Sunday, April 26, 2015

A Brief History of the Pixar-Disney Relationship

Any fan of animation knows what Pixar is. The iconic lamp jumping on and squashing the "i" before each Pixar movie is instantly recognizable, and for many, it means that the movie to follow will be exceptionally good. Pixar is pretty much the gold standard in animation, with a canon of computer-animated classics including "Toy Story," "Monsters, Inc.," "Finding Nemo," "The Incredibles," "Ratatouille," "WALL-E," and "Up."

Any fan of animation also knows what Disney is. Mickey Mouse, Donald Duck, Goofy, and other beloved characters are just as recognizable as Luxo Jr. (Pixar's lamp), and Disney also has a large canon of classics, including "Snow White and the Seven Dwarfs," "Beauty and the Beast," "The Little Mermaid," "Aladdin," and "The Lion King." While Disney has traditionally done flat, 2D hand-drawn traditional animation, their more recent features such as "Wreck-It Ralph" and "Frozen" have featured computer animation, like Pixar.

Finally, any fan of movies knows that Pixar is not Disney, and vice-versa. The aforementioned Pixar movies, and the aforementioned Disney movies, are made by different people in different buildings in different places. In fact, Pixar was a completely separate, independent company that only partnered with Disney for distribution, until Disney acquired Pixar in 2006 for $7.4 billion. This takeover is why Pixar movies are now distributed as "Disney • Pixar," but to maintain quality, Disney has kept both studios separate: despite a change in ownership, Pixar's filmmakers continue to make movies in their own studio on the other side of the state of California. In this 3 part series, I will be examining the effects of this takeover on both parties, but first, I'll explore the history of their relationship leading up to the takeover, so everybody can be caught up to speed.

Ed Catmull is a founding father
and official co-founder of Pixar,
where he remains today as President.
He has won 5 Oscars for his
 technical contributions to
modern computer animation.

Pixar's Roots

Disney was established in the 1920's and became a major movie powerhouse throughout the twentieth century, but Pixar came into the picture sixty years later during the 1980's, so this is where we'll start. Pixar's roots come from Lucasfilm, the creators of "Star Wars." George Lucas was hiring computer scientists to advance the special effects of his studio's science fiction films, and in 1979 hired Ed Catmull and Alvy Ray Smith to head up Lucasfilm's Computer Division, which would later make them co-founders of Pixar when the division was spun off as an independent company.

Meanwhile, over at Disney, a young animator by the name of John Lasseter was investigating the use of computer animation. This was 1979, so all animation at the time was flat, two-dimensional, and hand-drawn: think "The Lion King" or "Aladdin," versus more modern-looking computer animated films like "Finding Nemo" and "WALL-E." Computer animation was rather primitive at the time, and this young animator was eager to be the first one to use it in film: it would allow the creation of really cool three dimensional visuals, allow the creation of depth, and be easier than animating laboriously by hand. Awesome, right? John Lasseter certainly thought so. Unfortunately for him though, he was fired. In his enthusiasm to make a computer animated film, he accidentally circumvented his direct superior by pitching his idea to the higher-ups, so his direct superior fired him. Although being fired from his dream job for pursuing a new, innovative way to animate was devastating for Lasseter at the time, had this not happened, Pixar wouldn't have gotten where it was today.
John Lasseter is one of the
founding fathers of Pixar,
and today is a major figure
 in the animation industry.

That's because what happened next was Ed Catmull hired him to join Lucasfilm's Computer Division. Here, Lucasfilm's experience in making special effects for sci-fi movies and John Lasseter's experience in computer animation led to the creation of the first computer animated short film, "The Adventures of André & Wally B." Directed by Alvy Ray Smith and animated by John Lasseter, this short film really kickstarted the conversation around utilizing computer animation.

Things got interesting in 1986. Lucasfilm decided to spin off its Computer Division as a separate company, and at that time, a money-laden Steve Jobs had just been forced out of Apple. It was renamed as "Pixar," Jobs invested in it and slowly bought it out, and Ed Catmull became the new President. Jobs decided to make Pixar's focus the Pixar Image Computer, an advanced computer which could render the 3D graphics that make up the base of today's modern computer animation. To boost sales, John Lasseter made several computer animated short films with the computer, including "Luxo Jr.," which received an Oscar nomination for Best Animated Short, and later "Tin Toy," which won the Oscar for Best Animated Short. Despite this, the computer didn't sell well, and Pixar, struggling financially, sold off its hardware division in 1990. Also during this time, Pixar co-founder Alvy Ray Smith quit after an argument with Steve Jobs over a whiteboard, an incident which remains controversial to this day.

Steve Jobs didn't officially found Pixar,
nor was he involved in filmmaking,
nor did he do any of the real work in
revolutionizing the animation industry,
but he is generally credited as a
founding father and as the business
guy that made Pixar possible.
Image credit: Matthew Yohe.

Toy Story

In 1991, Disney essentially saved Pixar from the verge of bankruptcy. They were impressed by John Lasseter's Oscar-winning short film "Tin Toy" and wanted him back; after Lasseter declined to go back, and after some tough negotiations, they made a deal: Pixar would use its computer animation technology to create three computer animated films for Disney, while Disney would retain the rights to any sequels. This sequel thing would later be a thorn in the side of their relationship. This was when the Pixar we know today really began to take shape: John Lasseter and his crew began work on "Toy Story," the world's first feature-length computer animated film, under the supervision of Disney. John Lasseter would direct, while a small crew worked on the screenplay together. Steve Jobs was not involved creatively as a filmmaker in "Toy Story" and Pixar's future productions, but mainly handled the business side of things, including the negotiations with Disney.
Jeffrey Katzenberg left
Disney in 1994; he later
became CEO of
DreamWorks Animation.

However, production on "Toy Story" was troubled by the similar bureaucratic red tape that got Lasseter fired a number of years ago: Jeffrey Katzenberg, who headed Disney's film division, clashed with Pixar's filmmakers over creative decisions, while Peter Schneider, who headed Disney's animation department, was upset that Katzenberg was using a third party rather than Disney's own animation department to make the film. This infighting resulted in endless meetings where Disney executives micromanaged Pixar's filmmakers, and when Pixar showed off the first half of the movie, it was a disaster. Lasseter was embarrassed at what was on the screen, and Schneider called for it to be cancelled immediately. Steve Jobs kept things going with his own personal money, but was as demoralized as everybody else and pursued options to sell off Pixar. For the filmmakers, including John Lasseter, this was an especially dark time in Pixar's history.

Pixar's writers retreated and reworked the script themselves, without involvement from Disney. This was what ended up in the film: three months after Disney shut down production, they took their new script to Katzenberg and Schneider, who approved it and put production back on. Steve Jobs had actively pursued options to sell off Pixar, but as production progressed, he sensed that Pixar was probably on the verge of revolutionizing the animation industry, and decided to give it a chance. 

Toy Story was No. 1 at the US box office for 3
weekends, became, domestically, the highest
grossing movie of the year, scored a perfect
100% on Rotten Tomatoes, won an
Oscar, and was nominated for three more.
Nobody had really high hopes for it — nobody knew how well it would perform — but when "Toy Story" was released in November, 1995, it was an enormous success. "Toy Story" was No. 1 at the U.S. box office for three weekends, raking in a whopping $192 million domestically and $362 worldwide; domestically, it was the highest grossing movie of the year. It got rave reviews and also scored a perfect 100% on Rotten Tomatoes, with its astounding visuals and funny yet heartfelt story receiving particular praise. In early 1996, it got an Oscar win for John Lasseter (Special Achievement, for creating the world's first feature-length animated film) and three Oscar nominations for Best Original Score, Best Original Song, and Best Original Screenplay (here it became the very first animated movie to be nominated for a writing Oscar). In the long-term, "Toy Story" really did revolutionize the animation industry, as Steve Jobs speculated: while before, hand-drawn animation was the dominant style, in under a decade computer animation quickly took over mainstream American cinema, and today computer animation from multiple studios is ubiquitous - traditional animation has fallen out of fashion and become extremely rare apart from foreign productions. The enormous success of the movie was absolutely insane compared to their expectations, and the money gave Pixar some much needed freedom to operate as an independent company. 

Pixar's new and current headquarters in Emeryville,
CA, is a 13 minute drive from San Francisco

Pixar's Rapid Rise

After the tremendous success of "Toy Story," Pixar had its IPO on the NASDAQ, which became the biggest IPO of 1995 and valued Pixar at $800 million. Pixar also got a fancy new headquarters, and started production on several new films. Jobs was still involved in Pixar's business side of things, but now mainly spent four days a week at Apple instead, as he rolled out the iPod, iPhone, and iPad, which left John Lasseter and Ed Catmull to run Pixar; they went with an open, filmmaker-driven atmosphere to prevent the sort of restrictive bureaucracy they encountered at Disney. Pixar's next feature, "A Bug's Life," was another big box office hit, and this was followed up by "Toy Story 2," "Monsters, Inc.," and "Finding Nemo." Pixar underwent a massive expansion, and quickly established itself as the leading animation studio of the day.
In 2004, "Finding Nemo" becomes the
first Pixar film to win the Academy
Award for Best Animated Feature,
which was only established in 2002.

After 2003's "Finding Nemo" became the highest grossing animated film of all time, Pixar and Disney attempted to negotiate a new distribution deal. Now that Pixar's movies were more successful than Disney's, Pixar wanted more of the profits and rights, while proposing that Disney would only receive a small distribution fee. This was in contrast to their previous agreements that favored Disney, where Disney kept the lion's share of profits as well as rights to the story and sequels. These talks broke down, and Steve Jobs ended up announcing that Pixar was going to actively pursue other distributors besides Disney for their future movies.

However, Disney still kept the rights to Pixar's earlier films, and after their partnership broke down, Disney decided to make their own sequels to Pixar's films: Disney set up a studio named Circle 7 Animation to make "Toy Story 3," "Monsters, Inc. 2," and "Finding Nemo 2" without any involvement from the original filmmakers at Pixar. Disney legally had the right to do this, but it was decried by many as a political maneuver to force Pixar to cooperate, since no artist wants to see their work continued and manipulated by someone else, regardless of who legally owns it. John Lasseter was devastated, saying, "It's like you have these dear children and you have to give them up to be adopted by convicted child molesters."

Michael Eisner, Disney CEO
from 1984 to 2005
However, soon Disney came to realize that Disney needed Pixar, not the other way around. While Pixar was experiencing skyrocketing successes, Disney's days of quality animation were coming to an end. All of Disney's releases in the late 1990's and early 2000's were generally critically panned. Think about it: how many great Disney movies can you recall from this time? For me, the only decent ones were "Mulan," "Tarzan," and "Lilo & Stitch," but even these three highlights of that era pale in comparison to Disney's earlier successes such as "Beauty and the Beast," "Aladdin," and "The Lion King," or what Pixar was churning out at that time, such as "Toy Story 2," "Monsters, Inc.," and "Finding Nemo." The reasons for Disney's general decline after 1994's "The Lion King" can be explored more deeply, but in short, was basically caused by the same bureaucracy that got Lasseter fired in his early days and that botched the initial production of "Toy Story." Disney's animation department was in shambles, and their other source of quality animation, Pixar, was actively pursuing another distributor. The real turning point for Disney was in 2005, when newly instated Disney CEO Bob Iger was at the opening of Hong Kong Disneyland and realized that all of the new characters in the parade were from Pixar movies, because Disney's own animation had fallen to the wayside. Iger realized that Disney needed Pixar more than Pixar needed Disney, and quickly changed course.

Bob Iger, Disney CEO from 2005 to Present

Disney Acquisition of Pixar

He made a radical proposal: that Disney would buy Pixar. Pixar's Ed Catmull and John Lasseter were both nervous at first, but Steve Jobs, who had met with Iger previously through his work at Apple, convinced them to give Iger a chance to make his case. After talking with him, Lasseter realized that Iger's intentions were sincere: Disney's animation was broken, they needed Pixar to help fix it, and they were willing to work cooperatively. Lasseter initially worried about what would happen to Pixar if it were to be acquired by Disney, but both parties were eventually able to work out a deal that everyone was happy with.

In early 2006, Disney bought Pixar for $7.4 billion in an all-stock deal. John Lasseter became the Chief Creative Officer of both Pixar and Walt Disney Feature Animation, while Ed Catmull became President of both studios. The two were originally encouraged to just replace Disney's broken animation department with Pixar, but Catmull and Lasseter decided to revive it instead. Meanwhile, Pixar would remain a separate entity within Disney: it would keep its own separate building, personnel, and policies, and the two animation studios would not be allowed to share ideas or resources, to maintain both studios' independence. Steve Jobs, meanwhile, became Disney's largest shareholder, and got a seat on its board.

During its brief existence, Circle 7 Animation
 never finished making any films.
While Pixar continued to operate normally, Catmull and Lasseter set about restructuring Disney. They quickly dismantled Circle 7 Animation, and cancelled Disney's sequels to Pixar's films. They didn't punish the animators of Circle 7, however, since they weren't involved in the original decision to make said sequels; instead, Circle 7's animators were absorbed back into Disney's main animation studio, which was renamed as "Walt Disney Animation Studios." Disney's animators, who had become disillusioned and demoralized from a decade of mismanagement like the kind that plagued "Toy Story" in its initial production, eagerly anticipated John Lasseter's plans to turn them around and turn their studio into one of Pixar's level. The acquisition pretty much ended the tension between the two, and today, both animation studios churn out movies on a regular basis without the sort of fighting that happened with Circle 7 or during the production of "Toy Story." In fact, all that's left is pretty much just friendly competition in making great movies and vying for John Lasseter's limited amount of time to split between both studios.

This brief historical overview of the partnership between Pixar and Disney (which is basically the history of Pixar) hopefully puts everybody on the same page, and sets the stage for my next two pieces: separate analyses of how Disney and Pixar have changed after Disney's historic acquisition of Pixar, and what we can expect from both studios in the years to come.


  1. Great review - interesting to see how the rigid bureaucracy at the old-wave Disney studio is what led to the birth of the open-model Pixar Studio and the superb movies they produced. Very cool!

  2. Detailed information. Would be interesting to read the other analyses on the acquisition too.