Motley Fool Hidden Gems Investing - Pixar & Disney: Spanning the Range

Episode Date: November 17, 2020

Disney dominates the film industry, but within the company itself the studios are a smaller fish in a big pond. How much pressure is there for the animated films to generate revenue beyond the box office? Ed Catmull, co-founder of Pixar and longtime executive at Disney, shares how his teams maintain the balance between commercial output and artistic risk.   Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill. With The Motley Fool Money Extra, I'm Chris Hill. Within the movie industry, Disney is a big player. Last year, Disney produced movies accounted for a third of the total U.S. film market. But within the Disney Corporation itself, the studio business generates less than 15% of overall revenue. That's where things like merchandising come in. Mickey Mouse hasn't been on the big screen in a long time, but Disney has sold billions of dollars worth of stuff with Mickey's logo and likeness. Ed Catmull is one of the co-founders of Pixar. Before his recent retirement, he was the President of Pixar Animation and Disney Animation. This is someone who helped revolutionize not just animated films, but the overall movie industry. When we spoke a

a few years ago, I asked him about how much pressure Pixar and Disney Animation get from the merchandising side of the company. When we make our films, we have a span of risks. Now, we want them to all be great films, so that goes without saying. But it's clear that if you make something like, we just announced Incredibles 2 as an example, then the public wants it, consumer products wants it. it will be difficult to make, but Brad Bird is excited about doing it. So while it will be difficult, it's a low-risk idea. So there's a certain range of our films which are low-risk.

When you do a Cars film, then you know that we will do well with it. And so there's less risk with it. But at the same time, we've got the other end where the films would not pass the elevator test. So the idea of a rat cooking does not sound like a commercial idea or a trash compactor that falls in love with a robot. Or if you make a film about an old man who floats away on a house with a stowaway, well, no matter how successful the film is, you are never going to sell a lot of toy walkers. so what we try to do is say okay let's span this range because you do want to do some things that are commercially likely to succeed because we want to be healthy and we're in a business

it's important for our films to do well but we're also a group of artists and we want to push the boundaries so we will pick films that are that are sometimes really hard to figure out But by saying it explicitly to people, we're spanning that range from the very hard, or conceptually hard, to those that are likely to do well. Then we make ourselves financially healthy, and that allows us to continue to take risks. In addition to being an Academy Award winner several times over, Ed Catmull is also a best-selling author. Check out his book, Creativity Incorporated, Overcoming the Unseen Forces That Stand in the Way of True Inspiration. I'm Chris Hill. Thanks for listening. We'll see you next time.