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Pixar

History

Early history

Pixar's studio lot in Emeryville.

Pixar was founded as the Graphics Group, one third of the Computer Division of Lucasfilm that was launched in 1979 with the hiring of Dr. Ed Catmull from the New York Institute of Technology (NYIT), where he was in charge of the Computer Graphics Lab (CGL). At NYIT, the researchers pioneered many of the CG techniques that are now taken for granted and worked on an experimental film called The Works. When the group moved to Lucasfilm, the team worked on creating the precursor to RenderMan, called Motion Doctor, which allowed traditional cel animators to use computer animation with minimal training.
The team began working on film sequences produced by Lucasfilm or worked collectively with Industrial Light and Magic on special effects. After years of research, and key milestones in films such as the Genesis Effect in Star Trek II: The Wrath of Khan and the Stained Glass Knight in Young Sherlock Holmes, the group, who counted about 45 individuals back then, was purchased in 1986 by Steve Jobs shortly after he left Apple Computer. Jobs paid $5 million to George Lucas and put $5 million as capital into the company. A factor contributing to Lucas' sale was an increase in cash flow difficulties following his 1983 divorce, which coincided with the sudden dropoff in revenues from Star Wars licenses following the release of Return of the Jedi and the disastrous box-office performance of Howard the Duck. The newly independent company was headed by Dr. Edwin Catmull, President, and Dr. Alvy Ray Smith, Executive Vice President and Director. Jobs served as Chairman and Chief Executive Officer of Pixar.

Initially, Pixar was a high-end computer hardware company whose core product was the Pixar Image Computer, a system primarily sold to government agencies and the medical community. One of the leading buyers of Pixar Image Computers was Disney Studios, which was using the device as part of their secretive CAPS project, using the machine and custom software to migrate the laborious Ink and Paint part of the 2-D animation process to a more automated and thus efficient method. The Image Computer never sold well. In a bid to drive sales of the system, Pixar employee John Lasseter—who had long been creating short demonstration animations, such as Luxo Jr., to show off the device's capabilities—premiered his creations at SIGGRAPH, the computer graphics industry's largest convention, to great fanfare.
As poor sales of Pixar's computers threatened to put the company out of business, Lasseter's animation department began producing computer-animated commercials for outside companies. Early successes included campaigns for Tropicana, Listerine, and LifeSavers. During this period, Pixar continued its relationship with Walt Disney Feature Animation, a studio whose corporate parent would ultimately become its most important partner. In 1991, after substantial layoffs in the company's computer department, Pixar made a $26 million deal with Disney to produce three computer-animated feature films, the first of which was Toy Story. Despite this, the company was costing Jobs so much money that he considered selling it. Only after confirming that Disney would distribute Toy Story for the 1995 holiday season did he decide to give it another chance. The film went on to gross more than $350 million worldwide.

Disney

Pixar and Disney had disagreements after the production of Toy Story 2. Originally intended as a straight-to-video release (and thus not part of Pixar's three-picture deal), the film was eventually upgraded to a theatrical release during production. Pixar demanded that the film then be counted toward the three-picture agreement, but Disney refused. Pixar's first five feature films have collectively grossed more than $2.5 billion, equivalent to the highest per-film average gross in the industry. Though profitable for both, Pixar later complained that the arrangement was not equitable. Pixar was responsible for creation and production, while Disney handled marketing and distribution. Profits and production costs were split 50-50, but Disney exclusively owned all story and sequel rights and also collected a distribution fee. The lack of story and sequel rights was perhaps the most onerous aspect to Pixar and set the stage for a contentious relationship.

The two companies attempted to reach a new agreement in early 2004. The new deal would be only for distribution, as Pixar intended to control production and own the resulting film properties themselves. The company also wanted to finance their films on their own and collect 100 percent of the profits, paying Disney only the 10 to 15 percent distribution fee. More importantly, as part of any distribution agreement with Disney, Pixar demanded control over films already in production under their old agreement, including The Incredibles and Cars. Disney considered these conditions unacceptable, but Pixar would not concede.
Disagreements between Steve Jobs and then Disney Chairman and CEO Michael Eisner made the negotiations more difficult than they otherwise might have been. They broke down completely in mid-2004, with Jobs declaring that Pixar was actively seeking partners other than Disney. Pixar did not enter negotiations with other distributors. After a lengthy hiatus, negotiations between the two companies resumed following the departure of Eisner from Disney in September 2005. In preparation for potential fallout between Pixar and Disney, Jobs announced in late 2004 that Pixar would no longer release movies at the Disney-dictated November time frame, but during the more lucrative early summer months. This would also allow Pixar to release DVDs for their major releases during the Christmas shopping season. An added benefit of delaying Cars was to extend the time frame remaining on the Pixar-Disney contract to see how things would play out between the two companies.

Pending the Disney acquisition of Pixar, the two companies created a distribution deal for the intended 2007 release of Ratatouille, in case the acquisition fell through, to ensure that this one film would still be released through Disney's distribution channels. (In contrast to the earlier Disney/Pixar deal Ratatouille was to remain a Pixar property and Disney would have received only a distribution fee.) The completion of Disney's Pixar acquisition, however, nullified this distribution arrangement.

Acquisition by Disney

Disney announced on January 24, 2006 that it had agreed to buy Pixar for approximately $7.4 billion in an all-stock deal. Following Pixar shareholder approval, the acquisition was completed May 5, 2006. The transaction catapulted Steve Jobs, who was the majority shareholder of Pixar with 50.1%, to Disney's largest individual shareholder with 7% and a new seat on its board of directors. Jobs' new Disney holdings exceed holdings belonging to ex-CEO Michael Eisner, the previous top shareholder, who still held 1.7%; and Disney Director Emeritus Roy E. Disney, who held almost 1% of the corporation's shares.

As part of the deal, Pixar co-founder John Lasseter, by then Executive Vice President, became Chief Creative Officer (reporting to President and CEO Robert Iger and consulting with Disney Director Roy Disney) of both Pixar and the Walt Disney Animation Studios, as well as the Principal Creative Adviser at Walt Disney Imagineering, which designs and builds the company's theme parks. Catmull retained his position as President of Pixar, while also becoming President of Walt Disney Animation Studios, reporting to Bob Iger and Dick Cook, chairman of Walt Disney Studio Entertainment. Steve Jobs' position as Pixar's Chairman and Chief Executive Officer was also removed, and instead he took a place on the Disney board of directors.
Lasseter and Catmull's oversight of both the Disney and Pixar studios did not mean that the two studios were merging, however. In fact, additional conditions were laid out as part of the deal to ensure that Pixar remained a separate entity, a concern that analysts had had about the Disney deal. Some of those conditions were that Pixar HR policies would remain intact, including the lack of employment contracts. Also, the Pixar name was guaranteed to continue, and the studio would remain in its current Emeryville, California location with the "Pixar" sign. Finally, branding of films made post-merger would be "Disney•Pixar" (beginning with Cars).
Jim Morris, producer of WALL-E, has been named general manager of Pixar. In this new position, Morris is in charge of the day-to-day running of the studio facilities and products.

Feature films and shorts

Traditions

While some of Pixar's first animators were former cel animators, including John Lasseter, they also came from stop motion animation or computer animation or had recently graduated from college. A large number of animators that make up the animation department at Pixar were hired around the time Pixar released A Bug's Life and Toy Story 2. Although Toy Story was a successful film, it was Pixar's only feature film at the time. The majority of the animation industry was, and is still located in Los Angeles, California, while Pixar is located north in the San Francisco Bay Area. Also, traditional 2-D animation was still the dominant medium for feature animated films. Not many Los Angeles-based animators were willing to move their families so far north, give up traditional animation, and try computer animation. Partly because of this, animators hired at Pixar around this time either came directly from college, or had worked outside of feature animation. For those who had traditional animation skills, the Pixar animation software (Marionette) is designed so that traditional animators would require a minimum of training before becoming productive.
According to an interview with John Lasseter with PBS talk show host Tavis Smiley, Pixar films follow the same theme of self improvement. With the help of friends or family, a character ventures out into the real world and learns to appreciate his friends and family. At the core, according to John Lasseter, "it's gotta be about the growth of the main character, and how he changes."

Sequels

To date, Toy Story is the only Pixar film to have sequels. Toy Story 2 was commissioned by Disney as a direct-to-video, 60-minute film. When Disney executives saw how impressive the work-in-progress imagery for the sequel was, they decided it should be reworked as a theatrical release. The resulting change in status of Toy Story 2 was one of the major causes of the disagreement between the two companies that nearly led to a split. Toy Story 3 will be the second theatrical sequel when it is released on June 18, 2010. Cars 2, the third theatrical sequel, is scheduled for release summer 2011.

Pixar is not against sequels, but believe that they should only be made if they can come up with a story as good as the original. Following the release of Toy Story 2, Pixar and Disney had a gentlemen's agreement that Disney would not make any sequels without Pixar's involvement, despite their right to do so. In 2004, after Pixar announced their unsuccessful attempt to make a new deal, Disney announced that they would go ahead with sequels to Pixar's films with or without Pixar, although they stated they would prefer Pixar to agree to work on them. Toy Story 3 was put into pre-production at the new CGI division of Walt Disney Feature Animation, Circle 7 Animation.

When Lasseter was placed in charge of all Disney and Pixar animation following the merger, he stated that all sequels were immediately to be put on hold, with Disney going so far as to actually state that Toy Story 3 had been cancelled. However, in May 2006, it was announced that Toy Story 3 was back in pre-production, now under Pixar's control.

Lasseter further fueled speculation on future sequels when he stated, "If we have a great story, we'll do a sequel". Cars 2, Pixar's first sequel not based on Toy Story, was officially announced on April 8, 2008.

Expansion to television

Toy Story was the first Pixar film to be extended into television, with the Buzz Lightyear of Star Command film and TV series. Cars was expanded to television via Cars Toons, a series of shorts (three to five minutes) running between regular Disney Channel shows and featuring Mater (the tow truck voiced by comedian Larry the Cable Guy).

Animation and live-action

All Pixar films to date have been dominantly computer-animated features (WALL-E has so far been the only Pixar film to not be completely animated, featuring a number of live-action elements). A live action film is being planned by Brad Bird, 1906, about the 1906 San Francisco earthquake, which is currently in development. Bird has stated that he was "interested in moving into the live action realm with some projects" while "staying at Pixar [because] it's a very comfortable environment for me to work in."