Pixar: a Clear Future or Perilous Strategy

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Pixar
A Clear Future or Perilous Strategy

Introduction

Toy Story 3 is one of only seven movies ever to return more than US$1bn at the box office and is the first animated movie to break US$1bn, setting a momentous bench mark for Pixar’s direct competitors (BoxOfficeMojo, 2010). Every film release since 1995 (Toy Story 1,2&3, A bug’s life, Monsters Inc, Finding Nemo, The Incredibles, Cars, Ratatouille, WALL-E and Up) has been nominated for the Academy Award for the Best Animated Feature and each one is positioned amongst the top 50 worldwide earning pictures of all time (BoxOfficeMojo, 2011), totalling US$3.5bn (The Numbers, 2011). With these details alone, Pixar’s résumé is impressive but it has also won awards for its software engineering, producing some of the leading Computer-Generated Imagery (CGI) tools on the market today. Many theorists have, and continue to ask if this been achieved through luck and good fortune or if Pixar have found the latest elixir to success? Theories concentrate on Pixar’s self proclaimed declaration that all firms should simply copy their focus on employees but there is limited discussion on the success of their technology strategy.

This paper is an overall critical analysis of Pixar, broadly evaluating the business but focusing on how technology has been integral to their strategy. It considers the strategy Pixar used to gain market advantage and how it keeps its position today. How the business and its operations are controlled and protected and how it uses the combination of talent and technology to produce apparent endless hits. It also reviews what approaches might not be considered successful and how Pixar has learnt from their mistakes. Lastly, the paper reflects on how secure its business model is and speculates what market changes or technology advances will shape it (and other firms) in the future. While reading the document the reader should refer to the overview of the Pixar production process in the appendix.

The film industry is extremely competitive and therefore very secretive. Unfortunately the author does not have any inside connections and the information published in this report has all been obtained from the public domain.

History

Pixar Animation Studios is an Academy Award Winning computer animation studio (based in Emeryville, California) with the technical, creative and production capabilities to create a new generation of animated feature films, merchandise and other related products (Pixar, 2011).

Pixar began in 1979 when Dr. Ed Catmull (now President of Pixar) was hired to manage the Computer Graphics Group at Lucasfilm. George Lucas didn’t consider it to be a core activity and encouraged its management to buy it out and it became an independent company in 1986, when it was purchased by Steve Jobs (Catmull, 2008). After many years of collaborating with The Walt Disney Company, in 2006 Disney acquired Pixar for $7.4 billion (BBC, 2006) and since then Steve Jobs has sat on the boards of both Pixar and Walt Disney.

The goal at Pixar is simple and straightforward: develop computer animated films that appeal to everyone, by nurturing creative talents that develop groundbreaking technologies and innovative ideas. Pixar openly explain that these creative talents have been cultivated and encouraged by providing an environment that gives employees unusually high autonomy (including painting their own office (Mosher & Risedorph, 2005)), continuously setting challenging tasks and establishing forward-thinking leadership in a very fast advancing/ changing sector.

Pixar’s strategy so far

It is generally accepted that the major competitive advantage for Pixar is its creative ability (Datamonitor, 2004). The success of Pixar films is apparently due principally to the company’s wealth of creative talent in generating the movies and developing the necessary software tools and technology to make those...
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