The Story of PIXAR
Just Keep Swimming
Toy Story 2
Pixar's relationship with Disney began to turn bad during the production of Toy Story 2.

Cronin, Brian. "Movie Legends Review- Was
Toy Story 2 Nearly Deleted?"Spinoff Online. Comic Book Resources, 27 Mar. 2013. Web. 24 Nov. 2014.
Disney desired it to be "direct to video," and thus not part of their three-picture deal with Pixar. In Disney's experience, sequels were not as profitable and therefore they desired to keep their costs low, accomplished by a "direct to video" production. Pixar was primarily concerned about quality and was able to convince Disney to upgrdae Toy Story 2 to a theatrical release, thus maintaining their standard quality expectation for every film they would produce.

"Toy Story 2." Fanpop. Fanpop, Inc., 27 Mar. 2013. Web. 24 Nov. 2014. <http://www.fanpop.com
/clubs/pixar/images/31200460/title/toy-story-2-photo>.
Pixar then demanded that it be counted toward their deal, but Disney refused. Pixar came to oppose the deal, primarily because Disney exclusively owned all rights to the story and sequels. The box office successes of Toy Story, A Bug's Life, and Toy Story 2 convinced Disney of the need to make a new deal with Pixar, where both companies would be equal partners in order to keep Pixar happy.

"A Bug's Life Poster." Movie Insider. Movie Insider LLC.
Web. 24 Nov. 2014.<http://www.movieinsider.
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In 2004, Pixar attempted to reach a new agreement with Disney, where they would simply be the distributer, for Pixar intended to control production, own the resulting film properties, and collect 100 percent of the profits, conditions Disney deemed unsuitable, but Pixar refused to cave. Negotiations did not proceed well primarily becuase of the poor relationship between Steve Jobs and Disney's CEO, Michael Eisner, largely due to Eisner's devious manipulation of the three-picture deal.

"Michael D. Eisner." The Harry Walker Agency. The
Harry Walker Agency, Inc. Web. 24 Nov. 2014. <http://www.harrywalker.com/speaker/Michael-Eisner.cfm?Spea_ID=855>.