By the end of 1998, Disney and Pixar had received the majority of revenue that would be generated by Toy Story. Sure, there would be continuing revenue from merchandise sales and television syndication fees. But this would be minimal, especially compared to the imminent release of A Bug's Life. So I thought it would be fun to take a look at the revenue and profit Pixar made from Toy Story's original theatrical debut, home video release and merchandise.
Below is a table of revenue, gross profit and gross profit margins Pixar had for the years 1996 through the first quarter of 1999:
|Film Gross Profit
|1st Quarter, 1996||$76||$67||88.2%|
|2nd Quarter, 1996||$5,000||$4,586||91.7%|
|3rd Quarter, 1996||$11,146||$10,224||91.7%|
|4th Quarter, 1996||$2,625||$2,419||92.2%|
|1st Quarter, 1997||$6,301||$5,743||91.1%|
|2nd Quarter, 1997||$11,596||$10,827||93.4%|
|3rd Quarter, 1997||$3,509||$3,424||97.6%|
|4th Quarter, 1997||$5,508||$5,436||98.7%|
|1st Quarter, 1998||$4,036||$4,036||100%|
|2nd Quarter, 1998||$2,912||$2,912||100%|
|3rd Quarter, 1998||$1,260||$1,260||100%|
|4th Quarter, 1998||$1,551||$1,551||100%|
|1st Quarter, 1999||$559||$559||100%|
There are a few significant points I'd like to point out regarding this table:
- Gross profit margin - Wow! The reason it is so high is because of how the Feature Film Agreement was written. Disney reimbursed all production costs that Pixar incurred except for any budget overages. These payments were not treated as revenue but as cost reimbursements, which lowered cost of revenue to almost nothing.
- Notice how the profit margin started increasing in mid 1997 until it reached 100%. This was due to how much better Toy Story performed than expected, causing all production costs to be fully reimbursed sooner than Disney had expected. Once all the costs had been reimbursed, all revenue received by Pixar was pure profit.
- While Pixar had huge profit margins, the actual amount they made from Toy Story isn't very much. To put it into perspective, let's look at the revenues through 1996 which came from the theatrical release of the film. Toy Story made over $361 million worldwide but Pixar's revenues were not even $19 million, equating to only 5%. This was a big reason for Steve Jobs pushing for the Co-Production Agreement, which became effective with A Bug's Life and would give Pixar 50% of all revenue.