According to Reuters, The Walt Disney Co. is building a new animation unit to create feature film sequels to the hits it made with Pixar Animation Studios, starting with a Toy Story 3 feature film due by 2008, studio Chairman Dick Cook told Reuters on Tuesday.

Fans have wondered for years whether Disney would make the next Toy Story as a straight-to-DVD project, like follow-ups to Disney hits such as Lion King.

But Cook said it would be a theatrical release.

Disney has the right to make sequels to films from the Pixar relationship, with which Pixar could cooperate or not.

Pixar has not shown interest thus far, but Disney is moving ahead with plans of its own.

Disney's Toy Story sequel will be built at a new division in Glendale, California, near the feature animation division's headquarters in Burbank, Cook said.

"It would be another unit," he said, adding that Disney was still deciding how many animators it would hire.

"They'll have individual projects in there, using the same technology and the same infrastructure that we have at the main location in feature animation, and it will primarily be doing sequels to Disney/Pixar films," he said.