Disney CEO Iger: Frozen has restored our mojo by Jennifer Reingold @FortuneMagazine January 13, 2014, 10:59 AM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons Disney CEO Robert Iger, left, with John Lasseter, chief creative officer of Disney Animation and Pixar. When Walt Disney CEO and Chairman Bob Iger showed up at the premiere of film Frozen on Nov. 27, he was already sure that the animated musical about two sisters was something special, a return to the magical essence that made Disney, well, Disney. By the time he got to the credits, he had choked up. “I was glad I was wearing [3-D] glasses,” he says. “It was my proudest moment as the CEO of the Walt Disney Company.”Frozen is melting Iger’s heart not just because of the cold, hard, cash it’s generating — it has grossed $669 million so far, and it hasn’t even opened in China or Japan — but also because the success of the film, the third in a row for the studio after years of disappointment, appears to show that Disney Animation Studios is finally, finally back in the groove. “I realized, ‘My goodness, Disney Animation is where it rightfully belongs,’” he says. “The exhilaration was profound. It’s not about the bottom line. The bottom line is for the quarter. This is for something bigger and longer.”The tale of two estranged sister princesses who must come together to de-ice their homeland, Frozen is racking up the big numbers. It was the No. 1 all-time Disney animation debut, and it is expected to soon pass The Lion King in overall box office; it’s been nominated for two Golden Globes and may get an Oscar nod; it’s the No. 1 album on both Amazon and iTunes. (Apparently, the “polar vortex” helped; people didn’t seem to mind watching a story about an icy world when they were actually living in one.)MORE: The Wolf of Wall Street won’t give you the businessFrozen also has what Disney DIS calls “franchise” potential, which means that its characters and themes will translate across the company to everything from toys to theme park rides to interactive characters. It’s a big deal, because there are only a relative handful of franchise brands at Disney. “They’re not just making money inside of that film window,” says Tony Wible, senior media and entertainment analyst at Janney Capital Markets. “In that Disney fashion, they set it up across the whole spectrum.”In the Michael Eisner/Jeffrey Katzenberg heyday between 1984 and 1994, Disney Animation rolled out one musical blockbuster after another. There was The Little Mermaid, The Lion King, Beauty and the Beast, and many others. And then the pixie dust dried up. For years, the offerings were listless and underperformed. Morale dropped and talent departed as companies like Dreamworks and Pixar took the lead in animation. Says Iger: “We went through a long period where, for a variety of reasons, we weren’t making the films that drove the perception of the company and the brand.” That was a major reason why Iger’s first big move as CEO was to spend over $7 billion to buy Pixar in 2006. (See “Bob Iger: Disney’s Fun King.”)And so, starting seven years ago, two of Pixar’s co-founders, John Lasseter (now chief creative officer of both Disney Animation and Pixar) and Ed Catmull (now president of both studios), began to split their time between Pixar and Walt Disney Animation, commuting between the Bay Area and Anaheim every week in hopes of rekindling that Disney magic. Rather than trying to graft Pixar’s thriving culture onto Disney’s struggling one, they determined that the goal was to resurrect what had made Disney so special in the first place — the technically audacious, yet magical, fairy tale. But while they screened films for each other to get feedback, Pixar employees and Disney employees didn’t actually work together on films, even during crunch times. Lasseter and Catmull believed it was critical to keep the two identities separate.MORE: Crowds rush Apple’s Chinese stores for ‘Red Friday’ discountsThey did, however, import one key Pixar attribute: They put the director, rather than the studio chief or the animation head, in charge of the story. Unlike many studios, Pixar lets the director determine the arc of the narrative. Technology is used in service of the storytelling rather than as its starting point. “It was an executive-driven studio,” says Lasseter. “Now it’s a filmmaker-driven studio.” It was a major shift — and one that took a while to catch on; first used with The Princess and the Frog, a well-reviewed film with disappointing sales, it began to catch hold with Tangled (2010) and Wreck-it-Ralph (2012), each of which outperformed financial and critical expectations. “Disney Animation has done three years in a row of really great stuff,” says analyst Wible.Then came Frozen, based loosely on Hans Christian Andersen’s The Snow Queen, an idea that had kicked around Disney since the 1940s. Lasseter, whose first job was at Disney Animation, remembered a series of paintings of a frozen world and dug them out of storage when he came back. “I never forgot those paintings,” he says. “They were so incredibly beautiful.” Lasseter showed them to Chris Buck, the director of Tarzan, who had left Disney in the dark years, and helped convince him to come back. Later, he brought in Jennifer Lee, a screenwriter on Wreck-it-Ralph who is also the first woman to direct an animated Disney feature. Frozen’s story is both timeless, as a classic Disney tale should be, and modern (both sisters are strong protagonists with a modern sensibility rather than passive females awaiting a man).Frozen’s impact goes far beyond the movie theater, making it a key example of the synergy Iger has become known for during his Disney tenure. Anna and Elsa, the lead characters in the movie, have already become top-selling toys, as has Olaf the snowman, and a Frozen attraction at Disney’s theme parks would be another logical step. Its music, written by Robert Lopez and Kristen Anderson-Lopez, is a natural for Broadway. In my house, for example, the movie’s songs, such as “Let It Go,” and “Do You Want To Build A Snowman?” have become the soundtrack to our lives, thanks to my daughters.MORE: Why CES has become a CMO playgroundIn his interview with Fortune, Iger confirmed for the first time that Disney is in discussions to develop a show, though there is no set time frame. “We’re not demanding speed,” he says. “We’re demanding excellence.”What this means for morale, says Iger, is harder to quantify, but also important. Disney Animation is no longer the frumpy second fiddle to Pixar. “I was very lucky that I came into an environment where the number one creative process is the story,” Lee says. “It was like a startup because of this creative freedom and this energy.” Although the impact of one film won’t rock Disney’s gargantuan bottom line — especially since ESPN contributes so much of the profit — animation is, and will always be, the emotional core of the business. Says Iger: “If you think long term about what Disney is and the success and the vitality of the brand, this is a very, very important event.” Is it me, or is it getting warm in here?