Pixar traces its roots back to the New York Institute of Technology Computer Graphics Lab. The company officially became Pixar in 1986 and didn’t hit it big until the 1995 release of "Toy Story." Since then, the company has released countless blockbuster animated movies and has been acquired by the Walt Disney Company (NYSE: DIS).
Pixar and Disney
Starting with the 1995 release of "Toy Story," Pixar has dominated the animation genre for movies. The studio was at one time led by the visionary Steve Jobs, who helped Pixar survive and thrive. Almost every year, the studio releases a blockbuster movie. Those movies help rank Pixar high on the all-time grossing movies list for the animation category. It was the success of Pixar and an existing distribution deal that led to a $7.4 billion buyout by Disney.
Disney is also expanding its own animation brand apart from Pixar. "Frozen" became a highly successful brand and franchise for Disney and is the fourth highest-grossing animated movie in North America at $400.7 million. "Big Hero 6" also did well for Disney Animation with North American gross of $222.5 million.
Pixar had mixed results in 2015 with "Inside Out" and "The Good Dinosaur." "Inside Out" grossed $356.5 million in North America, while "The Good Dinosaur" grossed only $110.7 million in North America. Along with the other Disney releases, the company had a 19.8% market share of the North American box office at $2.28 billion.
In 2015, Illumination Entertainment, a segment of Comcast Corporation (NASDAQ: CMCSA), released "Minions." It became the most successful movie of the "Despicable Me" brand. The blockbuster helped Comcast claim the box office crown for the year and establish itself as a dominant player in the animated genre.
"Minions" grossed $336 million in North America, good for eighth place in the animated genre. While this trailed the North American performance of "Despicable Me 2" ($368.1 million), "Minions" had a much better performance internationally. "Minions" grossed $823.4 million in foreign markets, bringing its total gross to $1.16 billion. This eclipsed the $970.8 million total of "Despicable Me 2" and also made "Minions" the 11th highest grossing film of all time, trailing only "Frozen" for the animated crown.
For the last fiscal year, Comcast reported a 9.3% increase in revenue to $74 billion. The NBC Universal segment, which includes the filmed entertainment business, was a big part of that. NBC Universal increased revenue by 14.8% to $28.5 billion. The filmed entertainment segment saw revenue grow 45.5% to $7.3 billion and operating cash flow increase 73.5% to $1.2 billion. Comcast companies had the largest market share at the North American box office with 22.3% and $2.56 billion.
Universal will release "Despicable Me 3" in 2017 and likely a Minions sequel. Illumination Entertainment is scheduled to release "The Secret Life of Pets" in July 2016. An animated movie called "Sing," from Illumination, will also hit theaters in December 2016. Comcast could be the biggest competitor to Disney and Pixar for the time being.
The biggest pure play option for investors as the next Pixar is DreamWorks Animation SKG, Inc. (NASDAQ: DWA). The company has long been Disney’s main competitor, releasing the massively successful "Shrek" and "Madagascar" franchises. Recent performance hasn’t been great, with several box office misses and a new focus on creating TV content.
DreamWorks Animation had a hit with "Home," released in 2015 to $177.4 million worth of North American box office receipts. The studio is also releasing "Trolls" in November 2016 with an extensive marketing push on the brand. DreamWorks Animation has struggled to produce blockbuster animated movies since its last "Shrek" movie. The first three movies in the series all rank in the top 14 grossing North American animated movies. The fourth movie did not perform as well, and the company currently has no plans to extend the brand.
For a long time, Disney and DreamWorks were competing for box office dollars in the animated market. That has changed with 21st Century Fox (NASDAQ: FOXA), Time Warner Inc. (NYSE: TWX) and Sony Corporation (NYSE: SNE) crowding the box office market for animated movies.
Time Warner is betting big on the LEGO franchise. It will release movies in 2017 and 2018 under the LEGO brand, including LEGO Ninjago and LEGO Batman movies.
Sony is set to release a new Smurfs animated movie in 2017 and an Angry Birds movie in 2016. Fox released "Peanuts" in 2015, which grossed $128.2 million in North America. The company is also behind Blue Sky Studios, the creator of the "Ice Age" franchise. A new "Ice Age" movie hits theaters in July 2016. Fox also handles distribution for DreamWorks Animation movies, helping it cash in on one of the biggest players in the game.
The Huge Animation Market
The animated genre continues to bring in huge money for companies. As the market gets more crowded, it could mean focusing more on quality, and the bigger studios might limit the number of animated movies they release. Investors will be hoping to see the success that Pixar shareholders saw. Pixar shares traded at $22 during their initial price offering (IPO). They were then bought out for close to $60 a share at the time. The investment is worth even more if investors held their 2.3 shares of Disney for each Pixar share they owned.