Pixar

History and Ownership

Pixar Animation Studios is an American Computer animation film studio based in Emeryville, California. Pixar is best known for its CGI animated featured films. 

Pixar began in 1979 as the graphic group, part of the computer division of Lucasfilm. In 1982 the team began to work on film sequences with Industrial Light & Magic on special effects. In 1986 the group was spun out as a corporation with investment from Steve Jobs after he had left Apple Computers. Steve Jobs paid George Lucas $5 million for technology rights and put them and $5 million cash as capital into the company.


Pixar were a high end computer hardware company and their main product was the Pixar Image Computer. This was a system that was sold mainly to the government agencies and the medical community. One of the buyers of Pixar Image Computers was Walt Disney Studios, which they used as their device as part of their secretive CAPS project. They used the machine and custom software that was written by Pixar to split the ink and paint part of the 2D animation process to a more automated and 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 animations, such as Luxo Jr, to show off the device's capabilities, premiered his creations at SIGGRAPH.

As poor sales of Pixar's computers threatened to put the company out of business, Steve Jobs invested more money and took more ownership away from the management and employees of Pixar until after several years he basically owned the company for a total investment of $50 million. Lasseter's animation department began producing computer animated commercials for outside companies. In April 1990 Pixar sold its hardware division to Vicom Systems and transferred 18 of Pixar's 100 employees. 

Pixar continued its successful partnership with Walt Disney Feature Animation. In 1991, after a hard start of the year, 30 employees in the company's computer department had to fired including the company's president Chuck Kolstadwhich. This reduced the total number of employees to just 42. Pixar made a $26 million deal with Disney to produce three computer animated films. The first film was Toy Story. 

Despite the total income of these products, the company was still losing money. Steve Jobs the chairman of the board and now the full owner of the company often thought about selling it as late as 1994. One of the companies he contemplated selling it to was Microsoft. Only after learning from New York critics that Toy Story was probably going to be a success and confirming that Disney would put it out for the 1995 Christmas season Steve Jobs decided to give Pixar another chance. He also then began for the first time to take an active direct leadership role in the company, making himself its CEO. The film went on to gross more than $361 million. 




Pixar built a new studio in Emeryville which opened in November 2000.



Pixar and Disney had disagreements after the production of Toy Story 2. Pixar demanded that the film be counted toward the three-picture agreement, but Disney refused. 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 rights and also collected a distribution fee. The lack of rights was perhaps the most onerous aspect to Pixar and set the stage for a contentious relationship.

The two companies reached a new agreement in 2004. The new deal would be only for distribution, as Pixar wanted to control the production and own the film properties themselves. The company also wanted to finance their films on their own and collect all of the profits, paying Disney only the 10 to 15 percent distribution fee. 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.

Disagreements between Steve Jobs and then Disney Chairman and CEO Michael Eisner made the plans more difficult than they otherwise might have been. They broke down completely in the middle of 2004, with Steve Jobs declaring that Pixar was actively seeking partners other than Disney. Despite this announcement, Pixar did not enter negotiations with other companies.