Pixar - Case study Subject Merger of Pixar Animation...

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Case study Subject : Merger of ‘Pixar Animation Studios’ with the ‘Walt Disney Company ‘ Merger Period : In Jan 2006 Walt Disney agreed to buy PIXAR for $7.4 Billion History Pixar was founded as the Graphics Group, one third of the Computer Division of Lucasfilm that was launched in 1979 with the hiring of Edwin Catmull from the New York Institute of Technology (NYIT). After years of remarkable research success, and key milestones in films such as Star Trek II: The Wrath of Khan and Young Sherlock Holmes, the group was purchased in 1986 by current Apple Computer, Inc. CEO Steve Jobs after he left the company he founded with Steve Wozniak and Ronald Wayne. He paid US$5 million to George Lucas and put US$5 million as capital into the company. The sale reflected George Lucas' desire to stop the cash flow losses associated with his 7 year research projects associated with new entertainment technology tools, as well as his company's new focus on creating entertainment products rather than tools. A contributing factor was cash flow difficulties following Lucas' 1983 divorce from Marcia Lucas, concurrent with the sudden drop off in revenues from Star Wars licenses following the release of Return of the Jedi. Lucas also felt that a lot of the work being done by Pixar was redundant, with Industrial Light and Magic doing similar work. The newly independent company was headed by Dr. Edwin Catmull, President and CEO, and Dr. Alvy Ray Smith, Executive Vice President and Director. Jobs served as Chairman of the Board. Initially, Pixar was a high-end hardware company whose core product was the Pixar Image Computer, a system which was primarily sold to government agencies and the medical community. One of the leading buyers of Pixar Image Computers was Disney studios, which was using the device as part of their secretive CAPS project, using the machine and custom software to migrate the laborious Ink and Paint part of the 2D animation process to a more automated and thus efficient method. The Image Computer
never sold well. Though popularly believed otherwise, almost none of Pixar's famous shorts were ever rendered on the Image Computer. Only a few select scenes from the short Red's Dream were ever brought to final on the machine. Pixar employee John Lasseter, who had long been creating short demonstration animations, such as Luxo Jr., premiered his creations at SIGGRAPH, the computer graphics industry's largest convention, to great fanfare. Business in transition As poor sales of Pixar's computers threatened to put the company out of business, Lasseter's animation department began producing computer-animated commercials for outside companies. Early successes included campaigns for Tropicana, Listerine, and

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