How Pixar Created an Animation Revolution

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The world of cinema changed forever on Nov. 22, 1995, when Toy Story premiered. It was the first feature film to be entirely computer-animated, and it marked the beginning of a long and fruitful partnership between Disney , the film's financial backer, and Pixar, the pioneering animation studio behind Buzz and Woody. This partnership became a family a decade later, when Disney acquired Pixar in 2006.

At the time of Toy Story's release, Pixar was owned by Steve Jobs, founder of Apple and then-CEO of NeXT Computer. Jobs' control of Pixar would be a point of contention in the negotiations between Pixar and Disney that would eventually lead to Toy Story -- the Pixar crew had originally planned to produce a half-hour TV special, but Disney film honcho Jeffrey Katzenberg insisted on a feature film during an initial meeting. His financing terms were extremely high: In exchange for support, Katzenberg wanted the rights to Pixar's 3-D animation technology. Jobs, whose career had been built on proprietary software (and hardware), understandably refused this demand and countered with deal that allowed Pixar part-ownership of the film's characters, as well as video and sequel rights.

However, Disney was in a much stronger position, as Pixar was nearly bankrupt. Jobs and Pixar were forced to cave to a deal that granted Pixar only about 12.5% of the ticket revenue and nothing further. The deal was signed in mid-1991. Disney did not get access to Pixar's animation technology, though, and this critical bargaining chip proved more important than the take for Toy Story over the long run.

Production also proved contentious. Numerous rewrites left the film a steaming mess, requiring a completely new script and a brief production shutdown. Toy Story's shooting script was finally approved in 1994, but the tech-heavy crew soon ballooned from 24 to 110 people. Toy Story's initial $17 million budget was not going to cut it, and by this point, Jobs had endured several years of frustration at a time when he was also swimming in red ink at his post-Apple start-up, NeXT -- that company first posted a narrow profit in 1994. As the film's premiere drew near, Jobs' initially underwhelmed attitude changed to excitement as the Toy Story came together, and he decided to take Pixar public soon after the film's release.

Toy Story's success was immediate, and it earned virtually unanimous acclaim. Released over the Thanksgiving holiday, Toy Story earned $39 million in its first week of release and remained in first place at the box office for three straight weeks. By the end of the year it was the top-grossing film in the country, and it eventually went on to sell $362 million worth of tickets around the world.

Pixar has released 13 more completely computer-animated films since Toy Story made the company a household name. Every single one has managed to earn at least $300 million in global box-office receipts, and the total take for all 14 Pixar films now stands at $8.6 billion. That doesn't count the merchandising bonanza Pixar has created through these films -- the Cars franchise, Pixar's crown jewel, is by itself responsible for more than $10 billion in global merchandising revenue.

The next entertainment revolution Disney can capitalize on
Pixar helped transform the silver screen, but Disney also sits at the crossroads of a huge small-screen opportunity that's started an all-out $2.2 trillion media war. This war pits cable companies like Cox, Comcast, and Time Warner against technology giants like Apple, Google, and Netflix, with content superstars like Disney standing in the middle of the action holding the big guns. The Motley Fool's shocking video presentation reveals the secret Steve Jobs took to his grave, and explains why the only real winners are these three lesser-known power players that film your favorite shows. Click here to watch today!

The article How Pixar Created an Animation Revolution originally appeared on

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology. The Motley Fool recommends Apple and Walt Disney. The Motley Fool owns shares of Apple and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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