Passage: Pixar and Disney had disagreements over the production of Toy Story 2. Originally intended as a straight-to-video release (and thus not part of Pixar's three-picture deal), the film was eventually upgraded to a theatrical release during production. Pixar demanded that the film then be counted toward the three-picture agreement, but Disney refused. Though profitable for both, Pixar later complained that the arrangement was not equitable. Pixar was responsible for creation and production, while Disney handled marketing and distribution. Profits and production costs were split 50-50, but Disney exclusively owned all story, character and sequel rights and also collected a 10- to 15-percent distribution fee. The lack of story, character and sequel rights was perhaps the most onerous aspect to Pixar and set the stage for a contentious relationship.The two companies attempted to reach a new agreement for ten months before it fell through in January 2004. The new deal would be only for distribution, as Pixar intended to control production and own the resulting story, character and sequel rights themselves while Disney would own the right of first refusal to distribute any sequels. Pixar also wanted to finance their films on their own and collect 100 percent of the profits, paying Disney only the 10- to 15-percent distribution fee. More importantly, as part of any distribution agreement with Disney, Pixar demanded control over films already in production under their old agreement, including The Incredibles (2004) and Cars (2006). Disney considered these conditions unacceptable, but Pixar would not concede.Disagreements between Steve Jobs and then-Disney chairman and CEO Michael Eisner made the negotiations more difficult than they otherwise might have been. They broke down completely in mid-2004, with Disney forming Circle 7 Animation and Jobs declaring that Pixar was actively seeking partners other than Disney. Despite this announcement, Pixar did not enter negotiations with other distributors, although a Warner...

Question: Which year did the fallout between Pixar and Disney occur?
2004