Pixar Animation Studios, creator of the fantastically successful computer-animated movie ‘Toy Story’, and possessor of unrivaled technological brilliance in proprietary animation software, is now poised to give birth to a string of multi-million dollar merchandising monsters. The once tiny Pixar has attained a size where it can now churn out one big movie a year for the next three years, says chief financial officer Lawrence Levy. And if it can duplicate the success of ‘Toy Story’ this means big money. Pixar’s revenues have been bumping along at around $8m a quarter for the last two years, with a mixture of technology licensing, software sales and film income. But a five-movie deal just signed with Walt Disney Pictures looks set to change this pattern. Pixar will create the new movies, while the might of Disney’s marketing machine, the biggest in the industry, will handle the rest. And the two will split the costs and rewards fifty/fifty. Consequently, Pixar’s stock, which is 60% held by Apple’s Steve Jobs, has just started to take off again, and is currently trading at around $44, twice its IPO value from December 1995. This year’s release will be ‘A Bug’s Life’ – a 3D animated tale about a colony of ants who are being bullied by an overly aggressive gang of grasshoppers. Following this will be the sequel to ‘Toy Story’ and then a further, as yet unnamed movie is scheduled for the year 2000. The Bug’s Life plot has pushed Pixar’s proprietary graphics software to the limit, said Levy. A simulated, outdoor, bug-type location requires effects such as wind rippling through grass. Not an easy task apparently, which is why Toy Story was set mostly indoors. Secondly, many scenes involve a vast army of ants to be rendered simultaneously, a trick only recently made possible by Pixar’s software. The next big challenge is the creation of humans, whose complex skin tone and fluid clothing make realistic portrayal a nightmare. But Pixar is working hard on this, and ‘Toy Story 2’ will feature more realistic human characters; perhaps the one area where the original film fell down. Pixar pours $7.5m a year into its software development to combat these limitations, which Levy claims gives the company a five to ten year head start over the competition. Each film costs between $50m and $100m to make. But a film which takes $200m at the domestic box office (Toy Story took $184m) can go on to gross $1bn in total from clever franchising and video sales, leading to net profits of $400m, said Levy. And this is the business angle behind the cute characters. The creation of a lasting franchise, which rumbles on for many years is what the game is all about. So if you’ve already seen enough Buzz Lightyear bubble baths to last you a lifetime, you’ll be glad to know that orders are already being taken from retailers for a vast mountain of Bug’s Life lunch boxes with matching drinks bottle etc. A Bug’s life is set to be released in the US in November this year, the weekend before the Thanksgiving holiday.
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