Pixar has become a sequel factory. A position it never wished to be in. Now it’s trying to reinvent itself to become the creative studio it once was.
The last Pixar movies have seen a less than stellar reception. Financially, the box office performance makes the average animation studio blush. But for Pixar, owned by multimedia conglomerate Disney, the performance has been less than stellar. Recent installments have become a shadow of former box office hits.
A culture of creativity
Pixar is praised for its magically crafted original story, which catapulted the company to stardom. The enabling factor, which many inside and outside the studio believe, is its unique culture that enables creativity. In a 2008 article at the Harvard Business Review, co-founder at Pixar, Ed Catmull elaborated on the organizational structures that enable creativity at the animation studio. Catmull highlights Pixar’s unique rodd to success. The company spent years developing the technology behind the first Toy Story movie, which hit theaters in 1995, becoming the first computer-animated feature film. In the 13 years after that, the studio would release major blockbusters like Monsters Inc., Finding Nemo, The Incredibles and WALL-E.
All these productions were made without outside help, Catmull noted. The company never bought scripts or movie ideas from third parties. All its creations were envisioned and developed by employees at Pixar. Catmull remarked that this doesn’t mean the studio would never release a flop in the future, nonetheless it fits within the core values of the company. All the fanfare about the unique culture and streak of blockbusters that generated billions of dollars, couldn’t mask the eventual fall-out and disintegration of the company’s top executives.
Pixar shake-up
Over the course of 2018, Pixar went through a management shake-up. In June 2018, Pixar co-founder John Lasseter announced he would step down after a series of allegations regarding sexual harassment against staff members. The departure of Lasseter followed, what he himself called, a six month “sabbatical”. The announcement of Lasseter left Disney scrambling as to how to deal with the situation. Executives at Disney were exploring alternative opportunities for Lasseter at the animation studio.
The new role would reduce the managerial influence of Lasseter at the company, whilst not limiting his creativity. Employees were less than happy to see him return, with one employee claiming Lasseter would be incapable of accepting a role with less responsibility, as he was a narcissist. Industry insiders, Rebecca Keegan wrote for Vanity Fair, said he might make a comeback, but not at Walt Disney or Pixar Animation.
The industry itself wasn’t short of successors. Sources told Keegan that Pixar President, Jim Morris, or Blue Sky Studios founder Chris Wedge, among others would be possible suitors to take over where Lasseter had left off. Pixar employees themselves, were hoping that director of Inside Out, Peter Doctor, would take over the reigns at Pixar. Doctor was well respected by employees, as he promoted upcoming female talent. He himself however, never expressed his eagerness to run the chaotic environment of running a high value production studio like Pixar years prior.
During his absence, he said that he had reflected on his actions and decided that it was the right time to leave the company. The departure of Lasseter, which followed in the wake of the #metoo-movement shook the industry, who was highly regarded as one of the most influential figures in the movie industry. Shortly after the announcement of Lasseter’s departure, former graphic designer at Pixar, Cassandra Smolcic, revealed the inner, unprofessional culture, at the critically acclaimed studio.
In the extensive blog post, Smolcic retells how she experienced the old boys culture present at Pixar. She commented that Lasseters missteps have been left unchecked for decades, eroding the image of Pixar being a safe work environment. Smolcic notes that the sexist nature at Pixar was the primary contributor for her to leave the industry altogether. Pixar’s reputation is less tainted than its many counterparts in the industry, but Smolcic underpins that a toxic work culture is still present.
Smolicic experienced harassment and physical threats from male coworkers a number of times. Experiences that left her mark, shattering the one idealized picture she had from the studio. Lasseter was known to use sexually charged comments to and about women, co-workers told Smolcic. Interactions with him were uncomfortable for female employees. The retellings of Smolic paint a bleak picture of the inner working at Pixar, which came to a boiling point under #metoo and eventually leading to Lasseter’s departure.
Catmull leaves Pixar
A few months later, in October 2018, Pixar co-founder Ed Catmull announced his retirement. Catmull, just like Lasseter, was a defining figure within the animation industry, bringing revolutionary computer animation to the big screen with blockbuster hits such as Toy Story and working on Disney successes’ like Frozen. Disney didn’t name a successor, with Pixar President and Walt Disney Animation Studios President, Andrew Millstein, overseeing operations at the studio.
Angela Watercutter at Wired argued that Catmull’s retirement could pose an opportunity for Pixar, instead of a loss. Watercutter noted that in his book, Catmull said he wanted to build a culture where the company could continue to thrive after the retirement of its founders. Disney experienced its own fall in creativity after Walt Disney, the creative genius behind many of the studio’s successes, passed away. Disney couldn’t find the spark that made it such a magical place to work. But Pixar’s culture was far from perfect. Catmull’s retirement coincided with the departure of Lesseter, which in Watercutter’s eyes, could be an opportunity for Pixar to reinvent itself.
Furthermore, the company has been running on technologies that shot it to stardom, but aren’t as revolutionary today. The company could adjust its focus to revolutionize animation once more, Wattercutter argued. The animation studio could go beyond movies and branch out into augmented reality. Games such as Pokémon Go have shown that audiences are ready to immerse themselves into their favorite franchises in novel ways. The arguments Watercutter brings forward might be a stretch as the company has yet to navigate itself through what might be the company’s tensest chapters.
Disney acquires Pixar
A lot of moments preceded the hampering growth engine that once was Pixar. From the Lasseter incident to the departure of Catmull. But there’s a specific moment in time that would change the course of the company forever, the acquisition of Pixar by Disney. In January 2006, CEO from The Walt Disney, Bob Iger, announced it would acquire Pixar in an all-stock transaction worth $7.4 billion. Disney at the time was struggling to find its footing, just like Pixar today.
Disney was releasing flop after flop and didn’t have the technological know-how to keep pace with its competitors Pixar, Dreamworks and Blue Sky Studios, the production company behind Ice Age. Disney Studios tried to make its own animated features, but they weren’t as magical as some of its counterparts and its famous productions decades prior. The studio had to act fast, otherwise it would become a relic of the past.
In the press release Walt Disney noted that through the acquisition, the company would be combining Pixar’s technological prowess with Disney’s extensive franchise portfolio. By integrating Pixar and Disney’s expertise, a new era of creativity would be unlocked. Iger highlighted it was the studio’s unique culture that enabled the team to deliver the most innovative and successful films in history. By integrating these unique assets into Walt Disney, the studio would enter an era of new growth opportunities.
William C. Taylor and Polly Labarre at The New York Times commented that the acquisition of Pixar was a significant strategic shift for Disney, with Iger trying to unshackle the company from Eisner’s legacy. As Disney was primarily focussed on maximizing profits, Pixar had become the envy of Hollywood. A money printing machine with its own unique culture. The relatively young studio had a steady group of talented employees who worked every day to up their previous achievements.
Every employee within Pixar was dedicated to delivering the best product. This style of working was the complete opposite of the Hollywood-style of project based deliveries. Randy S. Nelson, who joined Pixar in 1997, told The New York Times, that the studio parted ways with the traditional idea-centered business prevalent throughout Hollywood, toward a people-focused business. The company aimed to develop people, who bring the best creative ideas.
Pixar’s creativity crumbles
Over a decade later, the signs of Pixar’s creativity engine grinding to a halt were starting to show. Pixar was cranking out sequels, which revealed the studio was no longer able to produce creative films. In order to generate cash, it had instead resorted to cranking out sequels to already successful franchises, with Cars 3 being the poster child for the creative decay that had set at Pixar after the Disney acquisition. The sequels had turned Pixar into a factory, with little left of its original culture of creativity. In 2017, Christopher Orr at The Atlantic, proclaimed the golden era of Pixar was over.
After a successful 15-year run, with commercial hits like Toy Story, Up and many more, the studio had been surpassed. Rival studios showed they had the creative prowess to deliver high quality animations. Orr highlighted movies like Coralina and Kubo and the Two Strings, and even Disney itself with animation blockbusters like Tangled, Frozen and Big Hero 6. Pixar could not deliver a product to match. Ironically behind the successes delivered by Disney, was the story-telling of Pixar, Orr noted.
The reason behind Pixar’s early success, Orr highlighted, was the uncanny ability of the studio to deliver movies that appealed to adults and children at the same time. Toy Story chronicled the relationship between parent and child, with some clever hidden adult jokes along the way. Disney meanwhile wanted to quickly capitalize on the success of its franchises, releasing direct-to-video sequels.
At the time, this was a lucrative business for Disney. It could use its B-tier animation subsidiary to make a quick profit on franchises that had significant momentum. Pixar meanwhile, Orr commented, took a different approach. Striving only for excellence. An aspect Catmull noted back in 2008 in his HBR article, where the company put people before projects.
Pixar tried to hold on to its formula of unique productions for as long as possible, but as Disney had success with its sequel releases, it was looking to emulate the same model at the studio it had acquired. In a 2013 piece in the LA Times, Vice President at Pixar, Andrew Stanton commented that Disney was exploring sequel opportunities to Finding Nemo. Stanton said he was always vehemently opposed to sequels, however from a business continuation perspective, they are necessary to keep a production studio afloat. Pixar requested a timeline from Disney, allowing it to at least plan it accordingly and deliver high value sequels.
Iger-era draws to a close
The leader who had acquired Pixar, was now leaving the ship and passing on the torch. In February 2020, Walt Disney announced Bob Chapek would become the new Chief Executive Officer of The Walt Disney Company, with Bob Iger taking on the role of Executive Chairman from 2021 onward. Iger would be working alongside Chapek over the first 22 months.
Chapek, who joined the company in 1993, acted as the Chairman of Disney Parks, Experiences and Products, overseeing the company’s largest business segment, overseeing 170,000 employees worldwide. He was part of the opening of the first Disney Park in mainland China and expanded so-called guest offerings at Disney’s six resort locations throughout the world.
Between 2011 and 2015, Chapek was President at Disney Consumer Products, where was responsible for the digital transformation. Chapek joined the executive position at one of the company’s most turbulent times. The world was going into lockdown during the COVID-19 pandemic and Disney had to navigate through the park closures and the shift to streaming services. In May 2020, Chapek explained to CNBC that parks would scale-up visitors numbers, with the team confident that they could handle the ramp up of welcoming more customers with safety precautions in mind.
At Pixar meanwhile, positions got reshuffled. In April 2022, Pixar promoted the director of Turning Red Domee Shi to Senior Vice President and producer of the animated feature, Lindsey Collins to become Senior vice president of Development. Collins would oversee the development group, who’s responsible for Pixar features and its streaming projects. She will be reporting directly to Pixar president Jim Morris. Shi meanwhile, would become Vice President of Creative, where she will supervise the company’s filmmakers.
At Disney, internal operations didn’t look much better. As Pixar was having its own identity crisis, Chapek’s leadership left much to be desired. Replacing Chapek with Iger sent shockwaves through the entertainment industry, with Disney employees learning about the return of Iger as the press release left the company’s headquarters. Initially, staff at Disney thought the news was a hoax or phishing, but their suspicions were confirmed as news outlets were reporting on the events.
Chapek’s termination might have come as a shock to many, but for Wall Street analysts, the evidence was clear. Disney was spending vast sums of money on direct-to-consumer content for its streaming platforms, with costs expected to peak at $1.5 billion. Disney’s stock price nosedived below $100, down to $90, Variety highlighted. Problems started to compound for Disney as its heavily marketed Pixar feature film, Elemental flopped at the box office.
Elemental flop and recovery
Pixar had high hopes for the movie Elemental, but the theatrical opening was the worst in the animation studio’s history, emblematic of the rough seas Pixar had found itself in. Elemental opened with a meager $29.6 million, lower than its previous slow opener Ratatouille, which clocked in at $47 million back in the summer of 2007. The Hollywood Reporter pointed out that the rise of streaming over the course of the pandemic had accustomed customers to stream Pixar movies. This streaming incentivized media consumption of Disney franchises has been one of the controversial designs set in motion by former CEO Bob Chapek, the news outlet added.
Luckily, Elemental was doomed from the start. Just like with the movie Ratatouille, Elemental saw a steady recovery over the weeks. Two months after its eye watering opening, Elemental was able to generate $148 million box office sales in the United States and up to $425 million worldwide. The ticket sales were much needed to recover the enormous marketing budget of $200 million Disney had put behind Elemental. President at Pixar, Jim Morris, who spoke with Variety about the lackluster opening subsequent recovery, said the team was disappointed with the movie’s debut, having better hopes for its initial run-up.
Morris noted that the drop-off in ticket sales remained stable, with Elemental performing better than previous releases. Elemental’s ticket sales fell by 12 percent from the previous week, which was for less than the average 50 percent. Morris added he expected the movie to top $460 million, hoping that the movie will break even at the box office, with streaming and merchandising leading to profitability. Ticket prices also hamper a movie’s performance, with an average family having to spend an upward of $100 to see a movie. Turning a profit for Pixar is challenging, as it produces its films in the United States. Elemental in particular, Morris is explained, was expensive to make as it featured characters with their own visual effects.
Rethinking releases
Elemental eventually saw some recovery and massive pick-up on Disney+, reaching 60 million views, surpassing Disney movies The Little Mermaid and Guardians of the Galaxy. Disney expected Elemental to bring additional revenue through physical and digital sales, as Morris rightfully predicted. The poor performance at the box office, yet surprising success on streaming service Disney+ raises the question whether a new release strategy is befitting for this new age of media consumption.
Brooks Barnes for The New York Times wondered whether Disney+ massive reach would change the way Pixar promotes its movies and whether box office performance targets should be lowered. Elemental was an expensive production, with a massive marketing budget to promote the movie across domestic and international audiences. Disney and Pixar meanwhile are at a crossroads, as they have to deal with Chapek’s legacy who started filling Disney+ with blockbuster productions to compete within the streaming wars which were going on at the time.
In order to recover the lackluster performance of Soul, Luca and Turning Red, Pixar announced in December 2023, it would be doing theatrical releases for its highly acclaimed movies. The Hollywood Reporter noted that a multitude of reasons lay behind the theatrical releases. Pixar wants to plug Inside Out 2, the news website noted, and generate revenue after the Hollywood strikes, which hampered productions.
Reshaping Pixar
Pixar’s relentless approach to storytelling and technical expertise have delivered some of the most memorable and profitable productions in cinema history. Its culture to pursue creative excellence and leave recycling of franchises to others, enabled its filmmakers to create original feature films that captured the hearts and minds of children and adults around the world. But as so often, great things must eventually come to an end.
Disney saw the potential of Pixar. Disney, once standing on top of the animation pyramid, saw its foundations crumble as new, agile, competitors came onto the scene. It was overtaken left and right by Dreamworks, Blue Sky and Pixar. Disney had to act fast and shortly under Iger’s leadership, the media conglomerate acquired Pixar in a multi-billion dollar deal. During the early stages, Pixar was left to its own devices. But as the months and years crawled by, Disney was ready to cash in on its investment, forever changing the course of Pixar.
Pixar became a sequel machine, a position it was so vehemently opposing when independent. Now it was cranking out sequel after sequel, which did more harm than good. It was eroding the precious franchises that made the studio famous. Meanwhile the core team was shaken up by Lasseter’s misbehavior and Catmull’s departure, rupturing the very, yet toxic, core that kept Pixar together. The following features didn’t achieve the promised returns they once did, partly due to Chapek’s streaming strategy.
It’s easy to point fingers at Chapek as being the final blow that destroyed what little magic that was left at Pixar. Not all decisions were as sound, but he inherited a company amidst one of the most difficult global economic conditions, having to navigate a giant conglomerate to the end of the tunnel. Its push for streaming was logical as most consumers around the world were spending their time at home on video streaming services and not in cinema’s.
