Pixar Business Model

1. EBM Assignment Three
Pixar
Carolina Morrone
05/22/2022
John Multhauf, instructor - Entertainment Business Models

2. Why I chose this company:
I chose Pixar because it is a company recognized for its excellence in the animated
movies industry, and its global box office success has made it a leader in quality family
entertainment. The company is known for creating vision and innovative technical artistry in
heartwarming stories that touch kids and families through the easy relatability between them and
the characters from the stories.
Background Information
Pixar is a pioneering computer animation studio founded in 1979 as part of the computer
division of Lucasfilm, until 1986 when it was acquired by Apple Computers. In 2006, Pixar was
bought by the Walt Disney Studios for approximately $7.4 billion in an all-stock deal (The Walt
Disney Company, 2018). Even before the acquisition, both companies already had a partner
relationship established in late 1980 when they started to work together to develop the computer
animation production system (CAPS), a program that would revolutionize the animated movies
industry. With the success of this new technology, the relationship between the companies was
getting deeper, and they came to an agreement to “make and distribute at least one computer-
generated animated movie”, which would be made by Pixar and distributed by Disney with
profits evenly split, but characters, sequel and merchandise rights owned only by Disney
(Delpozo, Brian 2020). This movie was developed and eventually became Toy Story, their
biggest success together, but after Toy Story 4, Pixar announced that they don’t have plans to
make any more sequels, only original releases (Elvy, Craig 2019).
The main product line of the company is animated movies with the outstanding
difference of creating heartwarming stories that touch kids and families through the easy

3. relatability between them and the characters from the stories. These stories are created and
produced by Pixar and distributed by Disney. Since Pixar’s first film, Toy Story, they did $14.7
billion in sales at the global box office (Whitten, Sarah 2021). Pixar’s yearly revenue is
approximately $134.2M.
However, Pixar has not been always only launched profitable movies, in 2020 they
released Soul on Disney +, with the movie theaters closed, with high expectations, when it came
out to be their lowest-grossing movie. Overall, Pixar is a prestigious company, they already had
49 Oscar nominations with 18 wins, and 22 Golden Globe nominations with 10 wins.
Customer Segments
• Families & Kids: The main customers for Pixar’s animated movies are kids and families
due to the ability of heartwarming storytelling in their animated movies. The age range
and gender of the audience usually vary in each movie, for example in “The Good
Dinosaur” males were the biggest audience, while “Inside Out” had females as their
biggest audience (J, T 2022).
• Streaming Services Platforms, Cinema Distributors, and Animation Film Studios: They
have a direct impact on how the content is delivered to families and kids, so they are
considered customers because they are the first customers to contact Pixar until they
deliver the content to the final customers.
Value Proposition
• Proprietary technology with world-class creative talents and CGI: Pixar owns their
unique technology called Presto, which is their software for features and short films
developed in-house (InspirationTuts, 2021).

4. • Unique computer-animated pictures with memorable characters and heartwarming
stories: Pixar is known for its ability to tell stories that connect with the consumers'
emotions, and they create unique movies with memorable characters that live through
generations.
• Offers diversity in the movies: Pixar offers diversity inside the company, as well as in
their productions. Their latest productions have been telling stories in different parts of
the world, with different cultural backgrounds, like Soul, Turning Red, Coco, and Luca.
While in the creation of these movies, Pixar was scored 73/100 across various culture
categories, and employees with no discrimination (Comparably, 2022).
Customer Relationships
• Website/Social Media: Pixar does a good job in keeping their customers updated, they
have accounts on several online platforms and are always posting about the latest
releases.
• Characters and stories relatable to the customer/Close family relationship: One of Pixar’s
greatest reasons for success is how they build relationships with their customers through
connection and emotion with characters and stories that these customers can identify with
creating a close family relationship
• B2B Relationship: Pixar also has customers with business, for example, businesses that
are part of their channels of distribution to the final consumer.
Channels of Distribution
• Streaming Services Platforms: Disney is responsible for the distribution of Pixar’s
animated movies, with that, and most of the movies are available on Disney+, there are

5. still a few on other streaming platforms because of the rights bought before but as soon as
the end of the contracts, they plan on going to Disney+.
• YouTube, online websites, and TV Channels: Both Pixar and Disney use these platforms
to release content or advertise about it.
• Movie Theaters: Pixar has not been releasing movies in movie theaters ever since the
pandemic hit, the last releases are all going straight to the streaming service Disney+
(Morrow, Brendan 2022). There is not a final answer yet if they will come back releasing
in the theaters like before that all releases were in the theaters.
Key Partners
• Movie Theaters: Before the pandemic, Pixar was known for releasing all of its new
movies in the theaters, and the theaters were even required to play the movies for a
certain amount of time, and if they didn’t, they needed to pay a penalty (Taylor, 2017).
Now after the pandemic, they are not realizing all movies in the theater, their last release,
for example, “Turning Red” was on the streaming service Disney +.
• The Walt Disney Company: Disney was already known for making animated movies
with appealing stories and connecting characters even before the merge with Pixar, when
they purchased Pixar, they merge their ability to make movies creating even better
franchises.
• Producers: The most famous producer of Pixar is John Lasseter. He has been on Pixar’s
team since the beginning of the company and has produced over 96 movies, pretty much
every movie of Pixar had his work in it. He was also the Chief Creative Officer of Pixar
and Walt Disney Company but left in 2018 after taking a leave of absence following
allegations of inappropriate behavior toward women (LA Times, 2021).

6. Key Activities
• Film Production: Pixar’s principal activity is producing and releasing animated movies.
The top 3 highest-grossing films of Pixar include Incredibles 2, Toy Story 3, and 4. They
plan on releasing one more movie this year (Lightyear), one in Summer 2023, and two in
2024 (Hutchinson, 2022).
• Marketing: Marketing involves the release of any movie, animated or not, but Pixar takes
its marketing and branding pretty seriously. Trailers, social media campaigns, and
announcements are only part of the marketing strategies the marketing department of
Pixar uses, for Monsters Inc 2m they created an entire functioning college website to
promote the movie (Austin, 2013).
Key Resources
• RenderMan Editing Software: Launched in 1988, the photorealistic 3D rendering
software is used in every movie to render their 3D animated movie productions and it is
also available as a commercial product licensed to third parties, and free for non-
commercial use (Pixar’s RenderMan).
• Branding: What makes Pixar so different than the competition and special to their
customers is the development of characters and stories that emotionally connects to their
audience, creating unique movies and experiences.
Cost Structure
• Marketing: Like mentioned before, Pixar takes marketing to another level, and this is also
reflected in its costs with it. Pixar expects, on average, to have marketing strategies for
one movie budgeted from $50 million to $150 million (The Numbers).

7. • Film Production: In 1995, the first Pixar animated movie, Toy Story, had a budget
production of $30million and made $364million worldwide. In Toy Story 4, the budget
went up dramatically compared to the first film of the franchise, it was $200million (The
Numbers).
Revenue Streams
• Box Office Sales: Pixar has almost guaranteed success in the box office sales of their
releases, even the least successful movies like Up, Inside Out, and Ratatouille, made over
$700 million the worldwide box office sales, with production costs at around $175million
(The Numbers).
• RenderMan Licensing: RenderMan is not paid for non-commercial use, however, there
are around 740 companies worldwide that use it and have to pay for the licensing every 6
months (Pixar’s RenderMan).

8. Conclusion
Disney and Pixar created the perfect merge together. Based on the revenue of the Pixar
movies, even before being acquired by Disney, they were already extremely successful and had a
wide audience worldwide. Pixar is known for creating vision and innovative technical artistry in
heartwarming stories that touch kids and families through the easy relatability between them and
the characters from the stories. They use their software to make these stories reality through
animation, which the licensing of it is also their second source of revenue.
The company is solid with its marketing strategies, which makes the movies known and
famous, even before being released. The top 3 highest-grossing films of Pixar include Incredibles
2, Toy Story 3, and 4, and Disney has managed to sell unique merchandise of these stories loved
by the customers because of the emotional connection created.

9. The Business Model Canvas
Company: Pixar Product: Animated Movies

10. References
“Disney to Acquire Pixar.” The Walt Disney Company, 27 Apr. 2018,
https://thewaltdisneycompany.com/disney-to-acquire-pixar/.
Delpozo, Brian. “How Pixar Became an Integral Part of Disney Movie History.” AllEars.Net, 24
July 2020, https://allears.net/2020/07/28/how-pixar-became-an-integral-part-of-disney-
movie-history/.
Elvy, Craig, and Craig Elvy (3721 Articles Published) Craig first began contributing to Screen
Rant in 2016. “No Pixar Sequels after Toy Story 4: Why That's Awesome.” ScreenRant, 14
June 2019, https://screenrant.com/pixar-sequels-after-toy-story-4-stopping-good/.
Whitten, Sarah. “Bob Iger Says Pixar Was 'Probably the Best' Acquisition He Made during His
Tenure with Disney.” CNBC, CNBC, 22 Dec. 2021,
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acquisition-as-ceo.html.
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J, T, et al. “Pixar Demographics: What the Average Pixar Fan Looks like?” Pixar Post, 6 Jan.
2022, https://pixarpost.com/2016/07/pixar-demographics.html.
“What Software Does Pixar Use?” InspirationTuts, 19 Apr. 2021,
https://inspirationtuts.com/what-software-does-pixar-use/.
Pixar Animation Studios Company Culture | Comparably.
https://www.comparably.com/companies/pixar-animation-studios.
Morrow, Brendan. “Turning Red Deserved to Be Pixar's 1st Movie Back in Theaters.” The Week,
The Week, 11 Mar. 2022, https://theweek.com/movies/1011025/turning-red-deserved-to-
be-pixars-1st-movie-back-in-theaters.
Taylor, Chris. “Disney Has an Impressive List of Demands for Theaters Who Want to Show 'The
Last Jedi'.” Mashable, Mashable, 29 Oct. 2021, https://mashable.com/article/star-wars-last-
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“John Lasseter-Run Skydance Animation Sets Apple Movie and TV Deal.” Los Angeles Times,
Los Angeles Times, 17 Feb. 2021, https://www.latimes.com/entertainment-
arts/business/story/2021-02-17/john-lasseter-run-skydance-animation-sets-apple-movie-
and-tv-deal.
Hutchinson, Thomas. “Every Upcoming Pixar Movie Release for 2022 and Beyond.” Collider,
11 Feb. 2022, https://collider.com/upcoming-pixar-release/.

11. Austin, Christina. “Pixar's Marketing for 'Monsters University' Is Very Impressive.” Business
Insider, Business Insider, 1 Feb. 2013, https://www.businessinsider.com/monsters-
university-marketing-breaks-the-mold-for-advertising-2013-1.
“Pixar's RenderMan: Intro Logged In.” Pixar's RenderMan | Intro Logged In,
https://renderman.pixar.com/intro_logged_in.
“Disney-Pixar Production Company Box Office History.” The Numbers, https://www.the-
numbers.com/movies/production-company/Pixar.
“RenderMan.” Pixar's RenderMan | Product, https://renderman.pixar.com/product.