Ding-dong, the glitch is dead. In a move that is long overdue, Disney (NYSE:DIS) is axing its model of producing low-budget direct-to-DVD sequels of its animated classics. In a DisneyToon studio shake-up that is no doubt influenced by last year's infusion of Pixar's craftsmen, Little Mermaid III will be the last of these home video titles.

Thank God!   

Sure, the releases were lucrative, but I would argue that it cost Disney far more than it made. Don't believe me? Hear me out.

Finding failure in success
Yes, I remember hearing former CEO Michael Eisner explain how Return of Jafar, the wildly popular direct-to-video Aladdin follow-up that kicked off the home video sequel practice, proved to be more profitable than Disney's Pretty Woman live action hit four years earlier.

Return of Jafar wasn't bad. The sequel was a near-term financial success, even without the contribution of Aladdin voice star Robin Williams. But looking back, it was a costly mistake. It was the beginning of the end of Disney's force as the golden standard in animation.  

Disney mistook beginner's luck with market vindication, when all it was really doing was scribbling an epic on cocktail napkins before the marketplace sobered up. Maybe that was the key in prodding Disney deeper -- and cheaper -- into rushed releases with substandard storyboards, mediocre animation quality, and penny-pinching sacrifices.

Some critics argue that it was the emergence of computer-rendered eye candy being put out by Pixar and DreamWorks Animation (NYSE:DWA) that made Disney mortal, but this was never a battle of programmed pixels over ink and paint. Disney just got sloppy, settling for less and assuming that its dwindling audience would stomach anything it shoved down its throat.

It didn't work out that way. There was no amnesiac magic in the pixie dust. Parents eventually got tired of snapping up cut-rate sequels. Kids who grew up on the stuff no longer had a reason to trust the Disney brand.

When Disney did strike cinematic gold on this side of the millennium -- as in Lilo & Stitch or to a lesser extent with Chicken Little -- it was the exception to the writedown rule. Exploiting classics squeezed Disney dry of its heritage, imagination and fan base.

Another renaissance afoot
Not all of the direct-to-video sequels were dreadful, but since when did Disney settle for anything less than the best? Just to make sure that I'm not being overly subjective here, I went to Netflix (NASDAQ:NFLX) to check viewer ratings. Home video sequels to iconic masterpieces like The Lion King, Cinderella, Peter Pan, and Bambi all have lower Netflix subscriber ratings than the originals. And just so we're clear here, this isn't dozens of movie buffs participating in a straw poll. We're talking about the collective opinion of hundreds of thousands of reviewers on most of these entries.

If you thought that killing Bambi's mother was an unpopular move back in 1942, what can you make of killing off Bambi -- the franchise itself -- 64 years later with Bambi II?

Ink it over
It's no surprise to find the Pixar leaders who have been charged with restoring Disney's glory in animation are moving to dismantle the direct-to-video brand thinners.

They have been vocal critics of sequels in general, even after the success of their own Toy Story 2. Still, that was a project that Disney originally envisioned as a home video release. Pixar's commitment to getting it done right was enough to bump it up to a theatrical release with all the trimmings.

Disney and Pixar also butted heads on the prospects of Toy Story 3, now set to hit a multiplex near you in three years.

So sequels aren't necessarily the problem. Done right, The Godfather, X-Men, and Spider-Man can have spectacular second installments that push endearing characters into more lasting relationships with popcorn-munching fans. And that's not just me talking. I'm going by healthy follow-up ratings on Netflix for those three franchises.

And obviously this isn't only about box office receipts and eventual DVD sales that suffer if the credibility is as spotty as 102 Dalmatians. Between digital downloads through Apple (NASDAQ:AAPL) and licensees like toy maker Mattel (NYSE:MAT) and video game publisher THQ (NASDAQ:THQI), the difference between blockbuster and franchise-snuffing crop duster is as wide as the divide between feast and famine.

Am I exaggerating? You tell me. Remember that $7.4 billion purchase of Pixar? Do you think it would have been necessary if the non-Pixar animation being put out by Disney was still the handiwork of a respected market leader? Of course not. That's a dear price to pay for Disney's mistake of squandering its hilltop vista by playing it cheap, quick, and stupid.

Those Pixar chaps know what they're doing. So farewell, Cinderella III. The shoe never quite fit.

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Longtime Fool contributor Rick Munarriz can usually be found at Walt Disney World. He's the one wearing the "Bob Iger Fan Club" T-shirt. He does own shares in Disney, Netflix, and DreamWorks Animation. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.