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Disney (DIS) is currently working on the Little Mermaid III. It's of interest because it will be the last production the company will make as a DVD sequel. From now on the Mouse is going to do only original direct-to-DVD features.

Some of the effects of the decision will be the breaking down of their DisneyToons Studio division. President of the division, Sharon Morrill, will be transferred to another position within the company.

It will now operate separately under the management of Walt Disney Animation Studios. Walt Disney and Pixar Animation Studios president Ed Catmull, along with John Lasseter, the companies chief creative officer, have taken up DTS' responsibilities. Lasseter has been the creative genius behind the many successes that came out of Pixar like Finding Nemo and Cars. When Disney bought Pixar, they got Lasseter with it.

"John and I are truly excited to be working with the talented team at DisneyToon Studios in developing and producing original stories for the home entertainment audience," Catmull said. "The first project includes Tinker Bell and a whole new cast of Fairy characters that have all the ingredients of wonder, magic and enchantment that our audiences expect."

Former Pixar CEO Steve Jobs once alluded to the quality of DVD sequels coming out of Disney's animation department as "embarrassing." This has been an ongoing concern really for years, as former animators for the company had talked about the quality coming out of Disney in its animation for quite a long time. That's why they bought Pixar in the first place, because they had it down; putting out one major hit after another. At the time of the purchase I even questioned why Pixar would want to be bought by Disney for that very reason.

What's interesting about all this, is even with the quality not being as good, the DVD sequels were very lucrative for the company. Now we'll see if the quality will pay off with dollars as a result of this move. If the past success of Pixar is any measure, it should really be a good move.