In 1980, Walt Disney Pictures production chief Tom Wilhite brainstormed with sound designer Walter Murch about the latter stepping into the director's chair for a Disney production. Murch mentioned that he'd like to make an Oz film, and Wilhite remembered that the Disney company was still sitting on the rights of the Oz books, the earliest of which was going to be slipping into the public domain soon, making any remaining rights the company had worthless. And thus, the movie that became Return to Oz began development.
Murch decided to do a markedly different take on Oz than the classic 1939 film that audiences knew so well. Instead of going back to MGM's 1939 Kansas, Dorothy would live in 1899. And instead of a Judy Garland lookalike (she was 16 when she filmed her famous role), nine year old Fairuza Balk would play Dorothy. The production itself took visual inspiration from John R. Neill's illustrations.
The story would be a sequel to L. Frank Baum's The Wonderful Wizard of Oz rather than the MGM film, but so as not to completely lose the audiences familiar with Garland's Dorothy, Disney obtained a license to use the Ruby Slippers in the film. Also, the film played with Noel Langley's motif of having characters and objects in Kansas suggest characters in Oz.
The movie was based on The Marvelous Land of Oz and Ozma of Oz. Dorothy, suffering from insomnia due to no one believing her stories about her trip to Oz, would be taken to be subjected to a new electrical therapy. (What we now call electroshock therapy.) She is rescued from Dr. Worley's clinic by a mysterious blonde girl. Being chased by Nurse Wilson to a river, Dorothy and the girl jump right in, Dorothy finding refuge in a chicken coop.
Dorothy awakens in the coop joined by her pet hen Billina (who has trouble laying an egg), finding themselves just outside of the Land of Oz in the Deadly Desert. Using rocks, Dorothy carefully makes her way to Oz. She finds a lunchpail tree for food, but soon wonders why she hasn't encountered anyone. Finding her old house, she spots a torn up yellow brick road, which she follows to a broken down Emerald City where everyone has been turned to stone.
The only remaining inhabitants are the maniacal Wheelers who force her to find Tik-Tok, the clockwork Royal Army of Oz. He forces a Wheeler to take them to Princess Mombi, who seems to be the only other person alive in Oz. She reveals that the Nome King took the Scarecrow to his mountain, took all the emerald of the Emerald City and turned everyone into stone. She also reveals that she can swap her heads (Dorothy had previously noted stone headless dancing girls) due to a large collection.
Dorothy defies Mombi when she takes an interest in her head and is thrown into the tower, where she meets Jack Pumpkinhead, who tells her of Mombi's Powder of Life. Dorothy sneaks out to steal it to build the Gump, a conglomerate flying machine. Finding it with Mombi's original head, Dorothy accidentally wakes the headless Mombi and her heads. Being led back to the tower room by a mysterious shape in a mirror, Dorothy brings the Gump to life (which Tik-Tok and Jack assembled) and they make their escape to the Nome King's mountain.
The Gump falls apart midflight, but luckily everyone manages to land somewhat safely on the mountain, where the Nome King offers them to take part in his guessing game to free the Scarecrow, who has been turned into an ornament. The Gump, Jack and Tik-Tok take their turns before Dorothy and fail. Before she goes to make her guesses, the Nome King reveals that he was able to capture the Scarecrow and wreak havoc on Oz with the Ruby Slippers that fell off of Dorothy's feet on her way back to Kansas on her first visit to Oz. He had justified his actions by claiming that the gems used in the Emerald City were really his and that the Scarecrow was a thief. He also offers to send Dorothy home with the Ruby Slippers and make her forget about Oz.
Dorothy goes to make her guesses anyway as Mombi arrives in the Nome Kingdom, fearing that Dorothy might guess correctly and find out about Ozma. The Nome King is sure that Dorothy will fail, until with her final guess, Dorothy selects an emerald that proves to be the transformation of the Scarecrow. Realizing that the people from Oz must be green ornaments, Dorothy frees the rest of her friends, except Tik-Tok.
The Nome King has sunk into a rage and become little more than a rock face (the failure of each of Dorothy's friends allowed him to take a more humanoid form). He attempts to eat Dorothy's friends, taking the Gump's body, but when he tries to eat Jack, Billina (who was hiding in Jack's head) finally lays her egg, which falls into his mouth. The Nomes cry "poison!" as the Nome King dies, his last words revealing that eggs are poison to Nomes, which was why he had previously been wary about chickens.
Dorothy reclaims the Ruby Slippers and uses them to return to and restore Oz. After arriving safely just outside the Emerald City, they find a green badge on the Gump's antler and it proves to be Tik-Tok's transformation.
In the Emerald City, Dorothy and the Scarecrow are welcomed back by a joyous celebration (consisting of many characters from later Oz books), and the people cry for Dorothy to become their new ruler. But Dorothy decides she needs to go back to Kansas. Wishing she could be in both places at once, Ozma, the true ruler of Oz, appears behind Dorothy in the mirror, and Dorothy recognizes her as the blonde girl from Kansas. Setting her free, Dorothy gives Ozma the Ruby Slippers, which she uses to send Dorothy home, promising to look in on Dorothy from time to time, and allowing Dorothy to return to Oz whenever she wants.
Awakening in Kansas, Dorothy is found by the river by Toto and Uncle Henry, who were leading a search party for her. Aunt Em tells her that the clinic was struck by lightning and burned down. Everyone (including damaged patients in the cellar) escaped, except Dr. Worley. At home, Dorothy wonders if her trips to Oz might not have been dreams after all, until she makes the Oz symbol on her mirror, making Ozma and Billina (who stayed in Oz) appear in it. Dorothy calls Aunt Em, but Ozma shushes her gently and vanishes. Aunt Em encourages Dorothy to play outside with Toto as the credits begin to roll.
There was certainly a lot to like about Return to Oz. Its script showed quite a bit of ingenuity in combining two of the Oz books into one narrative. Fairuza Balk made an effective Dorothy and Nicol Williamson gave a wonderfully wicked performance as the Nome King. The visual effects, such as Will Vinton's Claymation and wonderful animatronics and creature effects, are successful in selling the odder creatures of Oz as actual characters. David Shire's music is beautiful and very evocative. On the other hand, its dark tone was off-putting to audiences and critics who had expected another light-hearted Oz adventure in the spirit of the MGM film.
The production itself suffered many cutbacks and many plot elements (such as additional members of the Army of Oz and the Tin Woodman and Cowardly Lion appearing at the Nome King's mountain) were cut as the production tried to stay within the already inflated budget. At one point, Walter Murch was almost fired from the production, until a number of famous directors intervened on his behalf.
Return to Oz was not a box office success by any means when it was released in 1985, not even making back half of its $28 million budget in the US. Apparently the film was quite popular in the UK and Japan, but that was not enough to make Disney think of turning the film into a franchise as was originally planned.
On home video, however, the film has found a second life as a cult classic, though the most attention it received was Anchor Bay's VHS and DVD releases in 2000. Disney released their own DVD edition, carrying over the Anchor Bay special features. Today, fans hope for a Blu-Ray release and Disney has a rather unimpressive yet definitely HD version available through iTunes, Vudu and Amazon Instant Video.