The closing of its Florida studio is seen as a signal that Disney will bank on computer-animated fare.
LOS ANGELES - The Walt Disney Co. is shutting its Orlando animation studio, cutting about 258 jobs, as the company shifts from hand-drawn animated films to computer-generated features and videos.
Some of the employees will be offered jobs in Burbank, Calif., Disney said Monday in announcing the move.
The company has been steadily trimming its animation department for the past few years, from a peak of 2,200 employees in 1999, to 600, all based in Burbank after Monday's announcement.
The closing of the Orlando studio comes after Disney has shut similar animation outposts in Paris and Tokyo, which were opened at the height of the boom in hand-drawn animation.
Over the past few years as computer-generated films proved far more successful at the box office than traditional two-dimensional films, Disney shifted from having a large number of animators on staff to hiring on a per-film basis.
The move resulted in layoffs and major salary cuts and an emphasis on producing less costly 2-D films. The 2002 success Lilo & Stitch, for instance, was produced for about $80-million compared with $140-million for the box-office flop Treasure Planet, released the same year.
Disney has also been releasing a larger number of animated movies and sequels direct to video, a move that boosts profits by vastly reducing the cost of production.
The Orlando studio, opened in 1989, has animated some of Disney's more popular films, including Lilo & Stitch, Mulan and this year's Brother Bear.
But Disney has had its greatest success with animated films it produces in cooperation with Pixar Animation Studio, which uses computers. Hits produced that way include Finding Nemo.
The closing of its Orlando unit may, in fact, signal that Disney is close to announcing an extension of its deal with Pixar, according to one analyst.
The current deal is set to expire in 2006 with the release of Cars, the fifth film in the agreement that has Disney and Pixar split profits from the movies. Pixar has been pushing for a new pact which lets it own the movies and pay Disney a set fee to distribute them.
If Disney believed its Pixar relationship were about to significantly change or even fall apart, it would be beefing up its internal animation capacity instead of cutting it, according to David Miller, a financial analyst with Sander Morris Harris.
"It infers that Disney will be producing a lower number of animated films in the coming years," Miller said Monday. "Where is the film production going to come from? Most likely from Pixar, should they extend their co-production agreement."
Disney has only two animated films in production, both of which are computer-generated - Chicken Little, due in 2005, and A Day in the Life With Wilbur Robinson, set for release in 2006.
The studio canceled production earlier this year on A Few Good Ghosts, which was a hybrid of hand-drawn and computer animation.
The Disney film Home on the Range, a hand-drawn movie produced in Burbank, is set to open in April. The Disney film Teacher's Pet, a big-screen version of its popular television show, opens in theaters this week.
The studio does have some traditional hand-drawn feature films in development, according to Disney spokeswoman Heidi Trotta.