Disney To Stop Making Direct-To-DVD Sequels To Animated Films

LOS ANGELES (AP)–In a major strategy shift, the Walt Disney Co. (DIS) said it will stop making lucrative direct-to-DVD sequels of such classic animated films as "Cinderella," a move that reflects the growing influence of former Pixar Animation executives John Lasseter and Steve Jobs, who once called the films "embarrassing."

The change comes with a shake-up at the company's DisneyToon Studios, including the removal of longtime President Sharon Morrill, who will continue with the company in another capacity, Disney said Friday.

DisneyToon Studios will become part of Walt Disney Feature Animation and report directly to Animation President Ed Catmull and Lasseter, who assumed roles there after Disney bought Pixar Animation Studio last year for $7.4 billion in stock.

That deal made Jobs – the former Pixar chief executive who also runs Apple Inc. (AAPL) – Disney's largest shareholder and got him a spot on Disney's board.

DisneyToon will now only produce original DVD films, including an upcoming film starring the fairy Tinkerbell. It isn't clear whether sequels already in production will continue.

Disney has been a leader in the direct-to-DVD category, selling millions of copies of such films as "Lion King 1 1/2" and "Bambi II."

Although those DVDs were moneymakers for the studio, Disney purists scoffed, including Lasseter and Jobs.

In a 2003 conference call with financial analysts, Jobs said how much he hated the DVD sequels.

"We feel sick about Disney doing sequels," Jobs said. "If you look at the quality of their sequels…it's pretty embarrassing."

When Disney bought Pixar, it put former Pixar President Catmull and Lasseter in charge of its own animation efforts. Lasseter has made no secret of his disdain for sequels in general, although he is working on "Toy Story 3." That movie is planned to be released in theaters, however, scheduled for 2010.