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In November 1993, Disney Animation Chief Peter Schneider was unimpressed with the story reels for "Toy Story," which was on track to be the world's first computer-animated feature film. The narrative centered around Woody, a cowboy doll, and Buzz Lightyear, an astronaut action figure, both owned by a child named Andy. Schneider deemed Woody's character excessively unpleasant and considered halting the project. Recognizing the gravity of the situation, Pixar's creative chief, John Lasseter, turned to Jeffrey Katzenberg, the last Disney executive supporting Pixar, to rescue the film. This marked the onset of a corporate rivalry between DreamWorks and Disney's Pixar, leading to iconic films such as "Toy Story," "Shrek," "Finding Nemo," and "Kung Fu Panda."
The roots of this competition trace back to February 1983 at Lucasfilm's computer division in San Rafael, California. There, Disney animator John Lasseter was captivated by computer-generated graphics and became convinced of their potential to revolutionize animation. However, after proposing the concept of computer-animated movies in 1985, Lasseter found himself ousted from Disney Animation Studios. Ed Catmull, who had been advancing computer animation technology, offered Lasseter a position at Lucasfilm's computer division. When George Lucas mandated that Catmull either find a buyer or face closure, Catmull approached Steve Jobs, who purchased the division for $5 million, rebranded it as Pixar, and retained the animation team.
Despite initial financial struggles, including an Oscar-winning short called "Tin Toy" that required a $300,000 investment from Jobs, Pixar faced significant losses, leading to downsizing and the sale of its computer division. In 1991, Pixar executives met with Jeffrey Katzenberg, then head of Disney Studios, and struck a deal based on Katzenberg's admiration for "Tin Toy" and his desire to bring Lasseter back into the Disney fold.
The partnership between Disney and Pixar was formalized in 1993 with a three-movie contract granting Disney extensive creative control and ownership of the resulting films and characters. Despite the agreement heavily favoring Disney, Pixar managed to negotiate a small share of box office revenues. Pixar's initial pitch for "Toy Story" was met with demands for significant changes from Disney, which led to the creation of Woody and Buzz's characters as we know them today.
By April 1994, tensions rose within Disney's leadership, culminating in a heated exchange between Katzenberg and CEO Michael Eisner over Katzenberg's potential promotion to president, which Eisner denied. Katzenberg's subsequent departure from Disney in September 1994 led to the establishment of DreamWorks alongside David Geffen and Stephen Spielberg, setting the stage for a direct challenge to Disney's dominance.
This narrative is part of the Business Wars podcast series by Wondery, produced by Hernán López. The production team includes Dave Schilling, Tanja Thigpen, Matt Gant, Karen Lowe, Emily Frost, Josh Morales, Jenny Lauer Beckman, and Marshall Louis. The series, grounded in historical research and dramatizations, offers insights into the fierce competition that shaped the entertainment industry. For those interested in delving deeper, recommended literature includes "To Infinity and Beyond" by Karen Paik and "The Pixar Touch" by David A. Price.
