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Could cashing in on Pixar now be a whole lot harder than Disney officials had originally thought ?

Jim Hill

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Could cashing in on Pixar now be a whole lot harder than Disney officials had originally thought ?

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It was a year ago today that newspapers around the world featured the headline: "Disney Buys Pixar." With articles trumpeting the $7.4 billion the Mouse was about to pay out in order to acquire Pixar Animation Studios.

Oh, sure. There were a few of us out there who squawked about that ginormous price tag. But virtually everyone else -- from Bob Iger on down -- seemed convinced that the Walt Disney Company was going to make big, big dough off of this acquisition. That by adding these super-popular Pixar pictures to the studio's film library, by folding those already beloved characters into Disney's established roster of cartoon stars ... Mickey was basically acquiring a license to print money.

Well, that was then, folks. And this is now. And given Disney's Brand Management office has just completed an extensive study that reportedly shows that a number of Pixar's film franchises have already seriously eroded in value ... Well, it may now take the Mouse a whole lot longer to recover the initial costs of the Pixar acquisition.

What exactly is the problem? According to several company insiders that I've spoken with, this Brand Management study supposedly targeted several key age brackets, chief among them kids. And what these Disney officials allegedly learned is that -- with the exception of the characters from "Cars" (I.E. Pixar's most recent release) as well as the two "Toy Story" films -- the rest of the Pixar characters are already rapidly declining in popularity among children.

Copyright Disney / Pixar

To explain: Many of the study's participants reportedly dismissed the characters from "A Bug's Life," "Monsters, Inc.," "The Incredibles" and "Finding Nemo" as being "just kid's stuff." Meaning that -- as the original audience for this particular Pixar pictures continues to grow older -- these four film franchises are going to lose much of the initial appeal that they held with consumers.

And given that the Walt Disney Company had been planning on aggressively licensing all of the Pixar characters in order to help recover the corporation's $7.4 billion investment ... The news that at least four of these film franchises will probably underperform was not received warmly in the Team Disney Burbank building.

Which is why Mouse House officials are now looking into ways to reinvigorate the "A Bug's Life," "Monsters, Inc.," "The Incredibles" and "Finding Nemo" franchises. And among the ideas that are supposedly being considered is creating new three dimensional versions of these particular Pixar pictures by making use of the Disney Digital 3-D process.

The only problem with that plan is that the last animated feature to be repurposed in this manner -- "Tim Burton's The Nightmare Before Christmas" -- absolutely bombed at the box office. The new 3D version of this Henry Selick film only earned $8.7 million during its entire domestic release. Which didn't even come close to covering the cost of creating & then promoting the new Disney Digital 3-D version of this 1993 release.

Copyright Disney / Pixar

One of the other ideas that's supposedly being floated is asking Pixar to produce sequels to these particular pictures. Which would then -- in theory -- reinvigorate the "A Bug's Life," "Monsters, Inc.," " The Incredibles" and "Finding Nemo" franchises. But given that John Lasseter has been quite vocal on the whole "No more unnecessary sequels" issue (Which is why Disney officials feel lucky that "Toy Story 3" is allegedly already in the works for 2009) ... Well, it's extremely doubtful that John & Ed Catmull would ever go for that idea.

Then -- when you factor in Disney Consumer Products' reported concerns about "Ratatouille," plus the rumors that are already begun circulating about "Wall E' (EX: That Andrew Stanton's movie about robots in love will supposedly be in super wide format and feature little or no dialogue) ... Well, it's now beginning to look like it's going to take the Walt Disney Company a whole lot longer than it originally planned to recover that $7.4 billion the corporation originally paid out to acquire Pixar. Never mind finally beginning to turn a profit on this deal.

Your thoughts?

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  • Man, reports like this scare me--not Jim's report, but the Brand Management report.

    Just repeat that out loud---"Brand Managment Office."  Doesn't that sound like a group of people who understand how to make magic for kids?

    When those Pixar movies that are now allegedly losing value came out, what exactly were they sequels too?  Because this report seems to indicate that the only way to make money and connect with kids is to vomit up rehashed versions of what they've alread seen.

    Hopefully, Disney is smart enough to toss this report right out the window.  Those older Pixar movies DO give Disney the blueprint on how to make money.  But it's nto my rehasing and reselling the same thing--it's by creating new, and exciting, and fresh entertaiment.  

    The value in Pixar old movies is that they bring a richness and diverseness to Disney's library that they can draw upon to enrich their theme parks or enspire new artists who will grow up to create the new classics.  But the real value in Pixar isn't in the purchase of their library, but is attaining the services and talents of all those amazing artists who made those original films hits in the first place.  There can be a lot more money found in the future, then in the past.

  • What is very clear is that the MBA's who litter the halls of departments like Brand Management and "Supply Chain & Operations Strategy"  (yes that's a REAL department at TWDC) are the PROBLEM not the SOLUTION.  It was making business moves based on the findings of these non-creative types that has led to so many of the poor decisions of the last 15 years.

    Let the creatives decide on product and let the rest of the dog follow, not vice-versa.

  • Don't get too worked up over that supposed "Brand Management Report".

    Read Jim more carefully.  Here's what he said, and what he builds his whole furor over:

    "According to SEVERAL COMPANY INSIDERS that I've spoken with, this Brand Management study SUPPOSEDLY targeted several key age brackets, chief among them kids. And what these Disney officials ALLEGEDLY learned is that..."

    See what's going on there?  You can qualify anything and get away with it later, saying "Well, that's what I heard".

    If Disney only "allegedly" learned something, then why is Jim even listening to insiders?  "Allegedly" means this report might not have even taken place at all.

    Such a vaunted proposition, based on what?  A need to be vindicated for all those previous articles slamming Disney for spending so much on their acquisition.

  • I absolutely agree with the top two posts here.  And in addition, I'd say that this research is flawed!  My experience with kids I know, and the kids that THEY know, is that the Incredibles is still pretty hot with them, but there is no merchandise being made now for them.  They're playing with toys that have a couple of years of wear in them, whereas the Toy Story stuff has always been available, and was refreshed by being a two picture property and having a successful television spinoff.  Monster's Inc. could have probably done as well with a television version or a sequel, and The Incredibles could have the perennial appeal of any superhero IP with the right nurturing.

    Wufners makes a good point too- who are the Brand Management Office and why should anyone give a damn about their opinions?  Will they advise content?  Will they shape projects into earnings leaders?  Ridiculous.  

    Jim, your tired editorial drum beating against Pixar as an entity devalues this website, and makes the experience tiring for your readers.  Get another tune and play it, willya?

  • Okay, Jim. As a longtime reader who hasn’t felt the need to get on the board until now, let me say a couple things. I remembered a few months back when you wrote that you’d stick to doing one business story a week, primarily on Mondays, but that you’d mix things up between what older readers loved and newer readers expected. Yet, to date, I honestly can’t remember the last time I clicked on a headline, fully anxious to tear into a story. Every day I come to the site hoping for a little insider info on what to look forward to or what might’ve been.  However, as of lately, it seems that every story I read lately falls into one of 3 categories: 1) book/dvd review, 2) obscure news stories with opinion, and 3) business-related pieces concerning the finances of the Walt Disney Company.

    What happened to the stories about attractions that were never built? What happened to the behind the scene details on the ones that did? Where are the stories about attractions currently in the works? Where are the stories concerning the making of our favorite Disney feature length cartoons? For God’s sake, man, what ever happened to the Why Fors? I recently attended one of those Dining with an Imagineer dinners, and was told that there’d be a major rehab of Haunted Mansion in Disney World. What can we expect? I don’t mind two, three, even four stories per week on the financial side of things, but, c’mon Jim, at least once a week, throw a dog a bone. We’re starving for a little behind the magic info.

    As for the Disney acquisition of Pixar, I think it was a necessary move. On their own, Disney hasn’t produced a newer animated character that has connected with audiences since Stitch, and, before that, I’m guessing the next most recent would be the characters from the Lion King. The way I see it, Hercules, Treasure Planet, Pocahontas, Mulan, Atlantis, Tarzan, Hunchback, and Brother Bear never really connected with audiences. You need fresh characters to breathe new life into attractions, merchandise, etc., and the Pixar characters have done just that. Personally, I think its funny how Cars was supposed to be such a flop, yet there characters are listed among the few who are NOT declining in popularity. Bottom line is that Disney is a marketing machine that’s still wringing life out of characters that first caught on with the public over 70 years ago. They won’t be losing ANY money on the Pixar deal.

  • I recall when Roy made his speech at that infamous Disney Shareholders' meeting several years back that he ridiculed all those marketing types who speak in their buzzword lingo, throwing around such silly terms as "Franchise", "Brand", "Consumer Value" and other such nonsense. "Brands are for cattle!" claimed Roy, as he explained to us all that Disney films and characters are so much more than that.

    I'm with Roy on that - all these buzzwords are the language of the untalented, non-creative twits that not only flourished during the Michael Eisner Reign of Error, but apparently still infest the dark, mouldy crevices of Walt's once great wonderland. Too bad we weren't able to sweep 'em all out to the curb.

    No film has legs forever. I agree with WDWacky's point that the merchandising window starts to close up within a year or so after the DVD release. This fact has no bearing on the calibre of the film itself. The Pixar films are all fine entertainment, but , just like the Disney classics before them, there comes a time when most kids outgrow them. Even Walt knew that the kids who loved his movies when they first came out would have other greater interests by the time they hit their teen years. Still, he knew that some of them would be back later, once they hit their early adulthood and started having kids of their own. That's when the warm, fuzzy feelings of nostalgia come flooding back, and they want their kids to discover the magic in these films of their own childhood. So it will be with the Pixar films too - and the DVDs and plush toys can be rolled out to a new generation.

    Funny thing - the idiotic Brand Management Office continues to thrive while Disney unceremoniously drove the entire art staff out of their Consumer Products Division just this past October. These were the talented artists who lovingly created wondrous collectibles for the Disneyana enthusiasts, through the Disney Stores and Disney Catalogue. Their attention to detail and knowledge of the films impressed all of we collectors immensely, yet Disney Management just couldn't see it despite the highly respectable sales, so off to the chopping block they went. The result is that Disney collectors checking out the current online Disney Catalogue will find mostly the same old mass-market merchandise that is readily available on the toy shelves of their local Wal*Mart. Pity that...

  • Well, I've been a long-time reader, and while I genreally agree with Jim on everything about the Pixar deal and feel Pixar is overrated, I think he's gone too far here. I want to make a few points with my first post.

    1. How can you say "The Incredibles" is loosing it's audience? Seriously, it's probably Pixar's most popular film by now(thankfully, Nemo has lost it's underserved hype). I know several people who have near no interest at all in animation, but really like "The Incredibles". It truely does have the biggest adult appeal of the Pixar films and generally is loved by everyone(unless your a comic book fan like me and can't stand how it felt like a gigantic copy of "The Fantastic Four"). I can understand what your saying about the other three(although considering all the promotion for that stupid clownfish, and that lame-sounding "Midway Mania" thing Lasseter has planned for MGM/DCA, I don't exactly buy it's "loosing appeal") but "The Incredibles" has a pretty big fan club and can't see it loosing popularity anytime soon.

    2. WTF? "Nightmare Before Christmas in 3-D" a flop? Granted, I don't know how much it costed total to make it in 3-D(although I suspect Jim doesn't either) but for a film with that's been out for years and got released with a limited released, it at least did better than to be called a "flop". It's like calling "Cars" a flop. It MIGHT have disappointed, but didn't flop.

    3. I disagree with everyone on Pixar making sequels. Yes, they supposably do have a track-record of avoiding sequels, but personally, I've seen no prood that Pixar hates sequels. Afterall, most of there films are so episodic and have "incomplete endings", that it seems like they always were destined to have sequels.

    Finding Nemo has such an episodic structure, it easily could've been made a weekly t.v. show. I think they could easily make a "flip-flop" sequel(like they do with DTVs) and make Dory trying to find her family or something, afterall, Dory is a really dull character, we don't know anything about her past except her unfunny "Memory Loss" joke. A sequel could easily be made.

    And afterall, they DID make Toy Story 2, and are developing a Toy Story 3.

    So honestly, I don't see Pixar being so creative that they never make sequels, or make their films completely closed from the option.

  • Pixar may have been a big expense but at least Disney is doing something with the "over-paid for" entity. What are they doing with The Muppets? They bought them from Henson in 2004, they finished off some projects that already in motion prior to the sale and have just sat on the brand for over a year doing nothing! What's going on over at The Muppet Holding Company? How are they saving that franchise (and Bear in the Big Blue House) which they bought and have done nothing at all with? PIXAR is working and will work out any problems, but The Muppets just seem doomed at Disney.

  • Mickey Duck said:

    //My experience with kids I know, and the kids that THEY know, is that the Incredibles is still pretty hot with them, but there is no merchandise being made now for them. //

    This is what it boils down to: you can't make money off of something you don't sell.

    After all, I have a friend who is a huge fan of Hunchback, and when I was at WDW, I asked her if she wanted me to bring her back anything, and all she wanted was something with Esmerelda.  Outside of a Christmas ornament (which I didn't think she'd want), the ONLY thing I could find was a set of promotional postcards and I guess a promotional lithograph at Sid Cahuenga's.  Couldn't even find a pin.  And while I don't expect Disney to start churning out merchandise for Hunchback, it just shows you...the only merchandise you can sell is the merchandise you make available.

    In terms of sequels, the only time a sequel should be done is if there's a story to be told.  If they come up with an idea for a sequel to Nemo, fine, go for it.  But the first film worked as a self-contained piece; besides, look at the title.  Finding Nemo.  Unless Nemo is seperated again, they would need a new title, which creates problems in establishing a brand identity (I know, I'm getting into those words).  The title was tied directly into the plot, so a story with an entirely different premise really shouldn't be called Finding Nemo 2.  Of all the Pixar flicks (outside of Toy Story), I'd peg the Incredibles as the best possible franchise starter.

  • Jim is up to his old tricks again.

    Everyone basically voiced my viewpoint on this ridiculous article already, but I will add one thing.  I’m a cast member at The Disney Store, and I can tell you there is no shortage of guests consistently asking for and buying up The Incredibles and Finding Nemo merchandise.  Toys, PJ’s, apparel, heck…even magic towels.  I’m also happy to report that Monster’s Inc loot is also highly in demand…if only we had anything to sell them!

    This article is nothing more than a desperate attempt for attention and more of those ratings surges Hill was enjoying during the peak of the Cars bash fest of last year.  Bad show Jim!

  • I just have to add...I was at a Vietnamese restaurant tonight with several tropical fish tanks.  In the seven minutes waiting for a table, I heard children from three separate families exclaim "Nemo!" when they saw the clown fish swimming around.  I don't think there's any problem with brand identity there.

  • What age were these people who called "The Incredibles" kids' stuff? When I was a teenager I went through a phase where I thought everything Disney was kids' stuff. Now I'm in my 20's and I love it again, but I sure wouldn't have told you that was going to happen when I was 17.

    Disney (and all studios) -

    Please forget about all this brand management focus group malarkey and just make great films with great characters and market them well. The profits will come to you - and, if for some reason they don't, well at least you've made great films.

  • I posted this in the Why For thread, but I feel like posting it here too.  No one in these talkbacks has brought up the fact that the whole logic behind this article is totally bogus. Correct me if I'm wrong, but didn't Disney own the Pixar characters from the movies that Disney released anyway? Isn't that why they were going ahead with Toy Story 3 without Pixar's involvement, which really pi$$ed of Lasseter and company? Even if Pixar and Disney had gone separate ways, Disney still would have owned the rights to use Buzz and Woody, Flik, Mike and Sully, Nemo, The Incredibles, etc. Under their previous arrangement, I believe that either Cars or the forthcoming Ratatouille would be the last film that Disney distributed and owned the rights to. Again if Pixar had gone its own way, do we think that Disney would have stopped selling Pixar related merchandise, etc.? Would they have rethemed Buzz Lightyear's Space Ranger Spin to Chicken Little's UFO Chase? No... this was never worried about because Disney owned and would have continued marketing those characters and their universes.... So, the point is, in Disney's buyout of Pixar, they were not paying for past characters, period!  They already owned them!  They were paying for future characters and a braintrust that they could use to reinvigorate the creative portion of the company.  Jim knows this and yet concocts this article anyway so that he can further his agenda...

  • First of all, Disney bought Pixar with stock. Not a dollar changed hands; all paper. Having gone thru one of those myself at my old company, I can say that it's only bookkeeping. There is no 7.5 billion dollar hole in the Disney checkbook.

    Secondly, it boils down to the beancounters are stressing because they can't conceive of any more ways to squeeze out another buck of some Pixar films. The reason they are beancounters is that they have zippo creativity in their dull grey little souls. In fact, if they manifest one tiny little ounce of creativity in a spreadsheet or process review meeting or sales projections powerpoint presentation, they will be escorted to the Disney door. They need to sit back and let the artists create the reasons for the beancounters continued employment. Heck, they should probably let the Pixar folks come up with toys from the films. Betcha they'd be a lot more fun than yet another Nemo pen and pencil set.

  • Seriously, you are becoming the punch line to a bad joke.  Let it go, buddy.

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