Pixar Animation Studio : An Innovative Strategist
Pixar Animation Studios, commonly known as just Pixar, is an American computer animation studio known for its critically and commercially successful computer-animated feature films. It is based in Emeryville, California, and is a subsidiary of Walt Disney Studios owned by The Walt Disney Company.
HISTORY
1975
With the founding of a vocational school in Old Westbury, NY, called the New York Institute of Technology. It was there that Edwin E. Catmull, a strait-laced Mormon from Salt Lake City who loved animation but could not draw, teamed up with the people who would later form the core of Pixar.
1979
George Lucas recruits Ed Catmull from the New York Institute of Technology to head Lucasfilm’s Computer Division, a group charged with developing state-of-the-art computer technology for the film industry. Lucas’s wish list: a digital (nonlinear) film editing system, a digital (nonlinear) sound editing system, a laser film printer, and further exploration of computer graphics. The following year, he is joined by Alvy Ray Smith, who is hired as Director of Computer Graphics Research.
1982
The Computer Division completes the “Genesis Effect” sequence for Star Trek II: The Wrath of Khan. The scene, which shows an initially lifeless planet being rapidly transformed by lush vegetation, is the first completely computer-animated sequence in a feature film.
1986
Jobs did decide to buy Catmull’s unit for just $10 million, which represented a third of Lucas’s asking price.
1991
Pixar and Disney begin collaboration on CAPS, the Computer Animation Production System, which would revolutionize the creation of traditionally animated films. The first check was written to Pixar by a client after its incorporation is from Disney, for work on this project.
1995
Toy Story, the world’s first computer-animated feature film, is released in theaters on November 22. It opens at #1 that weekend and will go on to become the highest-grossing film of the year, making $192 million domestically and $362 million worldwide.
Pixar’s initial public offering takes place just days later, on November 28. It is the largest IPO (initial public offerings) of the year.
1996
Jobs demand an equal share of profits, equal billing on merchandise, on-screen credit and guarantees that Disney would market Pixar films as they did their own.
Toy Story is recognized with Academy Award® nominations for Best Original Song, Best Original Score, and Best Original Screenplay—the first time an animated film is recognized for screenwriting. John Lasseter receives a Special Achievement Oscar® from the Academy of Motion Picture Arts and Sciences for his “inspired leadership of the Pixar Toy Story Team resulting in the first feature-length computer-animated film.”
Pixar announces that it will stop making commercials to concentrate on longer-format and interactive entertainment.
2006
After the acquisition of Disney for 7.4 billion Dollars in 2006, Pixar was allowed to operate independently. This is to sustain Pixar’s creative culture. Some key people from Pixar were assigned to manage the joint operations of Pixar and Disney.
MISSION
Pixar is committed to the company's value that every single Pixar film should grow out of the absolute best efforts of the firm’s animators, storytellers, and technologists.
Ever since Pixar was acquired by the Walt Disney Company, it has always embodied the mission and vision of its mother company.
"The mission of the of the Walt Disney Company is to entertain, inform and inspire people around the globe through the power of unparalleled storytelling, reflecting the iconic brands, creative minds and innovative technology that make ours the world's premier entertainment company"
VISION
Pixar's vision is to become a company of creative innovation that produces new generations of animated feature films with remarkable characters and heartwarming stories that appeal to audiences of all ages and diverse backgrounds.
“For us, it is essential that our own team represents the whole of that audience - so we commit to creating a Pixar that includes everyone, makes movies for everyone, and hopefully allows everyone who goes to see a Pixar movie to see a bit of themselves on the screen.” stated by the current Pixar’s President Jim Morris in Pixar.com.
The goal of Pixar is to blend unique technical and global grade imaginative abilities with a captivating and warm-hearted story for the viewers of all generations and to produce computer-animated movies. In short, it is a culture that is, the common ideas, attitude, and conduct plus several factors that always lead to excellence in a particular effort. (“Pixar Mission and Vision statements- And Value analysis”) Pixar and Disney Animation offer a way to encourage and energize personnel and make heritage the strategic edge.
“We want to create some great stories and characters that endure with each generation,” Jobs stated.
Theoretical Aspect
The strategic tools that were used in this case study are IFE, EFE, BCG (Boston Consulting Group) SWOT, SPACE, and QSPM. The concepts, models, and matrixes mentioned are used to identify the company’s internal and external environment to identify the available opportunities and threats.
The combination of the results of the EFE and IFE matrices can be used to evaluate Pixar’s strategy and the various strategic intentions. The best results of the added, weighted averages can be chosen to make new strategic decisions.
By means of the EFE matrix, the most important external opportunities and threats that may influence a company can be identified.
SWOT Analysis stands for – Strengths, Weaknesses, Opportunities, and Threats that Pixar Disney encounters both internally and in the macro-environment that it operates in. Strengths and Weaknesses are often restricted to the company’s internal - resources, skills, and limitations.
Furthermore, to better understand the external environment and the competition in a particular industry, firms often use CPM. The matrix identifies a firm’s key competitors and compares them using the industry’s critical success factors. The analysis also reveals the company’s relative strengths and weaknesses against its competitors, so a company would know, which areas it should improve and, which areas to protect. [2]
Quantitative Strategic Planning Matrix (QSPM) is a strategic management tool used in the evaluation of strategic options and determination of relative attractiveness of strategies. The QSPM technique determines which of the selected strategic options is feasible, and it prioritizes these strategies. A basic tenet of the QSPM is that firms need to systematically assess their external and internal environments, conduct research, carefully evaluate the pros and cons of various alternatives, perform analyses, and then decide upon a particular course of action. [3]
External Opportunities and Threats
External Factor Evaluation (EFE) Matrix
KEY EXTERNAL FACTORS | WEIGHT | RATING | WEIGHTED | |
| OPPORTUNITIES |
|
|
|
1 | Market profitability with new merchandise and advertising | 0.14 | 3 | 0.42 |
2 | Inclusion and representation bring larger market | 0.08 | 4 | 0.32 |
3 | Opportunities to expand and enhance | 0.07 | 2 | 0.14 |
4 | Good Reputation | 0.12 | 4 | 0.48 |
5 | Collaboration with the leading competitor | 0.14 | 4 | 0.56 |
| THREATS |
|
|
|
1 | Illumination’s venture to Adaptation | 0.1 | 1 | 0.1 |
2 | Rapid growth and change in technology | 0.12 | 3 | 0.36 |
3 | Increase in production cost because of the minimum wage hike | 0.04 | 2 | 0.08 |
4 | Dreamworks successful incursion into Television | 0.07 | 2 | 0.14 |
5 | Temporary closure of most cinemas worldwide | 0.12 | 2 | 0.24 |
| TOTAL | 1 |
| 2.84 |
Pixar may have paved the way for the breakthrough of full-length animated films as the pioneer; however, many other animation studios followed their footsteps, and now become their rivals. As Dreamworks and Illumination grow over the years their success has threatened the position of Pixar in the Market. These rivals have also been able to catch the attention of critics who are left wondering whether DreamWorks or Illumination could ever overtake Pixar.
Internal Factor Evaluation (IFE) Matrix
Key Internal Factors | Weight | Rating | Weighted Score |
Internal Strengths | |||
| 0.13 0.13 0.07 0.07 0.1 | 4 4 4 4 3 | 0.52 0.52 0.28 0.28 0.3 |
Internal Weakness |
|
|
|
| 0.11 0.09 0.09 0.11 0.1 | 2 2 1 1 2
| 0.22 0.18 0.09 0.11 0.2 |
TOTAL | 1 |
| 2.7 |
Pixar is highly dedicated to producing quality films not only for awards and recognition but also for winning the hearts of its viewers. Pixar believes that diverse perspectives lead to richer stories and partnerships, as well as more innovative, successful, and dynamic workplaces. However, because of that principle, Pixar has been left behind when it comes to producing films. When its competitors can produce 2 to 3 movies a year, they only have one. Refer to (graph 1: Frequency of Movie Release from 1999 – 2020)
Quantitative Strategic Planning Matrix
|
| Research & Dev. | Technology Development | ||||
KEY EXTERNAL FACTORS | WEIGHT | Attractiveness Score | WEIGHTED | WEIGHT | Attractiveness Score | WEIGHTED | |
| OPPORTUNITIES |
|
|
|
|
|
|
1 | Market profitability with new merchandise and advertising | 0.14 | 3 | 0.42 | 0.15 | 3 | 0.45 |
2 | Inclusion and representation bring larger market | 0.08 | 4 | 0.32 | 0.09 | 4 | 0.36 |
3 | Opportunities to expand and enhance | 0.07 | 2 | 0.14 | 0.08 | 2 | 0.16 |
4 | Good Reputation | 0.12 | 4 | 0.48 | 0.13 | 4 | 0.52 |
5 | Collaboration with the leading competitor | 0.14 | 4 | 0.56 | 0.15 | 4 | 0.6 |
| THREATS |
|
|
|
|
|
|
1 | Illumination’s venture to Adaptation | 0.1 | 1 | 0.1 | 0.1 | 1 | 0.1 |
2 | Rapid growth and change in technology | 0.12 | 3 | 0.36 | 0.10 | 3 | 0.3 |
3 | Increase in production cost because of the minimum wage hike | 0.04 | 2 | 0.08 | 0.03 | 2 | 0.06 |
4 | Dreamworks successful incursion into Television | 0.07 | 2 | 0.14 | 0.07 | 2 | 0.14 |
5 | Experienced management | 0.12 | 2 | 0.24 | 0.14 | 2 | 0.28 |
| TOTAL | 1 |
| 2.84 |
|
| 2.97 |
|
|
|
|
|
|
|
|
| INTERNAL STRENGTHS |
|
|
|
|
|
|
| 1. Collective creativity | 0.13 | 4 | 0.52 | 0.1 | 1 | 0.1 |
| 2. Exclusivity of developed software | 0.13 | 4 | 0.52 | 0.12 | 3 | 0.3 |
| 3. Social responsibility | 0.07 | 4 | 0.28 | 0.04 | 2 | 0.06 |
| 4. Diverse supplier | 0.07 | 4 | 0.28 | 0.08 | 2 | 0.14 |
| Temporary closure of most cinemas worldwide | 0.1 | 3 | 0.3 | 0.13 | 2 | 0.28 |
| TOTAL | 1 |
| 2.7 | 1 |
| 2.97 |
|
|
|
|
|
|
|
|
| INTERNAL WEAKNESS |
|
|
|
|
|
|
| Overlap at work | 0.11 | 2 | 0.22 | 0.1 | 1 | 0.1 |
| Projects take up years to finish | 0.09 | 2 | 0.18 | 0.12 | 3 | 0.36 |
| Concerns with workforce | 0.09 | 1 | 0.09 | 0.04 | 2 | 0.08 |
| Technology training | 0.11 | 1 | 0.11 | 0.08 | 2 | 0.14 |
| Concerns about profit margin because of pandemic | 0.1 | 2 | 0.2 | 0.13 | 2 | 0.24 |
| TOTAL | 1 |
| 2.7 | 1 |
| 2.84 |
SWOT ANALYSIS
STRENGTH | WEAKNESS | OPPORTUNITIES | THREAT |
Commercial strength: Pixar is the first mover of full-length computer animated Films Management: Inhouse training programs that help them developed internally produced software. Pixar is composed of a highly dedicated creative innovative team.
| Pixar had fallen short of investment on their first decade of development. The sustainability of Pixar’s creative output is doubted. Low profitability which can hamper new project investment. | Supplier Diversity – enables them to reach out to a more inclusive market. Incorporation of diverse and inclusive storylines attracts consumers and audiences in every walk of life. | Other production and animated studios that have equally developed reputations such as: Dreamworks Illumination Studio |
Pixar Animation Studios SWOT Analysis
According to Juan Alcacer, David J. Collis, Mary Furey, even though Pixar Disney's financial statement is stable, but going forward Pixar Disney's 5-7% profitability can lead to a shortage of funds to invest in new projects.
CPM ANALYSIS
|
| Pixar Animation Studios | Dreamworks | Illumination | |||
CRITICAL SUCCESS FACTOR | Weight | Rating | Score | Rating | Score | Rating | Score |
Brand reputation | 0.13 | 4 | 0.52 | 4 | 0.52 | 3 | 0.39 |
Employee satisfaction | 0.08 | 4 | 0.32 | 3 | 0.24 | 1 | 0.08 |
Production Cost | 0.05 | 3 | 0.15 | 3 | 0.15 | 4 | 0.2 |
Successful new introductions | 0.04 | 4 | 0.16 | 4 | 0.16 | 4 | 0.16 |
Market Share | 0.1 | 4 | 0.3 | 4 | 0.4 | 3 | 0.3 |
Skilled Workforce | 0.08 | 4 | 0.32 | 3 | 0.24 | 3 | 0.24 |
Collaboration with established franchise | 0.05 | 2 | 0.1 | 4 | 0.2 | 4 | 0.1 |
Production capacity | 0.07 | 2 | 0.14 | 4 | 0.28 | 3 | 0.21 |
Customer retention | 0.02 | 4 | 0.08 | 2 | 0.04 | 4 | 0.08 |
Strong patent portfolio | 0.04 | 4 | 0.16 | 3 | 0.12 | 2 | 0.08 |
Strong online presence | 0.06 | 4 | 0.24 | 3 | 0.18 | 4 | 0.24 |
Customer service | 0.2 | 4 | 0.8 | 3 | 0.6 | 2 | 0.4 |
Successful promotions | 0.08 | 4 | 0.32 | 2 | 0.16 | 4 | 0.32 |
Total | 1 | – | 3.71 | – | 3.29 | – | 2.9 |
Table 6.2 Competitive Profile Analysis for Pixar and its Competitors
For decades, Pixar has been leading on the top-grossing charts. It is evident when you read the data of how Pixar films were well received by the audience worldwide. But despite the brand reputation and marketability of their films, unfortunate times are inevitable, like when they release the newest title last March 2021, Raya and The Last Dragon, which only bagged $130B gross sales worldwide.
While Pixar produces mostly original content, DreamWorks is not afraid of collaborating with other established franchises to bring their characters to the big screen. Such is the case of films like Captain Underpants and Mr. Peabody & Sherman, which are adaptations of well-known children's novels and cartoon segments, respectively. [8]
DreamWorks also produced a 2016 star-studded film based on the Danish Troll dolls that received a 2020 sequel despite the mixed reviews. Trolls World Tour, the second Trolls film, was a huge hit for the studio during the COVID-19 lockdown as it earned $40 million on its first weekend after its digital release on streaming services such as Amazon Prime and Apple TV, the author also added.
Pixar is driven by its value – quality over quantity. That is why they tend to invest heaveliy on the production than theThey strive to keep their product’s innovative excellence always in priority. Pixar has established a market business with a remarkable degree of uniqueness, creativity, and diversity, in addition to the preservation of their brand recognition to keep the audience devoted and engaged to their stories.
Existing Strategies to be continued
Pixar is successful because it develops talent and proprietary software internally through Pixar University. Giving them a competitive advantage over their competitors. Thus, you can say that the company is quite self-sufficient and self-dependent, which reduces the bargaining power of its suppliers. Furthermore, because Pixar is based heavily on technology and creative resources, competitors would need to invest in technology as well as human resources.
Now, Pixar needs to focus on developing its technology and training staff. More skilled staff means Pixar can observe its ambitious standards while producing superb movies in larger numbers and at a faster pace. It is also essential to nurture the creative culture Lasseter and Catmull had established.
Strategies to start
Being a subsidiary of Disney, Pixar characters are visible in Disney’s Theme Parks. However, we can say that the profit is not solely for Pixar utilization. Thus, we would recommend Pixar to build its own theme park.
Page Break
Data from the www.boxofficemojo.com
Graph 1: Frequency of Movie Release from 1999 - 2020
PIXAR ANIMATION STUDIOS | ||
FILMS | YEAR | WORLDWIDE |
Incredibles 2 | 2018 | $1,242,805,359 |
Finding Dory | 2016 | $1,028,570,889 |
Toy Story 4 | 2019 | $1,073,394,593 |
Toy Story 3 | 2010 | $1,066,969,703 |
Inside Out | 2015 | $857,611,174 |
Finding Nemo | 2003 | $735,099,082 |
UP | 2009 | $735,099,082 |
Monster University | 2013 | $743,559,607 |
The Incredibles | 2004 | $528,773,250 |
Monster Inc. | 2001 | $528,773,250 |
Table 2: Top 10 Gross Movie Sales of Pixar Animation Studio
DREAMWORKS | ||
FILMS | YEAR | WORLDWIDE |
Shrek 2 | 2004 | $928,760,770.00 |
Shrek the Third | 2007 | $813,367,380.00 |
Shrek Forever After | 2010 | $752,600,867.00 |
Kung Fu Panda | 2008 | $631,744,560.00 |
The Croods | 2013 | $587,204,668.00 |
Madagascar 3 | 2012 | $542,063,846.00 |
Madagascar | 2005 | $542,063,846.00 |
How to Train Your Dragon | 2010 | $494,878,759.00 |
Shrek | 2001 | $484,409,218.00 |
Monter Vs Aliens | 2009 | $381,509,870.00 |
Table 3: Top 10 Gross Movie Sales of Dreamworks
ILLUMINATION ENTERTAINMENT | ||
FILMS | YEAR | WORLDWIDE |
Minions | 2015 | $1,159,398,397 |
Despicable Me | 2017 | $1,034,799,409 |
Despicable Me 2 | 2013 | $970,766,005 |
The Secret Life of Pets | 2016 | $875,457,937 |
Sing | 2016 | $634,151,679 |
Despicable Me | 2010 | $543,113,985 |
The Grinch | 2018 | $511,595,957 |
The Secret Life of Pets 2 | 2019 | $430,051,293 |
The Lorax | 2012 | $348,840,316 |
Hop | 2011 | $183,953,723 |
Table 4: Top 10 Gross Movie Sales of Illumination Entertainment
References:
[3] https://www.mbaknol.com/strategic-management/quantitative-strategic-planning-matrix-
[5] Ed C. (Sept 2008), “How Pixar Fosters Collective Creativity”, Retrieved from https://hbr.org/2008/09/how-pixar-fosters-collective-creativity
[7] https://notesmatic.com/pixar-animation-studios-case-dess-lumpkin-eisner/
[8] Dess, G., Lumpkin, G., & Eisner, A. (2012). Strategic Management (6e). Boston: McGraw-Hill Irwin.
[9] Juan A., David J. C., Mary F. (2018), “EMBA Pro case study solution for The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? case study, Retrieved from https://embapro.com/frontpage/casestudysolution/15114-pixar-disney
[10] https://www.cbr.com/pixar-vs-dreamworks-rivalry-illumination-movies/
[12] https://www.mbaknol.com/strategic-management/the-strategic-position-and-action-evaluation-matrix-space/
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