When you can help write your own history, you can tell a slightly different story than the truth. Such is the case with Pixar Animation Studios, arguably one of the most influential creative units in all of Hollywood in the 25 years since it released its first feature-length animated film, Toy Story. Pixar is, of course, synonymous with the Walt Disney Company and has been for a long time. Its characters have been seen in films, on TV, and serve as the core elements of a lot of themed attractions and lands at the Disney theme parks worldwide.

But there was a time, not too long ago, when Pixar was on the outs with Disney to the point where the House of Mouse was more than happy to both sever its distribution deal with Pixar, and take matters into its own hands with sequels of their own. This is the story of Circle 7 Animation.

I Will Go Sailing No More

In a way, it all started with Toy Story 2, the first Pixar sequel and a film celebrating its 20th anniversary this month. Conventional wisdom suggests that Toy Story 2 is the pinnacle of modern sequels, and one of the very best Pixar films overall. The rush to completely overhaul and finish the film in the nine months leading up to its Thanksgiving 1999 release date is now the stuff of legend, but the success it received at the box office and with critics was a sign to Disney executives that they were able to finally crack the sequel nut without having to limit themselves to the small screen.

For Disney CEO Michael Eisner, that was the good news. Pixar was stepping into the role of the dominant animation unit, a role previously occupied by Walt Disney Animation Studios in the early 1990s. But in the latter half of the decade, Pixar was rising and Disney Animation was slowly falling off of its earlier heights. The bad news was simple: even though executives wanted Pixar to make more sequels, Pixar did not. Eisner chafed at how Pixar pushed back at him creatively, going as far as warning Disney shareholders a couple years after the arrival of Toy Story 2 that Pixar was in for a reality check with an upcoming project of theirs that simply wasn’t coming together. Sure, they’d hit box-office gold with their first four features, but this fifth one would be a bracing reminder that they weren’t flawless. That fifth film? Oh, just a story about a clownfish searching for his missing son across the ocean called Finding Nemo.

Of course, in the end, Finding Nemo became a massive hit for Pixar and the Walt Disney Company, only bolstering their confidence that they did not need to make sequels to stay financially solvent. Yet that 2003 classic was one of the last films Pixar was contracted to make for Disney; the original deal struck between Eisner and Pixar leader Steve Jobs was seven feature films. The way that Jobs and Pixar saw it, what would become the 2006 film Cars would be the last of those films; Eisner disagreed because Toy Story 2 was a sequel, arguing that the eighth overall film, the 2007 masterwork Ratatouille, would be the last one.

Just Keep Swimming

With the clock on the Pixar distribution deal running out, Eisner decided to roll the dice with what Nemo writer/director Andrew Stanton later dubbed “the most expensive bargaining chip” possible. Eisner put into place a nascent animation studio within the walls of Disney’s Burbank studios. Circle 7 Animation, so named after the old-school logo for the Los Angeles ABC affiliate that used to reside there, would do what Pixar’s filmmakers didn’t want to at the time: make sequels to the studio’s most popular and beloved films. With Circle 7 Animation, Disney could extend the lifespan of characters such Sheriff Woody and Mike Wazowski beyond just their respective films, merchandising, and theme-park presence.

It was around this time, in early 2004, that Steve Jobs announced to the staff at Pixar that they would not be renewing their deal with Disney. Jobs and Eisner couldn’t see eye to eye, and it didn’t appear that they ever would. So for about a year and a half, during which time the studio completed production on The Incredibles and went into overdrive on Cars, Pixar was an animation studio in search of a new home. And Circle 7 Animation was beginning to ramp up production of its own on sequels to Toy Story 2, Monsters, Inc., and Finding Nemo.

The earliest version of Toy Story 3, which went into production in 2006 with an estimated release year of 2008, would have focused once more on the exploits of Buzz Lightyear. Where Toy Story 2 threatened that Sheriff Woody might be carted off to Japan to be displayed as a museum piece, this Toy Story 3 would have had Buzz go on an unplanned journey to Taiwan due to a widespread recall on the space-ranger toy. The Monsters, Inc. sequel, subtitled Lost in Scaradise, would have focused on Mike and James P. Sullivan being trapped in the human world after trying to reconnect with Boo. The Finding Nemo sequel, based on a recently unearthed script draft, would have introduced Nemo’s long-lost brother Remy (in a sheer coincidence, considering that the lead in Ratatouille has the same name).

Falling With Style

But Circle 7 Animation never moved forward past its early production phases for these films. In the spring of 2005, Michael Eisner announced that he would step down as the CEO of the Walt Disney Company. Eisner’s departure was largely orchestrated by none other than Roy E. Disney, the nephew of Walt Disney who had once been instructive in bringing Eisner to the Disney executive suite. But over time, the two men’s relationship soured to the point where Disney and a fellow board member convinced enough of the other board of directors to steer Eisner to the exit.

Robert Iger stepped in as the new CEO, quickly moving to bring Pixar back to the fold, as the still-head of Disney has discussed in his new memoir The Ride of a Lifetime. Less than a year after Eisner stepped down, the new era of the Walt Disney Company officially began: Iger announced that Disney would acquire Pixar for $7.4 billion. Part of the deal included Pixar executives John Lasseter and Ed Catmull being installed as creative leads at Walt Disney Animation Studios too. Circle 7 Animation didn’t get closed as soon as Iger became Disney’s new CEO, or even as soon as the Pixar acquisition was confirmed. But by Memorial Day 2006, the unit was no more.

Thinking back on Circle 7 Animation and what might have been in a darker period is funny now, considering the last few years for Pixar. Even though Circle 7 is now just an odd little blip in the history of animation at the Walt Disney Company, the titles they were working on did, in some way, come true. We now have not three, but four Toy Story films, as well as a Monsters, Inc. follow-up and a Finding Nemo sequel. The creative leadership didn’t change at Disney or Pixar after the acquisition. Iger is, of course, still the CEO and has engineered a few other major acquisitions, but the Pixar deal was his first and most important. And Lasseter only left Pixar after allegations of sexual harassment were publicly aired; he’s now at a rival studio, Skydance.

Pixar’s sequels, though, lived on and arguably flourished. The key difference from the outside in is simple: the Pixar versions of these follow-ups are self-owned, whereas the Circle 7 Animation versions were made outside of the Emeryville studio. Though some of the creatives spoke afterwards about not wanting to appear as if they were desecrating beloved characters and universes, the notion to the public was that Pixar was losing the right to tell its own stories. Whatever may be true of Finding Dory and The Incredibles 2, for example, they both came from the men who wrote and directed the first films, with the implication being that the stories would have a unified voice.

…And Beyond

Circle 7 Animation was the closest thing to an existential threat that Pixar has ever suffered. If that studio had managed to move forward, and there were essentially rival studios releasing films with a Pixar background of some kind, what would it have looked like? It seems hard to imagine that a Circle 7 sequel to Toy Story 2 would have been any good — what if the original cast didn’t want to take part? What would that have sounded like? It’s one thing when you hear, say, the voice of Jim Hanks, Tom’s brother, as Sheriff Woody in a Disney theme-park attraction. It’s another when you hear a copycat voice, well-intentioned or not, in an entire film.

Circle 7 Animation felt like an in-the-moment version of Disney executives spearheading the initiative to make direct-to-video sequels to older Disney animated classics. It wasn’t as if the original cast of Cinderella was around to record vocals for the two direct-to-video sequels. So the animation not only looked lower-budgeted (because it was), but it barely sounded like a Cinderella film to begin with. The men and women who would have worked on these films would not have intended to screw over Pixar, but the products would have simply felt wrong, like drinking an off-brand soda that only partially tastes like the real thing.

Mercifully, we’ll never know what the end results would have been. Pixar Animation Studios became an official crown jewel in the Walt Disney Company’s line of baubles in the early months of 2006, making it so they would go onto release some of the most daring original films of their history in the last years of that decade. This decade has been marked by more sequels and prequels than their original fare, sadly — seven of the 11 films they released this decade weren’t new, original stories. But even those sequels — well, most of those sequels — have had their charms.

Next year marks the 25th anniversary of the first Pixar feature, Toy Story, which has proven to be a truly profitable cash cow over the last quarter-century. Michael Eisner himself was always skeptical that the film would do well, let alone computer animation as a feature-length format. But Pixar proved him wrong, again and again, and eventually their dominance helped save their earlier titles from becoming fodder for outsourced sequels. And next year, they’re starting off the new decade right, with two original films being released in the span of just four months. With all luck, the era of sequelization, either from inside or outside, is in the rear view.

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