Pixar Case Study

In 1975, Ed Catmull put together a team of people who formed the basis of what Pixar has become today. The group was hired in 1979 by Hollywood director George W. Lucas and developed as a graphics division for LucasFilms (Shamsie, 2001). This continued until 1985, when Catmull finally turned to Steve Jobs with the view to making full length feature films using computer animation. After more than a year of negotiations, Steve Jobs then purchased the graphics division and renamed it Pixar Animation Studios (Shamsie, 2001).

A three year film contract with Disney was negotiated in 1991 which resulted in the movie Toy Story being released in 1995 (Shamsie, 2001). Toy Story became the top grossing movie of the year and won an Oscar, after which Steve Jobs decided to take the company public (Shamsie, 2001). After this success, Steve Jobs and Disney came to a merger agreement under which Pixar would receive an equal share of the profits, equal billing on merchandise and on-screen credits and guarantees that Disney would market Pixar films as they did their own (Shamsie, 2001).

Part of this merger agreement included that Steve Jobs would have enough control over the companies so that Pixar's differentiated culture and work style would be protected (Rafi, 2011). Ed Catmull has continued to be instrumental in the company’s operations and is responsible for ensuring all technological advancements will also help to increase the creative side of movie making (Shamsie, 2001). At Pixar, it is seen as very important to get the storytelling perfect before production even begins and this has meant that production is slow and the company has not been able to release more than one movie in a year (Shamsie, 2001).

Problem The pace of production is a continuing problem for Pixar. In an attempt to increase production, employee numbers have been more than doubled and John Lasseter, Pixar's 'Vice president of the creative', is supervising other directors taking over some of the new projects (Shamsie, 2001). In addition, new divisions have been created to help movie development. Despite these actions, there is still concern about the pace of production and how far the company can grow without sacrificing quality for quantity (Shamsie, 2001). It has also been stated that the company relies on particular talent, such as Catmull and Lasseter, to create such highly regarded films, and that increasing production cannot continue with a finite amount of talent (Bary, 2003).

Analyses Despite its top position in the market, Pixar still needs to assess its future strategies based on the external opportunities and threats, and the strengths and weaknesses of the company. In its current position, Pixar has many opportunities to innovate, update and create new technologies to improve their development process (Rafi, 2011). Current technologies being used include the animation software “Marionette”, the production management software “Ringmaster” and the rendering software system “Renderman” (Dess, 2012). Other opportunities include the production of more sequels and short stories, and global expansion. The major threat to the company is the rising competitors, DreamWorks and Sony (Shamsie, 2001). Pixar needs to keep up with technological advancements in the industry in order to stay competitive, and it also needs to increase production without sacrificing the quality that has put it in its current position (Rafi, 2011).

The company currently has many strengths that it can use to its advantage, particularly after its merger with Disney in 1996. Disney provides the marketing and sales for all the films and leaves Pixar to concentrate on actually planning and producing them (Shamsie, 2001). In addition, the brand and reputation are really strong, the current software is leading edge, the corporate leadership is excellent and the employee culture is one that works well and is being improved through initiatives such as Pixar University (Rafi, 2011). In contrast, the company’s weaknesses revolve around the slow production time and development process (Rafi, 2011). There is currently a limited amount a talent that they have to work with and therefore production times are held back by this (Shamsie, 2001).

Alternative Solutions Alternative 1: Continued Innovation of Technology to decrease time to produce films. The current situation at Pixar means that the hold up in the production process lies in the development area, where the stories are created. As an alterative option for increasing production pace, Pixar can continue to update the technology used to develop the films. By increasing the development time, the overall time to produce a film will be increased without having to increase the talent. Advantages to this method is that it is easier then finding more talent, is more innovative then just hiring new staff and will allow the production time to increase without sacrificing quality. However, the downfall of this option is that it can only increase production pace to a certain degree as it will only address one half of the process.

Alternative 2: Horizontal Business Structure. By changing the organizational structure, top management will have greater control over how long production will take. While this option will allow movie production to progress in a way that is satisfactory from a time-management basis, and will allow collaboration to produce new ideas, the current business structure will be lost and will probably result in a loss of the sense of culture among staff. Pixar’s current view is that a creative environment needs to be in place, and an appropriate culture in order to come up with new creative ideas for movies.

Alternative 3: Focus on Sequels. Sequels to the big successful movies provide a way in which character development, storyline development and viewer followings are already in place before the film begins production. This means that a previous theme can be used and development time will be cut down significantly, therefore increasing production pace overall. The problem with creating sequels for all movies is that it may damage the creative reputation of Pixar.

Alternative 4: Human resources initiative to attract more talent. The final alternative solution is for Pixar to invest in human resources initiatives to find, attract and hire more talent in order to allow many films to be developed and produced at once, and increase the pace of production. This will attempt to solve the main problem with the company’s production processes rather then just work around it, or find solutions to the symptoms. However,

this process will be costly and will take some time to implement.

Recommendations It is recommended based on the information that continued innovation of technology and implementation of human resources initiatives should be coupled in an attempt to increase the production pace of Pixar’s films. By working on both of these aspects in the short term, the problem will likely be dealt with in the long term. As this problem is not urgent due to the current strengths of the company, it is not necessary to undertake any risky large-scale structure changes. While film sequels can be used, and are a great idea in many cases, this should not be relied upon as a solution to the problem of production pace and should be kept to a level which will not impact on Pixar’s creative reputation.

Conclusion Pixar’s predominant problem in its operations is the rate of production for its films being too slow. While the company has many strengths and opportunities to expand it is being held back by its story development and needs to continue making quality films, rather then sacrificing quality for quantity. The alternative solutions to address this problem are continued innovation of technology, change to a horizontal business structure, focus development on sequels to films, and implement human resource initiatives to obtain more talent. The recommended solution was to focus on innovation of the technology and implementation of human resource initiatives. This will increase the pace of all film production going into the future and will solve the root of the problem, rather then the symptoms.