Originally posted by DOUG
That's the truth....Disney needs Pixar a lot more than Pixar needs Disney.
It has been stated on many of the animaton web-sites that Michael Eisner and Steve Jobs (co-founder of Pixar) are not all that fond of one another. If Disney wants to keep Pixar they are going to have to completely restructure their current deal to include whatever Pixar wants (percentage wise). The only reason I can see that Pixar would want Disney is for it's distribution (of which they want a much better percentage here) and merchandising.
My dad thinks that Pixar is nuts for considering moving on without Disney....unfortunately.....all these ideas in the Pixar movies....are Pixars ideas.
In my opinion, Disney would be foolish to let Pixar get away...give them the percentages that they want and keep them on board. They split the profits of the films 50/50 so Pixar has more than enough cash to go it alone.
Pixar is after a distribution deal similar to what George Lucas has with Fox for Star Wars. The only problem is that if Fox had it to do over, they probably would not have inked the deal that they did since their profits are squat compared to what the movies make…
A new deal with anyone but Disney will result in a larger piece of a smaller pie. Compared to the deal currently in place that would probably mean higher profits than they are making now but NOBODY can offer the tie-ins, promotions and marketing for Pixar’s target audiences the way that Disney can.
Steve Jobs can talk all he wants about other studios being after him but I doubt that anyone in Hollywood wants to be stuck with a distributor percentage of around 10%. A lot of them wouldn’t consider it worth the hassle. To put this in perspective, consider that Disney gets 2% off the take of all of the Lord of the Rings movies and this was a project they passed on.
Sure, if a deal is made (and I’m reasonably confident that it will be) Disney will almost beyond a doubt be getting a significantly smaller share but it isn’t going to be what Pixar has to this point been asking for. Disney’s position in the industry aside, there are a few things going for them on their side of the table:
1. They don’t have to lowball the other studios to get Pixar, they just have to demonstrate a compromise that is low enough to make it worth while for Pixar to stay with them. A bigger piece of that bigger pie could be worth more than a huge piece of a smaller pie with somebody else. Like I said, nobody in Hollywood is going to be that crazy about the terms that Pixar is publicly wanting. I am of the opinion that they are low-balling the way people do in negotiations to allow for apparent concessions – you know, ask for the stars and the moon but take the moon when it is offered after you’ve negotiated up from just the vacuum of space. I don’t think they actually expect to get the terms they are requesting from anyone.
2. Pixar is still under contract with Disney for two more movies. If Disney were willing to swing these two movies into the new contract (like they already did once when A Bugs Life was released) Pixar would stand to make a lot more money in the near future which will allow accelerated growth and a much sooner realization in boosted profits than they would have working with another studio while still under the thumb of Disney. This is an incentive that nobody but Disney can offer them.
3. Disney still owns the rights to all the characters from the movies. These would be the Pixar ‘classics’. Sequels to existing movies are a goldmine but will never happen for Pixar if they walk away from Disney. One of the things they are fighting for is ownership of the content of what they have already created for Disney. I don’t see this as being something that Disney is going to budge on and if Pixar walks away, Disney can actually make Toy Story 3 on their own. If Pixar and Disney can come to good terms on a new contract Pixar can more easily make sequels to existing movies which is easier because the character development and research for a lot of what goes into the movies has already been done and only has to be built upon.
4. The Disney brand regardless of how less than stellar their current animation projects have done is still incredibly valuable. It is still more recognizable than Pixar to most consumers and is still the most trusted name in Family entertainment in America and much of the world. This sort of goes back to the pie issue…
5. Pixar has yet to make an underperforming movie but it is bound to happen. At their current size, if they were to release a dud on their own today, it would be enough to sink the company. I doubt that their first underperforming movie would actually be a dud but let’s face it, CG animation is hot right now. Traditional animation was hot once too but unlike the advantage that Disney had for decades, the lead that Pixar has both in terms of technology and in story isn’t all that large. Pixar is at the top right now but there is so much going on with CG between special effects for live action movies, attempts at simulating live action movies (Final Fantasy) and competition from other studios (as of this moment, Shrek has still grossed more than any Pixar release including Monsters Inc which was released after Shrek - though Nemo will probably beat it out in a week or two) that the future for Pixar is in no way certain. Disney themselves have been working on in-house CG animation for feature films and have contracted with other companies to make films for Disney. This is the kind of stuff that Pixar can’t ignore. In the same way that they killed Prince of Egypt with A Bugs Life a few years ago, Disney could kill one of Pixar’s movies released by a competing studio by doing a media blitz promotion of something else coming out the same week.
My point is that while Pixar clearly has the upper hand, Disney does have a few cards of their own. There is a reason that Jobs says that in an ideal situation Pixar would prefer to remain with Disney. It isn’t just interview talk and it has nothing to do with a good or bad relationship that he may have with Eisner – it is because in a lot of ways, a better deal with Disney would be more beneficial than the best deal with someone else.
BTW, anybody who has ever seen a keynote speech by Jobs for Apple knows that the only thing greater than his flare for the dramatic is his public ego. Every year he talks about Apple products like they are the answer to world peace. The truth is that Apple still has an almost insignificant share of the desktop market and the i-pod (no matter how great a product it is) has yet to end hunger in third world countries. Likewise, their new webcam while quality and feature rich is not exactly the life altering piece of technology that he makes it out to be – it is a webcam people! What he says in the media and what happens in the real world behind closed doors are two VERY different things.
