SPECIAL REPORT
What Makes Pixar Run?

In an industry where fortunes rise and fall, Pixar (Nasdaq: PIXR) seems to have the Midas touch, and it looks as if its reputation will be golden for some time to come.

Unlike most studios that have some clunkers thrown in among the hits, Pixar has produced a string of very successful films, from Toy Story to Finding Nemo, and it is rolling ahead with two more films slated for theaters in the next 18 months.

Pixar is not the only animation studio in town, nor is it the only one producing box office winners. In many ways, it is dwarfed by the mighty Disney. Yet in a relatively short time, Pixar has risen to prominence in a busy movie marketplace.

What makes Pixar so unique within this marketplace, and how will its current direction affect its future course?

The Jobs Touch

Although an animation studio naturally draws creative and lively employees, there is much to be said for good old-fashioned, vision-driven management -- and Pixar CEO Steve Jobs has shepherded the company with what appears to be an impressive amount of care and focus.

Nick DeMartino, associate director for strategic planning at the American Film Institute, told MacNewsWorld that the combination of John Lassiter, the company's creative chief, and Jobs is hard to beat.

"No matter how creative a company's employees are, you still have to have a really good business person running the show," he said. "Steve Jobs is darn good at doing that."

George Colony, CEO of Forrester Research, recently wrote a "Quick Take" opinion piece asserting that Jobs has revolutionized the film industry through Pixar.

"Jobs is delivering inspired, compelling digital alternatives to the old analog world," Colony wrote. "The guy has the creativity of Sergei Brin and Larry Page at Google, the experience of Michael Dell and the connections and persuasiveness of Carly Fiorina."

Tech Roots and Branches

From the beginning, even before Jobs signed on as CEO, Pixar has been at the forefront of technology, said DeMartino. When the company started, its primary claim to fame was a superior rendering engine, called RenderMan, that it licensed to other companies.

The company continues to refine RenderMan, and many digital-effects houses and computer-graphics specialists use it.

"They have deep technical roots," DeMartino said. "It put them ahead of others in understanding how computer graphics work and can be used effectively."

In March, Pixar moved to using OS X and Power Mac G5s for its workflow needs. In a recent speech, Apple (Nasdaq: AAPL) senior systems engineer Don Peebles noted that Pixar challenged his company to come up with a way to review HD-quality video on the desktop at a reduced file size, but keeping the same level of quality.

The technology that resulted from the challenge was based on wavelet compression and named, fittingly, "Pixlet."

Pixlet lets high-end digital film frames play in real-time with any Panther-driven Mac, without an investment in proprietary playback hardware.

Kids Today

Another significant reason for Pixar's success can be found in the audience for its films. DeMartino noted that the younger generation has not only grown used to computer graphics, it has come to appreciate the art form and expect more because of it.

Also, the opening weekend revenue for Shrek 2 demonstrates that kids aren't the only ones flocking to see computer-generated animation.

Computer gaming, which is growing at a healthy clip, is also creating an audience that leans more toward computer generated images rather than more traditional animation forms.

"Games are becoming very sophisticated, in terms of story, graphics, and gamer involvement," Jerril Yoo, a designer at LucasArts, told MacNewsWorld. "It makes sense that the film industry would benefit from that."

Pixar rides this wave, but also drives it in many ways. "They just keep setting the bar higher and higher, with fantastic execution," DeMartino said.

The Old-Fashioned Way

Although Pixar demonstrates the importance of proper management, stellar technology, and effective marketing, without its storytelling abilities, it would not be where it is today.

Mary Clarke-Miller, an academic director at the Art Institute of California, told MacNewsWorld that the company's animation style is very believable, but all the computer graphics in the world will not help if the story being shown is not compelling.

"They focus very intently on storytelling," she said. "There's enormous attention to detail with the script, from pacing to character development, from the beginning all the way to the final product."

This intensity will serve them well for future projects, and keep the hits coming, said Mar Elepano in an interview with MacNewsWorld. Elepano is the production supervisor of the division of animation and digital arts at the School of Cinema Television at the University of Southern California.

"They've found a way to make better movies than Disney," he said. "In some ways, they're doing it the old-fashioned way, by just having good people in place and concentrating on making movies that people want to see."