Paying Pixar

[speck76]

Paying Pixar

By Rick Aristotle Munarriz (TMF Edible)
May 10, 2005

Last week, Disneyland kicked off its golden-anniversary celebration by waxing nostalgic as well as announcing some new attractions that will be coming to Disney's West Coast theme parks. Over at Disney's California Adventure, the young park's horrendous Superstar Limo ride will be replaced with a family ride themed to the animated hit Monsters, Inc., while Finding Nemo characters will soon leave their watery mark on both Anaheim parks. Tweaking its old submarine voyage in Disneyland into a Nemo underwater adventure; porting the jaw-dropping "Turtle Talk With Crush" show into the California Adventure animation studio... do you see the common thread in these new additions?

Yes, that's right. They are all the handiwork of Pixar. This is important because even if Disney and Pixar part ways after their joint springtime release of Cars next year, it doesn't mean that the relationship ends. As long as Disney continues to use the characters that Pixar created over the past 10 years in sequels and merchandising, it will still have to cut Pixar a check.

Because Pixar stands to collect half of the proceeds generated from licensed products -- and considerably less, but still a cut if Disney produces any sequels to Pixar's movies without Pixar -- these theme-park rides are huge. As anyone who has stepped into a Disney park over the past few years knows, rides and attractions empty out into gift shops these days -- or, at the bare minimum, into an active kiosk just by the ride exit.

These aren't the first Pixar character rides that Disney has built. There are now three Buzz Lightyear shooting-gallery rides around the world, a Buzz Lightyear bumper car attraction at Disney World's DisneyQuest, and even Pixar's least successful release -- A Bug's Life -- in attractions at California Adventure and Florida's Animal Kingdom.

DreamWorks Animation (NYSE: DWA) has followed suit with Shrek shows at Universal Studios, and it may be just a welcome coincidence that Motley Fool Stock Advisor selection Marvel (NYSE: MVL) has seen its shares sling higher after Spider-Man, the Hulk, and Dr. Doom became permanent residents at Islands of Adventure in Florida.

That's why I believe that Pixar's earnings potential is greater than even what it showed during last week's market-thumping quarter. It's not just that Pixar stands to reap 100% of its new film profits after next year, but also that it will continue to reap profits from any development of its characters in Disney's hands.

Decades from now, as long as Buzz Lightyear's Space Ranger Spin remains at the Disney theme parks, Disney will be selling Toy Story merchandise and cutting checks to Pixar. If Cars is a hit and that inspires Disney to give its Tomorrowland Speedway a themed makeover, it will mean even more royalties for Pixar.

That's why I'm a fan of Pixar, DreamWorks, and Marvel -- all three have produced memorable characters that will continue to deliver licensing profits. Disney obviously isn't much of a slouch there, either.

 

[General Grizz]

Yep...Pixarization. Thanks for the article.

If "Cars" takes over the Speedway, I would at least hope the attraction take a more futuristic approach.

I do not think any more Pixar should be brought into Tomorrowland at this point. . . it just doesn't fit.

 

[ThreeCircles]

Disney pays a cut of any merchandise profits made off of Disney-Pixar characters to Pixar. They do not pay to use the characters or movies in their theme parks becuase they own the rights to do so.

If they did indeed have to pay to use the characters in the parks, my guess is you would see a LOT less of them. Period.

I most certainly hope that Disney and Pixar part ways and that Iger isn't stupid enough to sign away the best interests of Disney in maintaining a relationship among the two companies. Disney needs to reinvent their OWN animation studios rather than buying movies from the new kids on the block.

And for all the Pixar-lovin' folks out there, when Pixar has the success that Disney has over the past 77 years, then, perhaps, we can start comparing the two companies.

 

[Shaman]

Disney pays a cut of any merchandise profits made off of Disney-Pixar characters to Pixar. They do not pay to use the characters or movies in their theme parks becuase they own the rights to do so.

If they did indeed have to pay to use the characters in the parks, my guess is you would see a LOT less of them. Period.

I most certainly hope that Disney and Pixar part ways and that Iger isn't stupid enough to sign away the best interests of Disney in maintaining a relationship among the two companies. Disney needs to reinvent their OWN animation studios rather than buying movies from the new kids on the block.

And for all the Pixar-lovin' folks out there, when Pixar has the success that Disney has over the past 77 years, then, perhaps, we can start comparing the two companies.

I've been of the thinking that its better to keep Pixar as close as possible...but I agree, if the WDC has to give up too much for such a partnership then they shouldn't make a deal.

 

[bgraham34]

Disney Could have bought Pixar in the beginning but opted not too. This is all there fault anyways. I just hope they reach an agreement.

 

[Thrawn]

Disney Could have bought Pixar in the beginning but opted not too. This is all there fault anyways. I just hope they reach an agreement.

Actually, no. Pixar asked for way too much during contract negotiations.

I bet Disney brings Pixar back into the fold with the next 12 months, and they continue doing projects together. The contract will be more similar to the old one than the one Pixar wanted.

Now everyone should see why Disney pushes Stitch so much. It is the only recent, popular property they don't have to pay royalties on.

 

[Dayma]

Actually, no. Pixar asked for way too much during contract negotiations.

I bet Disney brings Pixar back into the fold with the next 12 months, and they continue doing projects together. The contract will be more similar to the old one than the one Pixar wanted.

Now everyone should see why Disney pushes Stitch so much. It is the only recent, popular property they don't have to pay royalties on.

Well said..!

 

[Disneyfan1981]

I love the Pixar movies but I miss the old animation style that Disney is known for. Let's face it even those who are Pixar lovers have to admit that Disney's Chicken Little looks pretty impressive for the studio's first feature film in that style with them. If Disney and Pixar make friends and continue on great, if not then I hope Disney doesn't build on Pixar Characters with sequels and just moves forward with their own computer animation studio putting out new stories and characters.

 

[ThreeCircles]

Prior to the "formal ending" of negotiations between Disney and Pixar some of the demands that Pixar were making (according to articles I read) included:

1. Pixar wanted full rights back to all the prior movies.

2. Pixar would decide when their films would be released and would not allow the release od Disney produced films within a time period before and after.

3. Disney only would get a distribution fee.


Sorry folks, I'd say it's Game Over time for these two companies. And, I think this is a plus, for both companies.

The fact remains that computer animation is probably a much easier medium to duplicate successful films in then traditional animation was. Think of the number of studios that have had VERY successful CGI releases. Dreamworks, Fox, Pixar. From what I've seen, Chicken Little should do as well as the Pixar films given that it has a strong story.

Regardless of what Pixar believes, they wouldn't be where they were without Disney. Would Disney? Most likely. If the terms of the original and second contract between Disney and Pixar wern't so favorable to Disney, I think they would have dropped Pixar a long time ago.

Recent articles have said that the major rift between Disney and Pixar revolves around future sequels to the five original movies. If Disney gives up the rights to produce sequels to those movies, and even worse, if they give up the rights totally, then they're getting screwed.

Hopefully Iger will have the backbone that it takes to send Pixar on their own. Steve Jobs is very quick to claim that Pixar is ready and can go it alone if need me. So? What are you waiting for Steve?

Disney can then focus on what made them a great company to begin with. Animation.

 

[jsfra209]

Prior to the "formal ending" of negotiations between Disney and Pixar some of the demands that Pixar were making (according to articles I read) included:

1. Pixar wanted full rights back to all the prior movies.

2. Pixar would decide when their films would be released and would not allow the release od Disney produced films within a time period before and after.

3. Disney only would get a distribution fee.


Sorry folks, I'd say it's Game Over time for these two companies. And, I think this is a plus, for both companies.

The fact remains that computer animation is probably a much easier medium to duplicate successful films in then traditional animation was. Think of the number of studios that have had VERY successful CGI releases. Dreamworks, Fox, Pixar. From what I've seen, Chicken Little should do as well as the Pixar films given that it has a strong story.

Regardless of what Pixar believes, they wouldn't be where they were without Disney. Would Disney? Most likely. If the terms of the original and second contract between Disney and Pixar wern't so favorable to Disney, I think they would have dropped Pixar a long time ago.

Recent articles have said that the major rift between Disney and Pixar revolves around future sequels to the five original movies. If Disney gives up the rights to produce sequels to those movies, and even worse, if they give up the rights totally, then they're getting screwed.

Hopefully Iger will have the backbone that it takes to send Pixar on their own. Steve Jobs is very quick to claim that Pixar is ready and can go it alone if need me. So? What are you waiting for Steve?

Disney can then focus on what made them a great company to begin with. Animation.

Well said!

 

[bgraham34]

Yes I would love to see some classic Animation but I would miss Pixar. Disney bring back the classic Musicals. That is what I miss.

 

[Figments Friend]

I don't mean for this to sound cynical or anything, but is'nt it Pixar that killed off classic animation to begin with?


I mean, it was because of Pixar's wildly successful films with computer animation that caused Disney and every other major studio to jump on the "hot trend" bandwagon. It also caused the general misconseption some higher-ups apparently made that 3-d Computer Animation was far better then Classic 2-d. This opinion then backlashed onto the general public and forced studios to close traditional animation houses and start producing a glut of anything even remotely animated with computers.

If it was'nt for Pixar, Disney would no doubt still be producing Classic Hand drawn animation....at least that's my opinion anyways.


Again, i am NOT saying this to be anti-Pixar ( heck, i like most of there films too!). These thoughts just dawned on me while reading this thread and had to comment to see if anyone had similar thoughts.