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Disney, Pixar to go separate ways (1 Viewer)

Ernest Rister

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Just on a side note...

Pretty much everything in the theme parks comes from an existing Disney feature film, with the exception of Epcot and parts of Animal Kingdom. The studios drive the content that finds it's way into the theme parks. Same with the consumer products division -- all those plush toys and coloring books and backpacks and CDs are all branded to a movie or Disney TV show. So while the revenue from the media outlets like ESPN and ABC might make up 38% of the pie, when you consider how the theme parks and consumer products are inextricably linked to content from the studios, the percentage is more 38% media holding, 62% revenue based off exploitation of existing creative properties.

Now, how can PIXAR be hurt by this deal?

Competition. One of the clauses of the new Pixar deal was a "right of way" for Pixar films vs. Disney films. Let's say Disney had a "Santa Clause 3" ready for release in the Fall, but Pixar wanted to open the same weekend. Disney, under the proposed deal, would have to defer to Pixar.

Now, Disney is free to open their films right up against any new Pixar film, and after the original agreement ends, I'm sure we'll see Disney opening titles like Pirates of the Caribbean 2 or whatever right up against Pixar's new films to try and squash their marketshare. The other way Disney can hurt Pixar is by producing sequels to the Pixar films they own, diluting the Pixar brand name and creating confusion in the marketplace. All those great characters are Disney properties, Disney controls the sequel rights to Toy Story, A Bug's Life, Monsters Inc., and Finding Nemo. It is not outside the realm of possibility to see Disney's 3-D wing making a Toy Story 3 to open against a new Pixar title, or a Finding Nemo 2 to try and crush the opening weekend of a new Pixar film.

Lastly, as for Roy's relationships with the Pixar crew, he is mentioned warmy on the Finding Nemo DVD commentary. I wonder how much of Pixar's decision was a PR move to actively try force the removal of Eisner.
 

Robert Anthony

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You're the Disney scholar, Ernest: can you answer our questions as to the Winnie the Pooh and Roger Rabbit payoffs that people are talking about in the thread? Are there some kind of rights reversions or something that they have to pay off? I'm a little lost

Thanks.
 

Ernest Rister

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The Roger Rabbit case involves unpaid royalties for spin-off merchandise, like McDonald's "Roger Rabbit" Happy Meals. Wolf claims he's owed some of the MCDonalds money, Disney - as usual - protests.

The Winnie-the-Pooh copyright lawsuit is insanely complex, with rights being argued and disputed by 2nd and 3rd generation relatives of Pooh author Milne, and how they feel they are owed royalties on the "Pooh-explosion" of the 90's. It's been tossed out of court, then re-instated, then even the Milne family lawyers quit, not Disney is the one fighting for an appeal. The legal mudfight has been going on for a good half-decade, who knows how it's going to turn out.
 

Casey Trowbridg

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Thanks guys, and here's something I just came to find Jim Hill took an exerpt from a Disney press release from Yesterday where in it mentioned films that Disney had in production, one of those on the list...Toy Story 3. Only thing is nobody bothered to check with Tom Hanks or Tim Allen to find out how they'd feel about partisipating in this project without the Pixar team working on it. Disney can make the film if they wish, but Hanks and Allen don't have to do the voices, and should they choose not to, then I'd think Disney is screwed.

Sure, Disney can open big pictures on the same weekends as Pixar animated projects, but that doesn't necessarily mean that the Disney stuff will always do better. Plus, what if, and I'll admit that its a hypothetical, but what if the Pixar film were to do better that weekend than the Disney offering, the Mouse House would have egg on their face for years.

We shall soon see.
 

Galen_V

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10 bucks says that Toy Story 3 went into production at approximately 6:00 PM EST yesterday. I mean, what better sendoff could Disney possibly give to Pixar than to announce that they will wholly exploit their ability to create sequels to Pixar's movies (through Cars)? Bravo, Eisner and Stainton, bravo; revenge is sweet, isn't it? :rolleyes
 

Paul_Sjordal

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Somehow I doubt the next Brother Bear is going to be much competition to a Pixar film. Pirates of the Carribean was a fluke. Just look at the other movie based on a theme park ride that came out. Obviously they don't quite get what made Pirates so popular or Haunted House would not have tanked like it did.

I don't think Pixar has much to worry about when it comes to movie competition from Disney. Disney has been batting around 10% while Pixar has been batting around 100%.

Disney will ultimately suffer for this. They have cut themselves off from future sources of revenue that could have come from future Pixar projects (merchandizing, theme park rides, TV cartoons, etc.).

That's not to say Pixar might not also suffer, but not as a result of breaking with Disney. Their greatest threat is Jobs, who has a long history of snatching defeat from the jaws of victory. They're fine as long as they can stay away from his famous "reality distortion field."
 

Edwin Pereyra

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Let’s look at this purely from a business sense.

Why was Pixar trying to renegotiate the contract it had signed with Disney years ago for The Incredibles and Cars? That was a done deal. Granted, Disney probably came out ahead of that contract, it also had to provide financing for a little startup and unknown company (Pixar) back then by giving them 50% of the box office profits and other considerations. That contract is binding. Honor it and move on.

From Variety:


The drama continues...

~Edwin
 

Ernest Rister

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As I sad, PIXAR has much to lose from this deal because of competition, and that their move may be aimed at kicking Eisner to the curb, hoping that a new Disney CEO would offer PIXAR better terms in the process.

The culture of Pixar is made up of former Disney talent. In fact, John Lassiter first became involved with CGI at Disney in the early 80's. Brad Bird was an apprentice under the legendary Disney animator, Milt Kahl. A lot of Pixar's talent is made up of CalArts grads, the school set-up by Walt Disney to teach animation to succesive generations. Roy Disney himself was apparently a voice of input on the narrative of Finding Nemo, if you believe the Pixar DVD commentary.

What many are missing from this new story in the press is the raucous showdown Disney Animation Prexy David Stainton had with the Flordia Studio Animators. When asked about the similarities between Chicken Little and Pixar's films, Stainton told the Florida animators that Pixar was imitating Disney, not the other way around. How did Pixar respond to this? Probably not favorably. Asked how Disney could possibly distinguish itself from Pixar in the CGI age, Stainton responded that the Disney product would feature songs and music...and yet Monsters Inc is the first Disney film to win a Best Song Oscar since Pocahontas in 1994. Stainton was eventually booed off the stage, but not before he tried to defend the glutting of the animation market with the Disney foreign-animated "cheapquels" to their classic films by saying Disney's research indicated that audiences couldn't tell the difference between the direct-to-video cheapquels and the feature product.

Stainton is the WRONG man to head Disney Feature Animation. DFA has always been the standard bearer in character animation, it has NEVER been an organization that prided itslef on producing low-budget crap that the lowest common denominator cofused with quality animation. The admission of the PRESIDENT of DFA that their research told them people couldn't tell the difference between their DTV CRAP and Feature-Quality Product was shocking, but to use that as an excuse to close the QUALITY wing of DFA was even more so. The President of DFA is basically saying that their audience is a bunch of no-taste morons who'll swallow any piece of junk with the word "Disney" stamoed onto it. Why spend money to make a good, original animated film, when you can make a piece-of-crap sequel to a film made by Walt Disney, and make a ton of money whoring off Disney's achievement?

The fact that these people own the sequel rights to ALL of Pixar's films including The Incredibles and Cars is not encouraging in the present environment.

The DFA division is getting their marching orders from Eisner. Because Stainton is a "Yes, Sir!" stooge, he needs to go, and to Save Disney (SaveDisney.com), Eisner needs to go, because without quality animation products from the studios, there is no compelling creative content to drive the consumer products division, or create new rides and parades at the theme parks, nor drive box office revenue at the studios. Strip-mining old Disney films by creating foreign-animated "cheapquels" is the LAST resort of a regime devoted solely to profit, oblivious to the fact that their actions have chased loyal Disney customers away, or forced Disney fans to view the company with disdain.

Lastly, as to the rebuke from whoever about my comments regarding CGI vs. hand-drawn animation...my comments were not a response to Lord of the Rings, they only used the latest CGI-fest as an example.

A better example would be the Star Wars films. They are astonishing works of imagination, and yet they are heavily-criticized for containing "too much CGI", "de-humanizing" the trilogy in the process. This is a reaction to the OT, which featured hand-made f/x and so were very personal, versus an "impersonal" feeling for the Prequel Trilogy. This bears out my point. People view the visual f/x in the OT with a great deal of respect. Certain people view the f/x in the Prequel films with disdain, because they have little respect for the prequel films regardless of the bountiful visual f/x seen in both Menace and Clones. People watch the walkers in Empire with rapt wonder. People watch the speeder/skyway chase in Clones with a detatched shrug. "Meh..computers." they say.

The same thing exists within the world of animation. CGI is simply not as admired as much as hand-drawn animation. CGI has freed up animators to tell stories in a way undreamed of traditional animation, and yet, people have more respect for the visuals in hand-drawn films than they do for CGI films...call it the "Phantom Menace" syndrome. When something is obviously computer-driven within the context of art a film franchise where people are used to seeing hand-made f/x, there is a subconscious rebellion against the computer f/x in favor of the human-created f/x.

Remember the "wow" factor after Jurassic Park in 1993? Since then, the level of respect for such f/x has dropped like a rock. In fact, the phrase "fake-looking CGI" has become a staple in younger film-fans' discussions of current event films. That's what I'm referring to...certain people simply do not have the same respect for visual f/x in movies that they used to, because modern visual f/x are so computer driven. The sneering at the f/x of the SW prequels or many other f/x films is the proof.

Same thing happens with animation. Final Fantasy, and Dinosaur were astonishing in their use of CGI. Audiences turned both into high-profile bombs. Why? It's the story that moves the masses, not the visuals. Why do Pxar's films always become audience favorits? Not the visuals -- the writing. The story. The direction. They are great *movies*, not great *CGI movies*. If Finding Nemo had been hand-drawn, it still would have been a hit. The writing and acting were excellent. No VFX on earth could have saved Dinosaur. Why? Becuase Michael Eisner personally mandated that the Dinosars speak. The moment that happened, the movie failed, because it is completely incongruous to see photo-real CGI dinosuars talking. Look at Bambi...the animals are "ideas" of the real thing, not exact reproductions of the real thing. Because we know they are unreal, we accept their plight and even personalize it because we are creating our own associations. Same thing with Finding Nemo -- the fish are not "the real thing", they are caricatures with which humans can identify with. They are "ideas", not "replicas". In Dinosaur and Final Fantasy, the attempt to create ultra-realism backfires against the appeal of associative animation. Because the animation team tries to be as real as possible, while the writers and directors undercut this attempt with hokey dialogue and lame storytelling, the result is a rejection by the audience. They see everything as an artifice, not a world they can believe in, no matter how good the f/x.

Because hand-drawn animation is inherently *unreal*, it is not accused of this sin very often. The creative team knows the writing and the directing and the acting have to be good, because they can't rely on visual grandstanding to save the day. The visuals have to be as good as the story, as opposed to the story as good as the visuals. Story comes first, always. The more eye-candy you have, the better your story needs to be to justify your visual tricks. That was the Walt philosophy - he knew people responded to identifiable emotion in storytelling more than the the thousands of dollars spent on the animation -- and that's what Pixar is demonstrating now.

It's NOT the CGI that makes Pixar special. It's the WRITING and the STORYTELLING. Just like Dumbo, Snow White, Bambi, Pinocchio, and Cinderella.

So I was not bagging on Return of the King -- just using it's f/x as an example of an effect that audience don't even notice or appreciate, because they've become so blase about CGI in film. But look at the acclaim for Triplets of Belleville -- it is *fiercely* hand-drawn, and critics are praising it for its immediacy and humanity. The most acclaim I've read about Return of the King isn't the f/x, or the CGI elephants -- it's the performance of Sean Astin.

That's my point in a nutshell. By discarding hand-drawn animation, Eisner has made a collosal blunder. Not only has he offended Disney fans, he has proved he doesn't understand animation to begin with.
 

Edwin Pereyra

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Like I said, who in their right mind would give up all those profits and that decision was reflected on the Company's stock price on Friday with very little loss. Wall Street liked it.

~Edwin
 

nolesrule

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Or Wall Street likes the fact that Disney retains sequel rights. Maybe they are expecting Toy Story 3, Bug's Life 2, Monster's Inc. 2, Finding Nemo 2, etc. to turn out like Toy Story 2 rather than Cinderella 2 and Peter Pan 2.

And as to a business standpoint, it's not unusual for renegotiations to occur on existing contracts when working out extensions and new deals. Many times, the new deal is designed to be effective immediately and replaces the old deal.



Well, Pixar has the power now, as the proven commodity. The business with greater power is going to wield it in negotiating any deal.
 

Edwin Pereyra

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The more I look into this, the more I’m siding with the Mouse than the Lampshade.

Now, who said that Pixar was giving up all its rights from its first 5 films? Under the terms of the original agreement, Pixar would share equally from all profits from all sequels that Disney decides to get into production. Now that Pixar might partner with another studio for all future projects after 2006, it wouldn’t be likely that they would develop any of these sequels with Disney. Pixar would be giving up lots of revenues from the sequels. This is their fault.

Still, Pixar would be entitled to a very modest licensing fee from all sequel development.

Come to think of it, maybe Steve Jobs was just trying to go after Eisner’s job. ;)

Yes, Pixar is now a proven commodity and a brand name and they should now have 100% control of their product. But with this failed negotiation, Pixar now will shop for another studio without the renegotiated contract – an opportunity that was never afforded to Disney because of its insistence that its original contract be included with this new one.

No thanks to Disney, a company that put their faith in a small fledgling startup company years ago by giving it all sorts of consideration and financing in the very beginning. Disney was always putting up 50% of its own money even before Pixar delivers its final product.

When you sign a contract, be a gentleman and honor it. That’s how you gain respect.

~Edwin
 

Jason Seaver

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Like Disney did, claiming Toy Story 2 didn't count? :)

Not that we should be looking at this as "Disney bad, Pixar good" or vice versa. What Pixar wants is a deal like George Lucas has with Fox for the Star Wars prequels, and they've got a chance of getting one for the same reason - their movies have so far been licenses to print money. As to their desire to renegotiate their contract, it's not uncommon; you see it all the time in sports and other businesses, where terms of a new contract supercede the current one.

Also, the railing at how unfair it is that Pixar doesn't own their own works (although, I think they do own 50% of everything from A Bug's Life forward) overlooks that this is standard operating procedure. Martin Scorcese doesn't own his own work, Kevin Smith doesn't own his own work... Not many people aside from George Lucas do. That Pixar may soon be in the position of controlling their work is extraordinary.

As for where they eventually end up, I figure a broad deal with Viacom might be the way to go. They're not quite so perfect a fit as Disney, but Nickelodeon is arguably an even more popular name among kids than Disney is.
 

Robert Anthony

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"When you sign a contract, be a gentleman and honor it. That’s how you gain respect."

I've been mildly paying attention to not only film entertainment, but television, and sports, and on the business end of it, the idea of honoring the contract seems to have flown the coop roughly around the Curt Flood era in baseball.

I can't even remember the last time, in ANY of those three industries, where a contract started when the star was unknown, and became a HUGE, POPULAR talent mid-contract, was NOT re-structured/re-negotiated/fought over. Difference being I can't think of an instance where the re-negotiation didn't actually go through. It's a very common occurrence. You pay a rookie salary, that rookie goes out, takes you to playoffs and wins the Cy Young two seasons afterward--there's GOING to be a re-structuring/re-negotiation. It's just common sense. I don't think respect even really enters into that--respect comes later.

Pixar is that rookie of the year for Disney.

When you're playing with tens or hundreds of millions, or even billions--honor is the first thing to go.

I'm not saying I agree with that or like it, but I don't think its' very wise to be expecting it out of giant corporations, media conglomerates, sports teams, networks and the swarm of agents acting as intermediaries.
 

Chris

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I don't know, I tend to side with the lampshade from a business perspective.

Pixar has a lower debt then Disney, and considerably smaller requirements for the market. They don't have as high of a cost of doing business as Disney because they lack the subsidiaries.
Pixar now has the ability to create not only feature length films on it's own, but to handle their own to-television rights; realize, Disney had those locked up and they made for great product on ABC :)
Disney has already made money on Toy Story without Pixar (see: Buzz Lightyear series animated)

Pixar offered Disney a significant name within that market, and Pixar may have also felt a little bit cloistered by Disney. Realize, Disney has been trying to get into the middle-market with films (Treasure Planet being PG, etc.) but hasn't gained much ground. Pixar would have a much more free hand without Disney to create more teen-friendly flicks, etc.

Realize, we're not just talking Pixar ala the movies, but also the computer games (see several popular Nintendo, PS2, XBox, PC) etc. which Pixar would now have a right to negotiate on new projects directly with gaming companies, making them lucrative to Warner or Sony.

I think both sides may benefit, but I think Disney is losing a lot.

This isn't about "honor your contract" Pixar is going to honor their contract, they aren't pulling Cars and The Incredibles from Disney, they will stay put. What they are negotiating is their future contract. While we think of "Cars" as a long way off, Pixar has to be in opening work on the film -that will follow that one- which means they have at least one film in the cooker that isn't signed to distribution yet because it's outside of Disney contracts. They can't just wait a year or so and keep making the film, animated projects take considerable time, and they'd prefer to get the negotiations done -before- significant production is done, because if they wait, it puts them very much at the mercy of thier current distributor.

I have no doubt that Jobs wouldn't mind taking a shot at Eisner's seat. I also don't doubt he'd do a better job.
 

Ernest Rister

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"Eisner had no other choice in my opinion," said Schwab SoundView analyst Jordan Rohan who estimates Disney would have forgone up to $1 billion in pretax profit over four years."

This is assuming Brad Bird's Incredibles and Pixar's Cars gross on the order of Finding Nemo and Monsters Inc., and if there is any true axiom in show business, it's that no one can ever predict how a movie will fare at the box office.

"If my financial projections are correct... then Eisner will be vindicated, the company will be back and Roy Disney will find it hard to effect any change," he said."

Eisner still hasn't been able to turn ABC around, still has no workable gameplan to improve the revenues from the theme parks, and his response to the struggling animation unit was to produce foreign-animated "cheapquels" to Walt Disney's films while dismantling the hand-drawn tradition, firing the animators who couldn't make the transition to CGI. This is the man who refused to let Roy Disney attend screenings of their animated films, because Roy's loyalties were to the Disney brand name, not the corporate bottom line.

Lastly, the analysts ignore the seething hatred of Eisner from Disney fans, and Roy's campaign to convince stockholders to dump him on the March 3rd referendum has taken on the fervor of a religious crusade. Roy has been hammering at Eisner's inability to retain talent, and losing Pixar merely re-inforces that image. The fact that Pixar walked away from the table four weeks before the vote convinces me that Steve Jobs and Pixar are trying to get Eisner canned, because a new CEO might give Pixar better terms, and won't arrogantly demand that "Toy Story 2" doesn't count towards the Disney/Pixar deal.
 

nolesrule

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Not only is renegotiation of exisitng contracts commonplace, but most contracts have a standard clause stating that the contract can be superceded by a future agreement or an amendment agreed to by all parties for the current agreement.

It is not dishonorable to attempt a renegotiation, as long as you don't break the current contract to gain leverage. Since Pixar is still going to deliver the next two films to Disney regardless of a renegotiation or a new contract, they are not breaking the existing contract.
 

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