation champion at the Oscars, holding a record seventeen
nominations and eleven wins for Best Animated Feature as of 2023, almost triple the number of wins by
the next best studio—Disney Animation.
101
But taking the longer view, Pixar is so integral to computer-animated lmmaking that the history of the
medium simply cannot be told without it. If Disney Animation forever denes hand-drawn animation,
then Pixar is synonymous with captivating, lifelike, 3D-animated lms. Business savvy, technological
innovation, and collaborative teamwork can only partly explain Pixar’s incredible, even improbable, run
of success during its rst twenty years of feature lmmaking. Instead, there is another more intangible
ingredient at play. Just as Walt Disney brought a lucky rabbit to life on the silver screen, Pixar’s people
have dreamt whole worlds out of desk lamps and children’s toys. They have turned rats and robots into
lovable heroes, transformed screams into laughter, and found wonder everywhere from the depths of the
sea to the bluest of skies. In the end, Pixar’s success stems not merely from its technical wizardry, but from
its unbounded imagination.
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11
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63
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64
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