With Disney and Universal both leaning into existing properties for their animated blockbusters, has the original cartoon gone the way of the VHS?
This article first appeared in Film Stories #51.
When Disney released The Rescuers Down Under in 1990, the studio was taking a surprisingly big swing. The first Rescuers had out-grossed Star Wars in France in 1977, and subsequent re-releases in the 1980s had convinced the house of mouse that audiences might be looking for more of the same.
But releasing a sequel 13 years after the previous instalment was a risk. More to the point, making an animated theatrical follow-up in the first place was unprecedented – Disney had never done it before.
So, when Down Under opened fourth at the US box office – behind Home Alone, Rocky V and Child’s Play 2 – it’s hard to imagine anyone was surprised. Tom Sito, the President Emeritus of Hollywood’s Animation Guild who was working at Walt Disney Feature Animation at the time, remembers studio head Peter Schneider was pretty decisive in his analysis of what had gone wrong.
“Well, obviously sequels aren’t a good idea,” he said.
The end of a golden age
When Sito entered the animation industry in the mid-70s, the ‘Golden Age’ animators of the 30s and 40s were retiring.
“I had a conversation with Preston Blair, the great MGM animator. He did a lot of beautiful work. The last thing he said to me was: ‘Don’t bother with animation. You can’t make any money in animation. You have to play the market’.”
That market hadn’t been as kind to the cartoon world as live action. Where Jaws and Star Wars were in the process of reshaping studios’ financial expectations in their own image, the animation industry was never expected to produce blockbuster earnings on a single theatrical run.
When The Little Mermaid broke all kinds of records on its 1989 debut, all that changed. When Disney followed it up with Beauty And The Beast and Aladdin, it was clear that a new economic reality was here to stay.
In fact, the “Disney Renaissance” of the 1990s would end up delivering some of the studio’s most beloved work – re-imaginings of classic stories like The Hunchback Of Notre Dame, Tarzan Of The Apes and Hamlet. Disney Animation had rediscovered what it did better than anyone else: not invention, but adaptation.
New kids on the block
When the House of Mouse entered into a seven-film distribution deal with a computer-animated upstart called Pixar, then, things really couldn’t have gone much better for either of them. 1995’s Toy Story proved itself a hit on the same level as the studio’s best in-house work. The likes of Toy Story 2, Monsters Inc., Finding Nemo, and The Incredibles soon followed – original stories that struck a chord with kids and grown-ups alike.
Pixar’s success helped mask a less rosy picture for Disney moving into the 2000s. While their colleagues down the hall counted their Oscars and weighed box office receipts year after year, Disney Animation’s 2D efforts couldn’t seem to capture the same magic as their predecessors. The Emperor’s New Groove, Atlantis: The Lost Empire and Treasure Planet took the form to increasingly beautiful, technologically impressive heights, but struggled to compete in the 21st century landscape.
To make matters worse, now they had competition. Jeffrey Katzenberg had left Disney to co-found DreamWorks with Steven Spielberg and David Geffen in 1994, but it wasn’t until 2001 that the studio’s animation branch really started to compete for the big bucks with its meta mega-hit, Shrek. Blue Sky Studios, too, was moving into the feature business with 2002’s Ice Age. And while Pixar’s Steve Jobs railed against the idea of putting out more sequels after Toy Story 2, his rivals seemingly had no such qualms. Between Shrek and Ice Age, DreamWorks and Blue Sky had fired the starting gun on franchise filmmaking worth more than $7billion.
Still, when it came to critical acclaim, Pixar was more or less in a league of its own. Disney would be mad to let them go…
Working hard and dreamily working
After the success of Shrek 2, Dreamworks’ Jeffrey Katzenberg was feeling rather optimistic. At the Cannes Film Festival in 2004, the prolific producer and businessman revealed that work had already started, not just on a third film for the insanely profitable ogre, but a fourth. This was a first, not only for DreamWorks, but the animation industry as a whole. It was rare enough that an animated feature generated a single sequel. The idea that anyone could milk three out of a single idea was almost absurd.
But this would soon become Katzenberg’s modus operandi. In a 2010 interview with Empire, he would announce not just a trilogy of How To Train Your Dragon movies and four Madagascars, but reveal Kung-Fu Panda – then a franchise exactly one film long – was just the first in a planned six-film arc for Jack Black’s loveable ursine pugilist.
Back in 2004, though, Disney CEO Michael Eisner was looking at the competition with dollar signs behind his eyes and a problem in the boardroom. His seven-picture deal with Pixar was about to expire, and there was enough bad blood between himself and Steve Jobs that the future of their partnership was anything but certain.
Read more: Does Inside Out 2 need to turn Pixar around?
Likely inspired by Katzenberg’s boldness and with Blue Sky’s Ice Age nipping at his heels, Eisner demanded Pixar get to work on a third Toy Story movie alongside sequels to Monsters Inc and Finding Nemo. In his mind, sequels didn’t count towards their existing agreement and, after the release of Cars in 2006, the animation house would still owe him a new original film anyway.
Jobs had other ideas. He re-iterated his intention to look for other partners post-Cars, and shot down Eisner’s attempts to franchise-out Pixar’s most successful creations. The only problem was, Pixar didn’t own them.
A quirk of the Disney-Pixar deal meant Eisner’s company maintained the rights to their partner’s characters. When the deal was struck in the 1990s, this hardly would have mattered. No-one made sequels to animated films anyway. But now that the landscape had changed, Disney was willing and able to make A Bug’s Life 2 or another Monsters Inc without the involvement of the original creators at all – which is exactly what they did.
Pix-aren’t
Circle Seven Animation, a 168-employee studio imaginatively named after the street its offices were built on, was founded in March 2004, and upset everyone immediately. A new division of Walt Disney Animation, the house was tasked with making three films in its lifetime: Toy Story 3, Monsters Inc. 2: Lost In Scaredise, and Finding Nemo 2. Pixar, which was gearing up to release The Incredibles at the time, was nowhere to be seen.
Animators and creatives were initially reluctant to get involved in the corporate shouting match, and the new studio quickly became known by a new name within the industry: Pix’aren’t. Eventually, though, talent began to trickle through. By 2005, Jobs and Eisner were no closer to salvaging a deal. Work began on the studio’s three scripts in earnest and, as the months ticked by, the idea that Circle Seven might be here to stay became a very real possibility.
Pixar’s star director, John Lasseter, was distraught. In a tearful speech to 800 of his colleagues, he reportedly said: “It’s like you have these dear children and you have to give them up to be adopted by convicted child molesters.”
Bob fixes it
Bob Iger, meanwhile, was in Disneyland. Celebrating the company’s newest amusement park in Hong-Kong, the man poised to take over an embattled Eisner’s job as CEO in a matter of days looked around the parade he would soon be responsible for, and had a realisation. The only characters from the last decade he could see were all from Pixar properties. Disney needed Pixar far more, it seemed, than Pixar needed Disney.
When Iger took over the title of CEO on 30th September, he brought Jobs back to the negotiating table. Less abrasive than the notoriously prickly Eisner, he rejected the idea of extending the two companies’ agreement, and proposed something simpler: Walt Disney Feature Animation would buy out its younger cousin entirely – to the tune of $7.4bn.
The deal was announced in January 2006, and by May, Circle Seven Studios was shut down. Pixar and its new owners had agreed to start work on their own version of Toy Story 3 – the work Circle Seven had already finished was deliberately shelved. Pixar’s leadership, Edwin Catmull and Lasseter, were placed in charge of Disney’s new, larger animation unit. 136 of Circle Seven’s employees were brought back into the fold, and Disney-Pixar was primed for a new era.
Sequels, sequels, sequels
That new era saw the studio take a leaf out of Katzenberg’s book. From 2010-2019, the pioneers of 3D animation made seven sequels and prequels and just four original films. Toy Story 3, Finding Dory, The Incredibles 2 and Toy Story 4 all made north of $1bn, while Walt Disney Animation, released The Lion King and Frozen II. If anything, these follow-ups to the company’s most beloved properties proved even more popular.
Outside of Disney, too, the clamour for animated franchises was getting stronger and stronger. Blue Sky President Chris Meledandri had left 20th Century Fox Animation in 2007 to create Universal’s new in-house animation division, Illumination, and soon began churning out multi-film franchises at an alarming rate. Despicable Me, The Secret Life Of Pets and Sing were soon generating blockbuster profits for cutthroat prices – to date, Illumination’s most expensive projects (The Super Mario Bros. Movie and Despicable Me 4) max out at $100m, when Disney routinely spend more than $200m almost by default.
But what did that matter, when everything Disney touched turned to Scrooge McDuck-sized piles of gold? Universal bought DreamWorks Animation in 2016 with the view to using its expanded portfolio to make more theme parks. Blue Sky Studios, three years after Ice Age: Collision Course debuted below expectations, became another casualty of the Disney-Fox merger and was quietly shut down.
By 2019, the family animation industry had become a two-conglomerate race. The rest of the big five studios – Paramount, Sony and Warner Bros. – dipped toes in the water from time to time with limited success. Almost without anyone noticing, animation had become a blockbuster-only industry. Gone were the days when a film relied on lunchbox sales to turn a production into profit; Disney and Universal had found ways to make some real money.
Originals in paradise
Box office success, however, hadn’t changed everything, and there were signs that not everyone working in the industry enjoyed the direction things had been heading. Pixar president and co-founder Ed Catmull, for one, seemed anxious about the direction the studio had taken since the Disney takeover, and in 2013 told Buzzfeed that he planned to ramp up original film production again. A year later, he described sequels as representing “a sort of creative bankruptcy” in his bestselling memoir, Creativity, Inc. True to his word, The Incredibles 2 and Lightyear were the only further franchise films to enter development at Pixar before Catmull retired in 2018.
At Universal, too, creatives were starting to worry about audience fatigue, even if the studio as a whole was sticking to its franchise-based model. “It’s important to express your own voice, because all animated movies are starting to look the same, starting to feel the same,” Boss Baby director Tom McGrath told Skwigly in 2017.
“Now, it’s all about original stories and original looks so they don’t all turn into one long movie.”
At the turn of the decade, then, it seemed that the original animated movie was poised to make a comeback. After spending years in development, Pixar’s next four projects – Onward, Soul, Luca and Turning Red – were all personal, original stories. If just a few of them could capture the public imagination like the studio’s early work, there was every chance the other studios could follow the market-leader’s example.
The first of these, brotherly fantasy-adventure Onward, arrived in cinemas on 6th March 2020. It didn’t end well.
Disney plus time
While every studio took a financial hit during the pandemic, only Disney had the misfortune of launching a successful streaming service at the same time.
Disney+ had arrived in the US, Canada and the Netherlands in November 2019, and immediately suffered with too many users. “The consumer demand for Disney+ has exceeded our high expectations,” a Disney spokeswoman said. Perhaps unsurprisingly for a launch of this size and complexity, reports of customers unable to log in or use the service’s interface at all soon began flooding in.
Here, a staggered global release turned out rather well. By March 2020 – the long pencilled-in release date for the streamer across most of Europe – a few of Disney+’s more problematic bugs had been stomped on. With cinemas now closed and the world compelled to remain indoors, the service soon became essential viewing – especially with a secret weapon of original programming up its sleeve…
Soul, the latest film from Pixar wunderkind (and Chief Creative Officer) Pete Docter, whose previous work included Monsters Inc., Up and Inside Out, was one of the buzzier original titles to emerge from the studio’s slate in years. An ambitious, beautifully animated story of a music teacher desperate not to miss out on his big break, this was originally slated as Disney’s big theatrical release of the year – and it was heading straight to Disney+.
NBC me, NB don’t
NBCUniversal’s parent company, Comcast, wasn’t quite so lucky. Its own streaming service, Peacock, debuted in the US in July 2020. Here in the UK, pubs had reopened for the first time in almost four months, but not that it mattered; four years later, Peacock is yet to travel outside the US. Earlier this year, Comcast CEO Mike Cavanagh celebrated the service passing 30m subscribers as Disney mourned its own dipping below 150m. Disney’s streaming business made its first profit in the first quarter of 2024. Comcast expects Peacock’s losses to have peaked last year at $2.8bn. The nine-month gap between the streamers’ US debuts might as well have been a decade.
Like most studios in the pandemic era, Universal found other ways to minimise its losses. Trolls World Tour, the follow-up to DreamWorks’ 2016 musical hit, was made available to rent digitally on the same day it arrived in the few cinemas still open to the public. By July, Universal had struck a deal with AMC Theaters which collapsed the theatrical exclusivity window to just 17 days – an existential change to the industry which, four years on, has yet to be reversed.
For Universal, though, it soon became clear that day-and-date releasing was little more than a stopgap. Disney had no such qualms. Under Iger’s short-lived replacement as CEO, Bob Chapek, the company began internal restructuring in October to prioritise its streaming business.
In the years that followed, Luca and Turning Red would follow Soul onto Disney+ with all the fanfare that allowed. Universal would put out Minions: The Rise Of Gru, the sequel to a spin-off of its Despicable Me franchise which grossed over a billion dollars the same year Lightyear – Pixar’s first post-covid return to the big screen – made a little over $200 million. Disney had trained Pixar’s audience to watch its films at home. The problem, at this point, was that Disney+ still wasn’t making any money…
The status quo
When Bob Iger ousted his replacement and returned to the top of the Disney tree at the end of 2022, his comeback marked a decisive change in the company’s theatrical output. In short, there would be one. Pivoting away from its outwardly successful and inwardly loss-making money pit, Disney confirmed Pixar’s next film – one of the last in Catmull’s series of original pictures – would arrive in cinemas with a 100-day exclusivity window before it became available on streaming. After the commercial failure of Lightyear and four previous films without an unincumbered cinema release – it felt like a bold call. With audiences only just returning to cinemas in numbers remotely comparable to 2022, studios on the whole were tightening their purse strings, and looking for guaranteed hits. Elemental, a fire and water rom com based on director Peter Sohn’s experience in a 1970s immigrant family, was far from a guaranteed hit.
Arriving a matter of months after Illumination’s The Super Mario Bros. Movie cemented an IP-obsessed Hollywood’s worst instincts, the contrast between Universal’s biggest film of the year and Pixar’s couldn’t be more profound. Mario’s debut broke records for video game adaptations across the animated and live-action spectrum. Elemental was Pixar’s worst opening weekend since the original Toy Story – before the studio became a household name.
Elemental, of course, ended its theatrical run as one of the year’s biggest sleeper hits. Though its $496m earnings were a far cry from The Super Mario Bros.’ $1.36bn, for any other studio, the film would have been a perfectly respectable hit. Add in a few lunchbox sales and a Disneyland parade or two, and that balance sheet starts to look pretty healthy.
But Disney stopped settling for “pretty healthy” a long time ago. Since The Little Mermaid brought the industry screeching into the blockbuster arena in 1989, animated travel has been heading in exactly one direction.
All the wrong lessons
In an earnings call in February 2024, Bog Iger raised a few eyebrows by addressing a change of strategy at the company he’d been parachuted back in to save.
“We’re leaning a little bit more into sequels and franchises,” he declared to a room full of analysts. “I think given the environment and given what it takes to get people out of their homes to see a film … leaning on franchises that are familiar is actually a smart thing.”
The ghost of the 2010s, it seemed, was living strong in the memories of both Iger and his board of investors. Catmull’s rejection of the “creative bankruptcy” the Disney takeover had inspired had come at exactly the wrong time. Onward, Soul, Luca, Turning Red and now Elemental, had all underperformed in one way or another. That only two of them ever saw the inside of an auditorium at all was a moot point. Since their films started making money, the animation industry has, like the rest of Hollywood, become one based on evidence – and the evidence that original films make blockbuster profits hasn’t been there since 2015.
Ever since Toy Story, Pixar has led the way in the field of family animated entertainment. They pioneered the shift to 3D animation in the 2000s. Their brand consistency legitimised the move to sequelisation in the 2010s. The 2020s should have seen the original animated blockbuster make a comeback. With Inside Out 2 currently the highest-grossing film of the year, it has not.
At Universal, meanwhile, work continues on The Boss Baby 3. The studio’s most recent original animation, Migration, made $228m on a $72m budget. In 1989, this would have been a runaway hit. In 2024, it may as well be a loss.
