Pixar's Future Plans Could Include Disney

Although CG trailblazer Pixar terminated its partnership with Disney (NYSE: DIS) earlier this year, Pixar CEO Steve Jobs has yet to find a new partner for the studio -- or even to meet with potential candidates, according to news sources.

According to the Los Angeles Times, Jobs was invited to visit Sony Pictures Entertainment; however, he has not flown down to meet with executives. A similar story in the New York Times reports that Warner Bros. also has expressed interest in the thriving animation house, whose latest release, Finding Nemo, garnered critical raves and broke box-office records. But Pixar has not scheduled meetings with that studio either.

Jobs' apparent lack of interest now is sparking speculation that Pixar may be renewing distribution talks with Disney, despite having rebuffed the Big Mouse only months earlier.

Pixar Cuts Disney Off

Presently, Pixar's agreement with Disney covers two more films, including The Incredibles, which is slated for release later this year. Each of the company's previous five movies has been distributed and cofinanced by Disney. The two firms attempted to negotiate an agreement for future projects, but talks broke down, apparently because neither company could come to an agreement on profit distribution.

With the success of films like Finding Nemo, Monsters, Inc. and Toy Story, Pixar plans to finance future movies on its own. As a result, the studio is seeking a distribution-only deal . When Disney apparently balked during negotiations, CEO Jobs announced in February that Pixar would begin talking to other studios.

When he announced the end of the relationship with Disney, Jobs said, "After ten months of trying to strike a deal with Disney, we're moving on. We've had a great run together ... and it's a shame that Disney won't be participating in Pixar's future successes."

Not Like Disney

Jobs also was publicly critical of Disney's animation efforts. In a fourth-quarter earnings conference call, he noted that Disney's recent films like Brother Bear failed to achieve box-office success.

"Pixar isn't like Disney; they don't do things the same way," Mar Elepano, production supervisor of the division of animation and digital arts at USC's School of Cinema-Television (CNTV), told MacNewsWorld. "At Disney, there's the problem of too many cooks in the kitchen. They make films by committee, and it's too bad. That's why they haven't had a successful film in a while."

But Disney has one thing Pixar needs -- an "incredible distribution mechanism," Elepano said.

Pixar and Disney possibly could rekindle their relationship if Disney is willing to reconsider changing terms of the distribution deal. In the past, Disney split production costs and the profits from each film down the middle. Jobs has said this profit-sharing setup is no longer valid.

Because of the success of its films, Pixar no longer needs Disney -- or any other studio -- to pony up for production since it has enough funding on its own. Pixar's five films have earned more than US$2.5 billion at the worldwide box office.

Better Suitors Available

Wharton marketing professor Jehoshua Eliashberg has noted that Pixar would fit well with Warner Bros. and Sony. In a recent whitepaper, Eliashberg wrote that Warner Bros. has the largest distribution infrastructure in the global home-video marketplace.

Eliashberg added that Sony has competence and a culture that could blend well with Pixar -- and with Jobs' digital expertise and mindset.

However, the company that succeeds in inking a deal with Pixar should be prepared to provide Pixar with as much freedom as the animation house wants. "Very few production companies have had unqualified hits every time it puts a movie out," Nick DeMartino, associate director for strategic planning at the American Film Institute, told MacNewsWorld. "At their core, they know how to tell stories -- and how to do it in a revolutionary way. Anyone working with them will have to recognize how special that is."

DeMartino added that there is not much risk of Pixar getting trampled in future distribution deals. "Steve Jobs is a darn good businessman," he said. "He knows what he's doing."

Jobs in No Rush

It could be that Jobs is biding his time in choosing a partner because he is well positioned to wait and choose the most attractive deal. Indeed, Pixar's brand is established, and the company has enough capital in its coffers.

Moreover, if The Incredibles and next year's feature, Cars -- the final two films under the Disney agreement -- achieve the same level of success as the company's other animated films, Pixar will be in an even better position to negotiate.

Jobs' ultimate decision on Pixar's future distribution model could have repercussions for similar studios down the line, Mary Clarke-Miller, an academic director at the Art Institute of California, said during an interview with MacNewsWorld.

As Clarke-Miller put it: "With every success that Pixar has, it encourages investors to help the industry grow. That's one of the reasons that people look to Pixar as a leader in the field."