Disney who? Steve Jobs rides a rocket named Pixar

Propelled by a movie about a clown fish that could, Pixar’s earnings surged 87 percent in its fiscal second quarter, Pixar reported Thursday.

“While crowing about ‘Finding Nemo,’ which grossed about $260 million worldwide during the period (The film’s U.S. box office receipts recently surpassed Disney’s 1994 ‘The Lion King,’ the previous top-ranked animated film; ‘Nemo’ has grossed $374 million worldwide since its initial release May 30), Pixar warned analysts against using the film as a benchmark for future productions.”

“‘Nemo’s performance is a once-in-a-lifetime experience, so please don’t expect it again,’ said Pixar chief executive and Apple Computer founder Steve Jobs,” reports Kelly Zito for the San Francisco Chronicle.

“Pixar’s profits increased to $19.5 million in the three months ended June 30, or 34 cents per share, versus $10.4 million, or 20 cents, in the year-ago period, the firm said in an earnings statement released after the close of trading. Revenues jumped to $48.9 million up from $22.8 million in the second quarter of 2002, due to ‘Nemo’ ticket sales as well as better-than-expected sales of its patented RenderMan software, which adds light, color and shading effects to computer-generated 3-D images. The results far outpaced analyst estimates. Analysts surveyed by Thomson First Call had forecast earnings of 22 cents per share,” Zito reports.

Full article here.

16 Comments

  1. Pixar split from Disney? No way. Disney provides the marketing and distribution muscle. For a cut, of course. But since Disney can’t seem to make a decent film anymore (other than direct-to-video rehashes of their previous work, at least), both companies need each other, and both benefit from the current arrangement. Of course, it *would* be nice to see Pixar start calling more of the shots…

  2. Gryffin, Pixar most definitely does not need Disney in the least. They are getting reamed by Disney right now. Jobs is shopping currently. Think DreamWorks or someone else unless Disney subverts itself to Pixar. Pixar has become the Disney of animation – everybody knows it, even Disney.

  3. Gryffin,

    I agree with you; these companies have a superb creative, and highly lucrative, partnership. They’re both making breakup noises, but both parties realize that they’re much better off maintaining that partnership. It all boils down to what kind of deal Pixar can make with Disney, although Pixar is widely acknowledged to have the upper hand, thanks to the spectacular success of all five films made under the current agreement. Jobs is already a legend in the entertainment industry for being the only man ever able to wrest a 50-50 deal from the Mouse Empire. Check out this article on CNNMoney’s site.

  4. I see a split as inevitable. I’m sure the 50/50 deal is for “profits”–and we all know how profits can dissappear. When the film Nemo grosses about $400 million and the studio gets less than $20 million (assuming they had some revenue other than Nemo, which is easy).

    I can see Disney having marketing muscle, but I don’t think that Pixar needs that anymore… and distribution — I’m sure there is more to it than sending a tape, but again, Pixar is well known and there are dozens who could distribute this. So Pixar’s success means that Disney needs them much more than Pixar needs Disney.

    Look at it this way, without disney, say the next Pixar film only pulled in a fourth of what Nemo did, say $100 million. Say they spent a huge amount marketing; $20 million. And it was really costly to distribute $2 million. That leaves Pixar with $78 million. Now all these figures came right out of my rear as an estimate, but you can get the point. With no Disney to “share” revenue, you can Quintuple Pixar profits, assuming they make movies half as good as Nemo.

  5. I don’t think a split is inevitable. One of the analysts quoted in the CNN Money piece gave his opinion that Pixar could hammer out a deal that would give them 70-80% of the profits.

  6. It’s better to hammer out a compromise. Domestically, Pixar could probably get any of the big studiios to distribute, but internationally, Disney probably would do better business; and, Disney owns the rights to sequels to ToyStory, Monsters, Inc, etc. If they split, Pixar could see Disney create their own ToyStory3, and that would really hurt if it sucked, and by association dragged Pixar down too. In the end, they’ll compromise, cause a split will leave money on the table by both parties.

  7. What could be a big factor is that Jobs and Eisner share no love for each other. Eisner was totally pissed at Apple for their “Rip, Burn,…” ads awhile back. He is freaked about the power Jobs has.

  8. Hey guys. Don’t any of you know about FOX? George Lucas got an ALL PROFITS deal from them where Lucas payed them a flat distribution fee. OBVIOUSLY, FOX can distribute, and they have incredible distribution in foreign markets. Pixar could easily go to FOX and no lose a percent of distribution. Michael Eisner is an @$$H0Le. He fired jeffrey katzenberg, who made Beauty and the Beast and the Lion King, who then went on to make the huge success SHREK. And he still wants the 50/50 deal with Pixar. Well, As Steveo just said, he knows what he wants for pixar, and he won’t accept ANYTHING else.

  9. I think it’s simple enough. Name the last 5 non-Pixar animation movies that are hits (and you can’t get any lamer than Disney’s Treasure Planet). As such, Pixar has the upper hand here. They can easily get another studio to distribute their movies. And Disney? Would they really let a guaranteed profit get away? Even as small as 10% of gross box office? Money is money… unless Eisner is stupid enough to get his ego in the way.

    I don’t really believe that Disney can effectively hold the right to use Pixar’s characters against Pixar. Aside from Toy Story 2, Pixar hasn’t really capitalize on their characters, Disney can have them. Pixar always looks for the next big thing instead of rehashing the same thing over and over…. That is the sign of creative genius.

  10. Why does everyone here want Pixar to leave Disney? The Disney brand is no bad thing to have on your product. Disney not only gives Pixar its mighty distribution channels but also the freedom to create the movies that Pixar wants to make. It is amazing that there has been no Mickey Mouse movie in 3D so far from Pixar; take that as a sign of Pixar’s freedom within Disney (not that such a project would be a bad thing in itself). Both companies are doing fine from their collaboration and both would most likely want to continue doing business with each other.

  11. Eisner pissed off Jobs when he didn’t allow Toy Story 2 to be part of the original agreement, everyone in town (Warner, Sony, Fox, Universal) would give everything (gross points) to just have the tie ins related to the pixar films. Walk into Disney World right now and everything is a character from a Pixar movie. These are the things that generate huge revenue and last for generations. Pixar had no choice years ago but they wont make the same mistake twice, Disney might keep them but they will pay and I’m sure Pixar will now want the rights to all characters from their movies. The ball is clearly in Mr. Jobs’ court and he knows it. I think it would be awesome if he made disney go all mac as part of the deal, now that would be classic.

  12. Disney animated movies are in a very sad state. Yesterday we took our son to the movies and first entered in the theater that was showing “The Jungle Book 2”. After spending about 15 minutes in that rehash of an excellent story, we moved on to the hall next to it where they were showing “Finding Nemo”. There is definitely no comparison. Any creativity that was left in Disney certainly left elsewhere.

  13. Disney is making most of its money through the PIXAR deal. If Steve Jobs were to sign to another vertically integrated major, i.e. Sony, then the Mouse House would been in serious trouble due to a lack of new franchises from which to generate income. However, PIXAR can call the shots and Eisner would be wise to no longer alienate Jobs via accusing Apple of deconstructing so-called traditional business models!

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