Wednesday, May 24, 2017

Pixar News Articles for May, 2017



It's been a long time since I've written a "Pixar News Article" post, but with the Cars 3 marketing machine fully ramped up, there have been a number of excellent behind-the-scenes articles and interviews.

Jay Ward, the Cars creative director and franchise guardian, shared this article regarding how Pixar brings Cars to life, with a focus on authenticity. And this Sahm Reviews article discusses story aspects and some of the challenges that Cars 3 presented with Bob Peterson, Scott Morse, Kiel Murray and Mike Rich.

The Pixar Post released a new podcast episode with the first in their series of interviews they had during the Cars 3 blogger press day a few weeks ago. This interview was with Production Designer Jay Shuster, Character Supervisor Michael Comet and Directing Animator Jude Brownbill, and covered the design, rigging and animation of the multitude of characters in the film.

There was some non-Cars 3 news too. In this Digital Arts article, Pixar's Matthew Luhn talks about the impact storytelling can have on people. Luhn also shares his opinions on how virtual reality is changing and how storytelling can work within that medium.

The next few months should be exciting, with more articles and interviews on Cars 3, and then we should immediately start seeing a lot more Coco news!




Sunday, May 21, 2017

This Day in Pixar History: Pixar's 1999 Annual Report



I've written a number of posts on the earning reports Pixar released when they were a public company. I began with their first report as a public company, the 1996 annual report, and now am reviewing the 1999 annual report. But I thought it would be fun to look at their earnings as someone considering buying Pixar stock.

To be clear, nothing in this post should be construed as stock advice or a recommendation to buy or sell any stock. One of the first rules of investing is to do your own due diligence. The point of this post is to highlight some of the numbers and factors one might look at when analyzing a company, using Pixar's 1999 annual report as a concrete example.

A Thinking Machines CM-5 Supercomputer
In addition to doing due diligence, an important investing rule (at least for me) is to be interested in the company. I know from my own experience, when I'm interested in the company I'll spend the time to research it, keep up with their press releases, read their quarterly and annual reports, etc. Fortunately, I was very interested in the company. I was an early investor in Pixar, with my first stock purchase in 1997. I wish I had kept a diary so I could better remember my thought process in why I bought the stock. Obviously I loved Toy Story and saw the potential in computer generated animation. Even prior to the release of Toy Story I was aware of the company. In the early 1990s I was working at the Minnesota Supercomputer Center, doing system administration and system programming for their Thinking Machine supercomputers. A number of folks on our team were involved with computer graphics and were aware of the work Pixar was doing in the field. Plus, during a conversation with Pixar's Bill Reeves, I learned Pixar had used one of our Cray supercomputers to render one of their early short films.

While at the Supercomputer Center, I also had the opportunity to hear Pete Docter speak at a conference I was attending. I believe it was his talk that introduced me to Pixar.

Getting back to Pixar's 1999 annual report, what can we learn? A couple of questions investors usually ask about a company is, is the revenue or sales of the company growing, and is that sales growth sustainable? Sales growth is what propels a company's stock price higher. From those sales we hope it covers all the expenses of the company and ends up on the "bottom line", which is more commonly referred to as net income. Sales, expenses and net income can be found on the income statement. For Pixar, their revenue is pretty straight forward, primarily coming from making their films - theater ticket sales, home videos and merchandise. If you've read my article on the film production agreements Pixar had with Disney, you may recall that Pixar and Disney split all profits 50/50 as well as the expenses to develop the films. In 1999, Pixar's revenue was $121 million. Even though Toy Story 2 had just been released in November of 1999, Pixar made no money from it during 1999 - that money would be earned in 2000 and later. In 1999, over $110M of their revenue came from A Bug's Life, which was released in November of 1998. This amount included theatrical, home video and merchandise sales. They also made $4.1M from Toy Story merchandise, television royalties and home video sales. The rest of their sales came from $5.7M of RenderMan sales and less than $1M of animation services.

From the $121M in revenue, Pixar deducted $46.5M in film development costs and other expenses such as research and development, sales and marketing, and general administrative costs. In addition, they paid almost $33M in income taxes and made about $7.5M in interest on their cash and investments. In the end, this gave Pixar a little over $49M in net income.

How did these results compare to previous years? Well, since Pixar hadn't released a film since Toy Story in 1995, they compared extremely well! For 1998, Pixar only had $14.3M in revenue and almost $8M in net income, while in 1997 the did a little better with $34.7M in revenue and $22.2M in net income.

Not only did revenue and profits jump dramatically in 1999, but their balance sheet was strong. The balance sheet shows how much assets (cash, bonds, property, equipment, etc) and liabilities (salaries to be paid, debt, upcoming income taxes, money owed to Disney, etc) the company has. At the end of 1999, Pixar had about $195M in cash and investments, plus other assets of $180M for total assets of almost $375M, while they had no debt and only owed $30.5M, giving them a net worth of over $344M. And the balance sheet was getting stronger - from the $121M in total revenue for the year, over $109M of that ended up as cash the company could use for buying more computers, developing films and putting in the bank. I think it's clear that A Bug's Life was very profitable for the studio!

So going back to the questions I asked earlier, in regards to sales growth, I think it's clear that Pixar had this covered! As for the second question, whether the growth was sustainable, I think this is where it helps to really understand the company. What I mean is that while 1999 was a banner year compared to 1998, revenue and income in 1998 dropped from 1997, when Pixar was receiving more income from the international and home video releases of Toy Story. Up to this point one could say Pixar's profits were lumpy and not consistent, rising when a new film was released and falling just as dramatically the year after. This "lumpiness" might scare off investors who didn't look deeper at the company and the film production agreement Pixar had with Disney.

But I think there were strong signs as to why Pixar could continue growing their revenue and net income.

First was the new Co-Production Agreement with Disney. As I mentioned earlier, Pixar received half of all the profits from A Bug's Life and any of their other future films. The impact the new agreement would have was already clear. I wrote a post about how much money Pixar made from Toy Story. That film was produced under Pixar's original agreement with Disney, where they received a much smaller percentage (closer to 10% - 15%) of the film's profits. While I don't have the exact numbers, in the 3 year period after Toy Story was released, I estimate Pixar received about $56M. Compare that to just one year of revenue from A Bug's Life where they made $110M, or almost double all their revenue from Toy Story!

Second, Pixar had a set a goal of delivering a new film every year. They weren't there yet - Toy Story came out at the end of 1995, and it was 3 years before A Bug's Life was released. But Toy Story 2 came out 1 year later, and Monsters, Inc. would be released 2 years later (with Finding Nemo about 18 months after that). One could see that Pixar received significant revenue from Toy Story for over 3 years. So even if their next films weren't as successful as Toy Story, I think it was clear their earnings "lumpiness" would smooth out as they approached delivering a film every year.

I also think it was clear their growing film library would continue delivering results long after the films had left the theater. I wish I could say I had the foresight to see all the ways Pixar could have a positive impact on the Disney corporation. I'm not sure I envisioned theme park lands being devoted to one of their films, or that sections of resorts would be named after other films, or that Disney theme parks would dedicate entire weekends exploring the development of their films or celebrating the studio's 30th anniversary. But I do think it was obvious Disney was making good use of their partner. Pixar characters were showing up in parades at the Disney theme parks, and Buzz Lightyear had his own attraction at Disney World's Magic Kingdom (which opened in late 1998), all of which would help keep the films and its iconic characters in people's minds, helping drive additional merchandise sales beyond the ebb and flow of their film releases.

All of these factors pointed to the strong possibility of continued growth for the company.  Were these factors reflected in Pixar's stock price? Well, the price stayed between $15 and $25 from 1999 through 2001 (note, all prices are adjusted for the 2-for-1 stock split the company declared in early 2005). Even into the beginning of 2002 one could buy their stock for around $15. But then in 2002 it began a steady climb for the next few years, going over $50 before the company announced its merger with Disney at a price of almost $60 in early 2006. For that period, from early 2002 to early 2006, Pixar's stock price returned over 30%/year, compared to the average annual return of 8% - 10% for the overall market! We will never know, but I think Pixar would have continued to be an exciting company for shareholders if they hadn't merged with Disney.

Thursday, May 4, 2017

This Day in Pixar History: Ed Catmull Gives University of Utah Commencement Address

© Disney/Pixar

Five years ago today, on May 4, 2012, Ed Catmull, president of Pixar Animation and Disney Animation, gave the commencement address at the University of Utah. Catmull studied at the University of Utah, earning bachelor degrees in physics and computer science plus a Ph.D. in computer science in the mid 1970s. One of his goals after graduating was to make the first computer animated film, which he succeeded at with the release of Toy Story two decades later.

Catmull gave an inspirational speech that included a number of references to both Pixar and Disney films, and the cultures of the 2 companies. Much of his speech spoke about the importance of accepting change and planning for unforeseen events rather than trying to prevent them. The University of Utah has a video of the commencement. You'll need to forward to the 98 minute mark to get to his speech.

Once you've finished watching the address, if you'd like to hear more from Catmull, check out the April 13th episode of the Motley Fool Money podcast. This is a repeat episode where Chris Hill interviewed Ed shortly after the release of his book, Creativity, Inc.: Overcoming the Unseen Forces That Stand in the Way of True Inspiration. In addition to some of the points he made in the commencement address, he talks about how most Pixar films are bad at the beginning of development, and the importance of protecting the team during those early phases.

Monday, April 24, 2017

This Day in Pixar History: Pixar Announces Coco




Five years ago today, on April 24, 2012, Pixar announced their film lineup through 2015 at CinemaCon. This was an exciting time for Pixar; it was only a couple of months before the release of Brave, and Monsters University was well into production with a release date of the following year, and all of us Pixar fans were clamoring to hear about a couple other untitled films. Back in 2011, Pixar had announced that Bob Peterson and Peter Sohn were working on a film, and all we knew is that the working title was The Untitled Film About Dinosaurs. Well, during the conference Pixar tweeted the official title, The Good Dinosaur. In addition, we knew Pete Docter was also working on a new film, appropriately titled The Untitled Film That Takes You Inside The Mind, but at the conference it received its official release date, June 19, 2015.


The final announcement was that Lee Unkrich was teaming up again with Darla K. Anderson to bring us a film about the Mexican holiday Dia de los Muertos. Unkrich and Anderson had last worked together on the 2010 blockbuster Toy Story 3. Very little else was known about the film, no release date was provided (although rumors were that it would come out in 2015 or 2016) and all we were left with was this short synopsis:
From director Lee Unkrich and producer Darla K. Anderson, the filmmaking team behind the Academy Award®-winning “Toy Story 3,” comes a wholly original Pixar Animation Studios film that delves into the vibrant holiday of Día de los Muertos.


 Now, 5 years later, we're just a little less than 7 months away from the release of Coco!

Coco looks to be a visually stunning and unique film! Thinking back to the announcements from that day in 2012 fills me with anticipation and excitement for Pixar's future. Between those announcements and now, not only did we get the films we knew about (Brave, Monsters University, The Good Dinosaur and Inside Out), but Pixar also released Finding Dory last year, which was the number 2 film of the year, only behind Rogue One: A Star Wars Story. And before Coco comes out later this year we're getting Cars 3 this summer! I'm so excited to go back and explore this world, and expect it to be one of the biggest hits of the summer. That's a total of 7 films. What does that mean for the next 5 years? After Coco, there are only 2 officially announced films, The Incredibles 2 for 2018 and Toy Story 4 in 2019. Plus, there are 2 untitled films scheduled for 2020. What are those 2 films, and what's in store for the following 2 years? And then what will be on the slate 5 years from now? Here's a few names to think about: Pete Docter, Pete Sohn, Bob Peterson, Dan Scanlon, Ronnie del Carmen, Enrico Casarosa, Angus MacLane, Mark Andrews, Andrew Stanton. Thinking about these folks and what they may be dreaming up just gets me pumped for Pixar's future!



Thursday, February 16, 2017

This Day in Pixar History: Development of the First Cars Film



Pixar's next film, Cars 3, will be in theaters exactly 4 months from today, and the marketing for the film is definitely heating up! We've had that shocking teaser trailer plus the special preview that took place at the Detroit Auto Show (check out the great write-up from the Pixar Post). I can't wait!

While waiting for Cars 3 to arrive, I've been spending time watching the two earlier Cars films and their bonus features. I've previously written about my love for the original Cars, including a couple of my own trips along the Main Street of America, but I thought it would be good to explore one specific aspect of the film's development. I very briefly mentioned this in the last line of a post back in 2013 but only recently thought about the impact it must have had on the company and employees.


The development of Cars can be traced back to 1998 near the end of production for A Bug's Life, when story artist Jorgen Klubien began development on a concept referred to as The Yellow Car. The story really took off in 2001 after director John Lasseter took his family on a cross-country road trip that included driving on Route 66. As with all Pixar films, there was plenty of research done. For Cars, that included a couple of road trips along Route 66, which were highlighted in the Route 66 Memory Lane bonus feature on the Cars DVD and Blu-Ray. In the feature, you can hear John's passion as he recounts many of the people and locations they saw as they traveled the Mother Road, and I loved seeing how much of the design, look, characters and even the pacing of the film were influenced by what they experienced. At the end of the feature, John states that Cars is the most personal movie he's ever made. I don't think there's any doubt that these films are a labor of love.

So imagine what it must've been like for Lasseter and the rest of the crew that as they were pouring their heart and soul into this film, they were on the verge of losing the rights and access to not only the characters in this film but all the characters they'd brought to life in their previous 6 films.


To elaborate, during the time Cars was being developed, Steve Jobs and Pixar had tried to renegotiate their 10 year, 5 film Co-Production agreement with Disney. Cars was the last of the 5 films to be delivered under the agreement. The negotiations started in early 2003, and 10 months later, on January 29, 2004, Pixar announced they had terminated the negotiations and would find a new partner to distribute their films.  According to their existing agreement, Disney retained rights to all films and characters created under the agreement. In addition, Disney could create sequels or use the characters in their theme parks. Pixar would have the opportunity to participate in, and receive compensation for, any sequels, but if they declined to participate, the final decision to move ahead resided solely with Disney. In fact, near the end of 2004 Disney announced they were moving ahead with a Toy Story 3 sequel without the involvement of Pixar.

This had to be one of the most nerve-racking times for the employees at Pixar. Throughout the last 2 years of production, they were working on a film knowing that once complete, they would hand it over to Disney and lose the rights to their work. I can't imagine how difficult it must have been to come into work knowing this and still being able to keep their focus, and produce a film full of fun and heart, one with great messages of loyalty and the importance of slowing down and enjoying life.

I think for many companies this would have been too much. The devastation of losing all of your creations of the past 15 years, and the uncertainty of what the future held would've torn them apart. But in Pixar's case, it seems it had the opposite effect. I think it solidified the company and brought everyone together. They may not have known what was ahead, but they put all their passion and focus into their work and each other, committing to come up with better stories and characters. They maintained their optimism for the future.

I just love this segment of old Route 66, near Auburn, IL.


In the end, things turned out well. In the fall of 2005, Disney CEO Michael Eisner resigned from the Walt Disney Company, and President and Chief Operating Officer Bob Iger took over. Immediately, relationships between Disney and Pixar began to improve. And in late January, 2006, almost exactly 2 years after announcing they were terminating their agreement with Disney, Pixar announced it would be merging with its larger partner, which took place 4 months later, just one month before the release of Cars.

I think as proof of the positive impact these events had on the company, just look at the domestic box office totals (from Box Office Mojo) and critical success (from Rotten Tomatoes) of the 4 films Pixar released after Cars:

Ratatouille (2007) - $206M, 96%
WALL•E (2008) - $224M, 96%
Up (2009) - $293M, 98%
Toy Story 3 (2010) - $415M, 99%

As you can see, each consecutive film had higher results than its predecessor. This is how one turns adversity into success, and is another example of the strength of Pixar's people and culture.


Wednesday, January 4, 2017

My Favorite Pixar Interviews and Podcasts, 2016 Edition

While I think many people were pretty happy to see 2016 come to an end, animation had a great year! Disney Animation had 2 great films in Zootopia and Moana, plus there were Kubo and the Two Strings, Sing, The Secret Life of Pets, and of course Finding Dory, which became the highest grossing animated film of all time, as well as the top grossing film of 2016 (domestically). I think 2017 is also shaping up to be an awesome year!


I listen to a lot of podcasts, and as I've done in the past I wanted to highlight a few of my favorites from the past year. Some are purely animation or Pixar related, while a few are more general. Some are interviews of Pixarians, others are somehow related to the Pixar universe, and one is a podcast hosted by Pixar artists. Hopefully some will be new to you!

Let's start with a couple that I've mentioned before and that I'm sure you're all familiar with. First is the Pixar Post - it's your one-stop shop for all things Pixar. T.J. and Julie do an awesome job covering the news and bringing you behind-the-scenes information. They've also done so many great interviews with Pixarians. One of my favorites this year was their interview with Piper director Alan Barillaro.

The Animation Addicts Podcast by The Rotoscopers is a general animation podcast where Morgan, Chelsea and Mason review films and cover animation topics in nerdy couch discussions! Never boring and filled with film quotes as well as plenty of laughs, it was a banner year for Pixar as the trio reviewed 4 of their films - A Bug's Life, Finding Nemo, WALL•E and Finding Dory.

I've mentioned The Incomparable in the past. Not just one podcast, I think they have around 20 different shows that cover all aspects of pop culture - films, books, comics, science fiction, etc. Jason Snell and his guests had 2 Pixar-related podcasts this year, where they reviewed Toy Story 2 and Toy Story 3.

Dan Taylor, more commonly known as Dan the Pixar Fan, is one of the biggest Pixar fans I know! He does a post every day (how does he do that?!?!) on one of the pieces of Pixar merchandise in his collection or a Pixar-related experience. And early in 2016, Mike Kenny from Mike's Pop Culture Playhouse did a super in-depth interview with Dan, covering how he fell in love with Pixar and how he's built his collection. As an aside, I recently discovered that Mike also did a short interview with Sanjay's Super Team director Sanjay Patel and producer Nicole Paradis right around the time of the Academy Awards last year.

The folks at Soundworks Collection did an interview with Finding Dory director Andrew Stanton right before the release of the film. I've always been interested in the impact that sound and music have on a movie (Some early Pixar DVDs like Toy Story had sound effect soundtracks, which I thought was a great way to watch the film), and while much is made about visual effects in film, I think it's good to recognize the impact that sound design has on films (yes, I'm looking at you, act one of WALL•E). Soundworks Collection has done interviews with directors such as Stanton, sound designers like Walter Murch and Randy Thom (who won an Academy Award for his sound editing work on The Incredibles) and many others involved in sound design and editing.

An animation podcast that I discovered in 2016 was the Bancroft Brothers Animation Podcast. Tom and Tony Bancroft have been involved in the animation industry for decades. Tom did character animation at Disney for over a decade, animating on films like The Lion King and Aladdin, while Tony was supervising animator on The Lion King and The Emperor’s New Groove, and co-director of Mulan. In episode 48 last summer, Tom and Tony also interviewed Andrew Stanton. I loved this episode as they discussed the early days of Pixar, including the lunch at the Hidden City Cafe where Andrew, John Lasseter, Pete Docter and Joe Ranft discussed ideas for upcoming films like Monsters, Inc. and WALL•E. I also really enjoyed how Andrew discussed his struggles to break into the industry, and the importance of work ethic and perseverance.

Another animation podcast I found last year was The Animated Journey. In September, Angela Entzminger interviewed Pixar story artist Michael Yates, who has the distinction of having worked at 3 of the major animation studios - Dreamworks, Disney and now Pixar. It was fun to listen to Michael discuss some of the differences between the studios, his path to becoming a story artist, and his thoughts on what it takes to personally succeed as an artist.

A new Pixarian-hosted podcast arrived last year! Pixar artists Deanna Marsigliese and Zaruhi Galstyan launched Straight Against the Curve. They only published 5 episodes last year but I'm hoping for many more. Dee and Zar both have an unending amount of enthusiasm and energy, and their interviews have included character designer Chris Sasaki to storyboard artist Rosana Sullivan. Their most recent episode was a hilarious and insightful interview with The Good Dinosaur story lead Erik Benson.


Perhaps my favorite interview of the year was with Pixar's director of lighting Danielle Feinberg. I've said it before, I love anything Danielle touches. Whether it's lighting a film like Brave (or the upcoming film Coco), taking photographs of Greece or making the most yummy donuts ever, she puts her heart and energy into it and it comes out awesome! She was interviewed by Samira Sohail on episode 17 of Samira Stalks, where they discussed her discovery of her love for engineering, Pixar's culture and what makes it so great, and the importance of being your own person and following your passion.


Finally, barely making it onto the list, composer Michael Giacchino was the guest on NPR's Wait Wait Don't Tell Me, the news podcast, where he played Not My Job. From listening to this and other interviews, I think Michael is one of those people that would be a blast to hang out with. He talked about how he got started with composing music in the gaming industry and how that led to him working with director J.J. Abrams, starting with TV shows like Alias and Lost, and then moving to films like Star Trek and Rogue One: A Star Wars Story. In a humorous exchange, he was questioned by host Peter Sagal regarding the Married Life sequence in Up and whether Pete Docter had directed Giacchino to bring everyone to tears! Not surprisingly, Michael got all 3 questions right on Not My Job!

Hopefully this gives you some new listening options. And what about you? What are you listening to? Let me know in the comment section below what your favorite podcast is, and I wish you all a great 2017!


Saturday, October 1, 2016

When Will We Start Getting Cars 3 Information?


© Disney/Pixar

Is it only me, or is anyone else wondering when the Disney/Pixar marketing machine is going to ramp up for next summer's Cars 3? I can't wait for this film, and there's been so little information. It's killing me!

To be fair, there's been some information and light publicity for the film. First, we have the brief synopsis from Pixar's official website:
Blindsided by a new generation of blazing-fast racers, the legendary Lightning McQueen (voice of Owen Wilson) is suddenly pushed out of the sport he loves. To get back in the game, he will need the help of an eager young race technician with her own plan to win, inspiration from the late Fabulous Hudson Hornet, and a few unexpected turns. Proving that #95 isn’t through yet will test the heart of a champion on Piston Cup Racing’s biggest stage!
Then, in late May we received some more story details regarding Lightning's new trainer, Cruz Ramirez, and the young upstart racer Jackson Storm, plus some gorgeous concept art by Noah Klocek (shown below).

© Disney/Pixar

Plus, there's been some social media activity. First, during the Toyota - Save Mart 350 race at the Sonoma Raceway on June 26th, Cars 3 director Brian Fee, Cars creative director and franchise guardian Jay Ward and supervising animator Bobby Podesta held a live Facebook video chat to talk about the Cars franchise. You can watch the video on the Cars Facebook page, or read about it in an excellent write-up by the Pixar Post.

Also, in late July, Jay Ward held a live video chat with automobile designer Chip Foose. Foose is well known for his car designs and has been involved with Pixar since the first Cars film. In addition to designing the flames for Ramone and Lightning in the Cars films, Foose provided some of his design flair to Ramone's House of Body Art and inside the Radiator Springs Racers attraction in Cars Land at Disneyland.

Finally, Pixar has released a set of fun animated episodes on YouTube called the Cars Die-cast Series. Each episode is only a few minutes long and take the Cars characters to different, real world environments. They're fun, full of detail and you may spot some Easter Eggs hiding in the backgrounds.


© Disney/Pixar

And just this week, we learned that long-time Pixarian Dave Mullins was directing the studio's next short film, Lou, which will play in front of Cars 3.  I loved Dave's quick sketch and am looking forward to learning more about this film, and seeing it in the theater next June!

So when will we get our first trailer for Cars 3? Your guess is as good as mine. It seems obvious to have a teaser trailer attached to Disney's Moana, which comes out November 23rd, but perhaps Disney will surprise us and attach it to Doctor Strange, being released on November 4th. And could we get a full-length trailer with Rogue One: A Star Wars Story? What a great early Christmas gift!

Cars 3 is directed by Brian Fee and produced by Kevin Reher, and hits theaters on June 16, 2017!