Oppenheimer & Co. analyst Peter Mirsky says that Pixar's primary incentive for coming to a distribution agreement with the Walt Disney Co., rather than going to a different studio, lies in the fact that it still owes Disney two more films under its current contract and would likely be able to include those films in any renewal deal. However, if Pixar decides to sign with another studio, it would be at least three or four years before it could see any benefits from the new relationship. Nevertheless, the two companies reportedly remain far apart in their negotiations, leading the newspaper to comment that, after boasting about the success of Pixar's animated fish movie, Finding Nemo, Disney "could be talking about the one that got away if it doesn't reach a new deal with Pixar soon."
Pixar�s newest motto appears to be �no compromises on quality� therefore �at most one and only one film per year�
On the surface the practice of one film per year appears to be fine but I do foresee problems
I�ve always assumed that if one of Pixar�s films flopped (or was just mildly accepted) then Pixar would ride on the tails of its evergreen revenue stream until the next film released.
Here is the problem: "I don�t foresee solid, long-term, evergreen revenue streams for Pixar films unless they have a partner like Disney."
1. The Disney channel is largely responsible for Nemo�s long legs. The Disney channel is viewed daily by lots and lots of children; it inundated those children with facts and stories about Nemo. Disney planted the seeds needed to create repeat customers.
2. The Disney cartoon �Buzz Lightyear of Star Command� and the Disney stores have done a lot to keep children buying Toy Story products. Most products come and go from the shelves of your average toy store, but Disney products stay on the shelves of Disney stores for years and years. The products may roll over occasionally, but over time they come back again and again. IMHO, Pixar merchandise isn�t really evergreen but Disney merchandise is.
3. Disney is a key component of Pixar�s evergreen strategy. Without Disney, I foresee Pixar�s revenue steam becoming one that is truly based upon the success and failure of their next film because I foresee the evergreen component fizzling out.
4. Without Disney, Pixar will be paying 100% of cost to create a film. If a film flops and if the evergreen revenue fails then what are the chances that Pixar will have lay offs? The cash reserves are expected to build new building, pump up the employee base by 50% and to allow Pixar to create films without Disney, but it will only go so far if a film fails at the box-office.
I�m sure that there are many more reasons why Pixar needs Disney. Unfortunately, the management team at Pixar may be too arrogant to admit it.
"Without Disney, Pixar will be paying 100% of cost to create a film. If a film flops and if the evergreen revenue fails then what are the chances that Pixar will have lay offs? The cash reserves are expected to build new building, pump up the employee base by 50% and to allow Pixar to create films without Disney, but it will only go so far if a film fails at the box-office."
By this calculation Pixar can afford to have a flop every other movie and still come out even. Also, what do you think Disney might do if Pixar made a couple of flops along the way? Ask for 80 percent?
"the management team at Pixar may be too arrogant to admit it"
Why does the common man, or in this case the short man, always equate success with arrogance. The confidence that exudes with the Pixar management team is the result of successfully accomplishing their goals, not because of arrogant personalities, IMO.