Pixar Article

Let me get this straight. You are now arguing, herr DB, that Steve really tried to break the contract because he realized he was sitting on a gold mine and didn't want to share. Let's review:

On February 24, 1997, Job$ signs the deal.

June 1997, Job$ tells the shareholders TS2 is a video sequel.

By November 1997, Pixar requested that TS2 be treated as part of the five.

In June of 1998, even before A Bugs Life came out, Stevie reported to his shareholders that Pixar was capitulating to Ei$ner's demands to keep it out of the five.

What was the preciptious event that DB intimates? What lightning strike hit Job$ and made him realize literally only a few months after inking the deal that he was sitting on a gold mine? There is none. The argument that Job$ woke up in November of 1997, and suddenly had an epiphany about the true value of his company is malarkey. Puhlease.

Which makes more sense, the above version, or the scenario where Disney's independent rep and the heads of the story team at Pixar jointly realized they had a great story on their hands, and ramped up production. And that Job$ then realized that Ei$ner was going to hold Pixar to this little "clause," in an 'unintended' manner. Version Two, please, with a side order of vindication, but hold the hubris. ;)

Oh and thanks for the contract link. You did notice that whole sections of Section 15 have been excised for privacy reasons, and trying to put it back together is more than a bit confusing. But the gist of the contract is clear. Section 15 says derivative works can be video or theatrical, and that theatrical does not get included in the five.

Aha! says crusader. Oho! says DB. The argument ends. Oh really? Crusader, you are forgetting that definition of the argument is the key. The argument between me and DB is whether or not Ei$ner jerked Pixar around by using a technical "loophole" or "clause" unintended by the parties to be used in that manner to squeeze one more film out of Pixar. HOW DOES THIS LANGUAGE PROVE DB'S POINT? It doesn't, because it does not address what the parties believed to be theatrical works are. It is clear, however, from Job$ statements before and after the scrum, that at least Pixar never envisioned being asked to make TS2 (contract or no contract) and pushing off their independence for at least two years for nothing.

Remember, I don't have to disprove that Job$ wanted out of the contract; that's a given. I don't have to prove that the contract was crystal clear in my favor; all I have to prove that Ei$ner was at fault in the bad blood between them, by holding them to this language, when the circumstances of the industry was changing before their eyes.

Crusader, I know that theatrical releases can come from and be determined to be derivative works. That's not the point. The question is was the application of this story, TS2, as a theatrical release intended by the parties to be a derivative work that is not counted in the five. Forget DB's arguments just for a second, and remember the history. Steve told you in the annual report that as far as Pixar knew there had been only ONE ever animated theatrical sequel, and that was Disney's own Rescuers Down Under.

Remember that this was the time of Aladdin II and III, with Little Mermaid under development, and Ei$ner throwing out ideas (that eventually were followed) to Sequalize every single animated property in the library and show them in the theaters quickly to generate profits. So as Pixar signed the contract, they knew that Disney may give them the option to make cheaper to produce, less labor intensive derivative works that could be released into theaters. What better way to cut a new animator's teeth, then to stick him with the software and sets that were already prepared, whip out a new story, and presto gizmo, instant video, big dollars (from a profit standpoint).

I can't say it any clearer. Neither Pixar nor Disney intended that a fully developed, fully staffed, fully invested sequel to Toy Story (made with better standards than the original, and costing Pixar the manpower and resources to work on Picture 4, delaying that picture by up to two years) would be out of the five picture deal.

What Job$ was asking for was fair, could be read under the contract as proper, and Ei$ner's pigheaded decision to use this contractual set of tweezers to pluck another free film was short-sighted. It was also, as DB has ignored even though I've posted over and over about it, part of Ei$ner's modus operandi. Why question Job$'s motivations, when Ei$ner's history is laid bare for all to read in his dealings with 90% of Hollywood?

Even assuming you are right, that Pixar knew or should have known that TS2 was out of the five, was it the right thing to do? Did Ei$ner do right by Pixar, and eventually, by his own shareholders? When you are not making widgets, and are relying on artists to produce creative output, should you really twist their arm that hard? Should you really leave bruises, lacerations, and broken bones?

Nope. And if you think he did, why don't you tell me all about it the next time we ride Star Tours 2.0 together. Or maybe you can have Robin Williams write a chapter in his autobiography detailing how much of a prince Ei$ner is when it comes to contracts...





As an anecdote, here in Job$'s own words, is the key reason ramped-up production was the reason why it should have been counted:

Toy Story 2 began life as a direct to home video sequel. Let me tell you why. After the success of Toy Story, it was clear that audiences wanted to see more of Woody and Buzz on the big screen. But most of the team that created and produced Toy Story were already working on our next feature, A Bug's Life. Even with a handful of Toy Story veterans in key positions, we thought it would be almost impossible to recruit a second crew as talented and experienced as the original Toy Story one. So we decided to make a sequel that would be measured by a gentler yardstick--a direct to home video sequel. This was our plan when I reported to you last year. But we were wrong. We underestimated Pixar's gravitational pull--it has become one of the hottest places to work in our industry--and by the fall we had pulled together an incredible team to make Toy Story 2. With a world-class crew in place, the only remaining question was "Is the story good enough?" That question was answered when Pixar and Disney viewed the complete story on "reels" last November. The decision was clear and unanimous: to expand Toy Story 2 into a full theatrical feature for release during the 1999 holiday season.
 
all I have to prove that Ei$ner was at fault in the bad blood between them, by holding them to this language, when the circumstances of the industry was changing before their eyes.
I've already conceded that Eisner outmaneuvered Jobs.

But why fault him for exercizing a major powerplay? Don't you think it was inevitable that this venture would outgrow itself?

They both had to have seen it. I believe that's why Jobs wanted to cash in and why Eisner didn't.

You can't admonish one's greed over another. They are equally to blame.

But you answered your own question here: "The question is was the application of this story, TS2, as a theatrical release intended by the parties to be a derivative work that is not counted in the five."

First there's the obvious yes because they spelled it out in the contract. Even if they used the characters or any other creative offspring from the original to build a major feature film, it constitutes a derivative. They know this.

But if you're arguing that it all boils down to some false assertion on Pixar's part that a derivative in theory would automatically exclude the animated feature film TS2 - because an implication exists that sequels are of a lesser standard than the content of TS2 - I'm not buying it.

They know the capability of their work and they knew if they were to be involved in the development of any sequel it would have to be in accordance with their standards which are the highest in the business. They can't work any other way.

So who's kidding whom? Maybe Jobs didn't anticipate a sequel coming along as quickly as it did when he executed the contract. But he certainly understood the potential for it to manifest itself into a major film.

In Jobs own words he is admitting that a theatrical sequel could be a major animated feature film:

Steve told you in the annual report that as far as Pixar knew there had been only ONE ever animated theatrical sequel, and that was Disney's own Rescuers Down Under.

Even if he only had one prior example, isn't he acknowledging he has a full awareness of the prospect? You can't then claim you were dupped into a false premise. We're not dealing with an amateur here.
 
Originally posted by airlarry!
Let me get this straight. You are now arguing, herr DB, that Steve really tried to break the contract because he realized he was sitting on a gold mine and didn't want to share...Which makes more sense, the above version, or the scenario where Disney's independent rep and the heads of the story team at Pixar jointly realized they had a great story on their hands, and ramped up production. And that Job$ then realized that Ei$ner was going to hold Pixar to this little "clause," in an 'unintended' manner. Version Two, please, with a side order of vindication, but hold the hubris. ;)
What I'm arguing is that the contract clearly provides that (1) TS2, if being produced for a full-blown theatrical release (as happened in the end), was clearly a "Derivative Work" and didn't count toward the 5 pictures, and (2) TS2, if being produced for DTV (as it began), was clearly a "Derivative Work" and didn't count toward the 5 pictures. Your failure to accept the clear language of the contract and give up your feeble "Theatrical Motion Picture" = DTV argument is becoming pitiful. If I only had the Glossary of Terms for the Co-Production Agreement, I could put that argument to bed for good.

What I think happened is that, as you said, both parties realized that TS2 was turning into a good property, and was worthy of being converted from DTV to full feature status. Job$ realized that his choice was either (1) decline the option to produce TS2 as a feature, and fight with Disney about how they would recover the costs already sunk into the TS2 DTV production, or (2) proceed with the feature production and make a ton of money off of it. Somehow Job$ derived from this that Pixar was being wronged, and tried to invent some argument as to why TS2 feature film should count toward the 5. But in the end he had to live up to the clearly-worded contract.

Remember, I don't have to disprove that Job$ wanted out of the contract; that's a given. I don't have to prove that the contract was crystal clear in my favor; all I have to prove that Ei$ner was at fault in the bad blood between them, by holding them to this language, when the circumstances of the industry was changing before their eyes.
Let me get this straight. Job$ wants to change the terms of the deal, in a manner that only gets Pixar out of the deal sooner (with no corresponding concession to Disney of any kind), and Eisner is at fault for saying no?

When you are not making widgets, and are relying on artists to produce creative output, should you really twist their arm that hard? Should you really leave bruises, lacerations, and broken bones?
Oh, please. This was not a dispute over creative issues. It was Job$ seeking more dollars and Ei$ner saying no.

"After the success of Toy Story, it was clear that audiences wanted to see more of Woody and Buzz on the big screen."
That's your quote from Job$. Doesn't that "big screen" comment undermine your whole argument about thinking all sequels were to be DTV?
 
You know, to me, all this boils down to is whether each is making the best decisions for his company.

In Jobs case, I think he is taking a bit of a gamble by not inking a deal with anyone, unless he really is looking at going it alone. Its hard to imagine The Incredibles increasing his leverage much, but it could possibly decrease it, if its not the mega-hit we've come to expect.

As far as trying to renegotiate, there's nothing wrong with that. If you can convince the other side to tear up a deal and sign another, that's fine. Jobs wasn't able to get Eisner to do that.

Which brings us to Eisner... Setting aside my opinion on Disney's strategic direction from the get-go, yes, it looks like he outmaneuvered Jobs and got what he wanted.

But was that really in the best interest of his company? Certainly in the short term it was.

In the long term? Debateable to say the least. Pixar's leverage has grown significantly since then. Would it have been better to give in on the TS2 thing, but at the same time sign some kind of extension, or even renegotiation of the final few films? Sure, the terms would have been lesser for Disney, but certainly they would have been better than what they could get from Pixar now. Pixar had less power, and Disney still had some leverage in that more films remained on the existing contract than now.

What could have been done? None of us know for sure, but the end result is that Pixar is in a better position today than then, and Disney's leverage has diminished.

No matter what one thinks of Eisner, you have to admit that on a go-forward basis Disney is in a less than optimal position for two reasons:

1- Pixar will either be making films with somebody else soon, or they will make them with Disney under a much less favorable agreement for Disney.

2- For whatever reason you want to provide, Disney has not shown the ability to simply turn on a spiget and start producing hit films to replace the Pixar films.

So again, Eisner got what he wanted in the short run, but there's no doubt it could cost him* in the long run.

*really, I should say cost Disney, since Eisner will likely be long gone before the long term impact of his decision makes itself known.



And guess what - the market caught up. Shark Tale leads for the second straight week.
Just as Ice Age did not mean the market had caught up, neither does Shark Tale. Its still early of course, but I don't think Shark Tale is tracking towards $200 million, is it?

A great success, no doubt. But not the level Pixar has done. Further, as we've agreed, ST benefitted from being the follow-up to the Shreks as well as capitalizing on the ocean theme (Nemo meets The Godfather...).

Pixar may not be the only game in town, but they are still the unquestioned leader. Dreamworks gets the nod for a solid second, but until they can produce a mega-hit with something other than a Shrek, that's where they stay.

Everyone else, including Disney, is looking for a way to make their share too. Not so bad for a start-up just trying to make some money. But for Disney, a company who has built one of the most recognizeable brands in the world on being the best, its a problem. Its a problem that will take time to manifest itself, since they own Pixar's past stuff, but a problem nonetheless.

Synergy isn't as much fun when you don't have the best content anymore.
 

I yield. I read Pixar's statement as proof that they interpreted the contract to mean that TS2 was a home video derivative work, but that these home video DTVs, if released to theaters, would not count toward the five. You seem pretty confident that the contract's definition of "theatrical release" is what you say it is, and Ei$ner correctly interpreted the contract.

I checked "the source." I looked back at AV's post, and he said something like, ironically both sides were right. Ei$ner had the contract in place the way he liked it (and according to some it was a different clause from the interpretation of Contract 1), but Jobs and Lassiter never intended to allow Disney to prolong the contract by holding Pixar's creations hostage to force Pixar to create sequels.

You will neither admit that Pixar interpreted the contract that way nor that it was their intention when they entered the contract, despite all anecdotal and circumstantial evidence to the contrary. You have not and will not admit that this treatment of Lassiter is one of a long list of examples of Ei$ner playing hardball in an arena where hardball gets you thrown out. Can't widget-produce animated features, you know.

We have reached our second impasse in as many years.

As a side note, when I checked around, I realized that even back in 2001, you had no faith in the chance that Jobs and Eisner could patch their differences. I don't necessarily disagree with you on that point. For some reason back then you seemed open to the idea that it was the mutual fault of both parties (although I may be reading you wrong), but now you seem bent on defending Ei$ner and crushing Job$. Why the change of heart, if I am reading your first rumor board post correctly?

The nasty reason why Eisner got ‘Toy 2’ for free was that he told Pixar in no uncertain terms Disney would leave Pixar without a distributor and drive them into bankruptcy unless Buzz did EXACLTY what he was told. Not really very helpful when you want to build a long-term relationship.

This mess is all on Eisner’s back. A once powerful and beneficial partnership has been destroyed by greed. Pixar will come out of this as a very strong motion picture producer with a strong brand and good distribution. Disney’s entire computer animation efforts right now is Eisner’s son playing with his iMac.
*
*A classic post from AV, circa 2001.


Seems to me that the argument that Disney is shooting itself in the foot re TS3 only make sense if you assume that somehow an extended future with Pixar is/was possible.

It appears that Pixar wants to satisfy its 3-picture contract ASAP so it can shop itself around as a free agent. Pixar's unwillingness to do a longer-term deal with Disney may be partly based on the clash of egos, etc., but mostly it knows that it has something to sell NOW and it wants to hit the market while it's hot. (Query what happens if the next 3 are dogs?)

So Eisner is offered the chance to get three brand new pictures from a proven hitmaker, or get TS3 plus two new pics.

And you know that you could make TS3 without Pixar (based on other posts hereSure, the Pixar TS3 might be sure to be profitable, and sure, Pixar's TS3 might be better than the one Disney makes in-house or with another contractor, BUT, it seems like a no-brainer for Eisner (insert your joke here) to get 3 potentially blockbuster new franchises rather than the tail end of one franchise plus 2 new.
*
A classic post from DB.
 
I certainly feel (and believe I have said in the past) that Eisner could have been a lot more warm and fuzzy with Jobs over the years--and perhaps Eisner's biggest character flaw is his inability to play well with others (Katzenberg, Jobs and Ovitz) since Wells' death. For many (not you, Larry) that fact alone is enough reason to blame Eisner for the failure to obtain an extension of the Pixar relationship.

I just think that if you really look at the history, this isn't a case of Eisner picking on the poor artistes at Pixar. Rather, it is a classic business battle between CEOs with large egos and plenty of resources on both sides (including, on BOTH sides, high-priced attorneys who knew darn well what the 1997 agreement meant and how it differed from any earlier agreements).

I see in that history that Jobs wanted to fulfill his Disney commitment ASAP so that he could shop Pixar among all of the possible partners to get the best deal. I see no indication that there was a long-term below-market deal on the table for Eisner to take if he was just willing to kiss up to Jobs and take a somewhat smaller cut.

I also don't think Jobs will really hesitate to enter into a new deal with Disney if it's the best deal on the table. That being the case, I don't think Eisner's flaws have really significantly hurt Disney in its chances to keep Pixar. Either a mutually beneficial business deal will be there for Pixar and Disney, or Pixar will find someone else to partner with, on terms that really wouldn't be attractive to Disney.
 
Well stated, even though you and I don't agree. IMO, the blame is not with Ei$ner solely on some theory that the buck stops with the executive or the CEO is the captain of the ship and takes all blame. I believe I have cited enough rumor, speculation and innuendo, ;) if taken even partly true, to suggest that Ei$ner's tougher-than-needed tactics have been the primary cause of this row. We'll agree to disagree.

However, do you have an opinion as to what deal would be best for Disney with Pixar? There's talk that Lucas' deal with 20th Century Fox is a 5% distribution deal, and that Pixar wants somewhere in the neighborhood of 7.5%.

If the deal is distribution only, with a proviso that Disney retains exclusive right to license future characters for use in the parks as an incentive to take a low number, should Disney do it? Please don't tell me you think Disney can or should concentrate on CGI to the detriment of its now extinct FA business?
 
I dunno. What's the opportunity cost? On the one hand, given Pixar's record, you might like to have future Pixar characters in the parks. On the other hand, Disney would much rather be exploiting characters as to which they own a bigger piece of the residuals.

And what would a new agreement say about release date windows and such?
 
Good points. Obviously, you see by now that either Pixar put themselves in a bad position or Disney exploited a loophole here when it came to production, and the same could be true for release windows.

One, how can Pixar trust that if Disney signs another 5 picture deal for a split of the profits (let's say its 90/10 instead of 50/50 this time) that Disney won't focus more on the sequels, forcing pixar into the hard choice: Spend valuable time, resources and manpower to ride herd over the sequels, or allow Disney to dilute the brand with cheap, massly produced, thinly scripted, DTV "squeals."

Two, how can both parties trust the other to prepare the movies, and hold release windows, that will benefit both parties. On Pixar's part, it seems obvious. It's their name up on lights now. On Disney's part, I dunno. If Disney does intend to get into CGI, Pixar then becomes a competitor for release dates.

Of course, we all know that Ei$ner would never play dirty pool over either of these two issues, or try to threaten the Pixar people with crappy sequels put out by Animations R Us, now would he?
 
To me, it's not a matter of "dirty pool" and such, it's just a business negotiation. I expect Eisner to use all of the clubs in his bag, and Jobs to do the same.

As to the sequel issue, perhaps Pixar has the bargaining power now to provide that they control that decision.
 
Spend valuable time, resources and manpower to ride herd over the sequels, or allow Disney to dilute the brand with cheap, massly produced, thinly scripted, DTV "squeals."

If Pixar signs another deal with Disney, or anyone else for that matter, and again finds themselves in that position, I can only assume that either (A), thats what they wanted, or (B), they weren't smart enough to craft a deal that avoids being put in that position.

10+ years ago they didn't have the option of negotiating those kinds of terms... now they do.

Release windows should be another issue Pixar gets written into the contract. Remember, besides their own CGI, Disney has already signed a deal with another CGI company.

To me, it's not a matter of "dirty pool" and such, it's just a business negotiation.
I agree, its not dirty pool when its negotiated up front. But one also has to know when to play hard ball and when not to. That's an area where I think Eisner has struggled.
 




New Posts









Receive up to $1,000 in Onboard Credit and a Gift Basket!
That’s right — when you book your Disney Cruise with Dreams Unlimited Travel, you’ll receive incredible shipboard credits to spend during your vacation!
CLICK HERE






DIS Facebook DIS youtube DIS Instagram DIS Pinterest DIS Tiktok DIS Twitter DIS Bluesky

Back
Top Bottom