Photo by Max Cortez on Unsplash

Pixar is the first animated studio that made a feature-length computer-animated film, Toy Story. It was released in theatres in 1997 and became a massive success. Pixar made 26 feature-length films so far, and almost all the films are both commerically and critically acclaimed. It transformed the animated movie industry and made computer animation mainstream.

 Initial Years

Pixar was initially the Computer Graphics Division of LucasFilm, owned by George Lucas. They made the hardware capable of rendering computer graphics and various animated software and tools like RenderMan. Lucas used this Graphics Group primarily to assist in generating computer graphics that are needed for regular live-action films.

After the release of all Star Wars movies in the original trilogy, the division didn’t serve any purpose for him. So he decided to sell it off. But the team at Pixar has always had the goal of making a full-length animated film, but they didn’t have the capable technology to do it as the hardware is still not advanced and it also costs a lot to produce the movie. So they convinced Lucas to spin it off into a separate company making hardware, which they marketed to government, medical imaging, and scientific businesses in the field of geophysics, and meteorology. Their core product Pixar Image Computer was capable of generating high-resolution 3D images and graphics.

They looked for investors to invest in or buy them, but faced rejection from scores of VC firms and large corporations. Because Computer animation was in its early nascent stages back then and all animated films are made through hand drawings. Disney, the biggest animated movie company, also didn’t see any potential in computer animation as their hand-drawn animation films are already quite successful.

Steve Jobs takeover

Steve Jobs having been fired from Apple in 1985, bought the Pixar division from LucasFilm for $10M, with his own money in 1986. He initially intended it to make hardware for computer graphics and sell the technology to other companies that made animated graphics. But the hardware was quite expensive, as the Pixar Image Computer cost $135k, so there were very few takers. The next-generation devices cost around $30k. But they were only able to sell 300 computers altogether. So Pixar didn’t make any profits from its hardware products. Pixar also made short films and animated commercials but they were very few and also didn’t make much money for them.

The hardware technology was very advanced and the animations created by them were of very high quality. But neither the hardware nor the animated shorts and commercials were making any money. All those years Jobs kept on pumping money to keep the business afloat. He injected more than $50M into Pixar over the years.

The Turning Point

Steve Jobs finally took the gamble of pivoting completely to making animated shorts and movies commercially by Pixar. He sold the entire hardware division and proprietary imaging software to Vicom Systems to focus solely on animation. The Oscar win for Pixar’s short Tin Toy has also played a part in recognizing the potential of animation.

Deal with Disney

Steve Jobs negotiated a massive $26M deal with Disney to partner and produce 3 full-length animated feature films. Disney would distribute and market the film for Pixar and they would keep 100% of the merchandising revenue and a significant portion of ticket sales. Disney also had the rights to the movie sequels and characters. The deal was skewed in Disney’s favor but it gave Pixar an entry point as they are already running out of cash and close to bankruptcy.

Toy Story Success & IPO

The first feature-length animated film Toy Story was released in Nov 1995, and became a big commercial and critical success, raking in $373M, with a weekend collection of $40M. Pixar also went to IPO the very next week, was successful, and ended day 1 at $39 per share, riding on the success of the movie. Steve Jobs made a massive $600M through this public offering.

In 1997, the deal with Disney was renegotiated with 5 films and Pixar got a larger share of revenues this time. And all 5 of them were extremely successful and cemented Pixar’s legacy, while Disney struggled to make a decent animated film during those years. Disney eventually bought Pixar for $7.4B, which made Steve Jobs Disney’s largest individual shareholder with 7%, valued at $3.9B.

Pixar Braintrust – The Secret Recipe

Pixar has a creative development process where the entire team of animators, writers, storyboard artists, and directors examined each other’s work to give constructive notes on what can be added, removed, or improved. They moved away, from the regular executive-driven movie production that most Hollywood employed, towards filmmaker-driven movie production. They valued story and storytelling which in turn drove the animation.

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