Any good news for DreamWorks Animation at the 2014 global box office came at an exorbitant cost. While the toon studio’s slate was up 36% over last year at the global B.O. with $1.18B across three movies — Mr. Peabody & Sherman, How to Train Your Dragon 2 and Penguins Of Madagascar, productions costs for DreamWorks Animation surged 56% to an estimated $422M.
That was the second highest total in the studio’s history, surpassed only in 2010, when it shelled out $460M for a three pic-slate that included Shrek Forever After, How To Train Your Dragon and Mega Mind (total global B.O. $1.57B) under its distribution deal with Paramount.
And not only were budgets up, three of the five titles that DWA delivered to distribution partner 20th Century Fox the past two years haven’t been the mass-appeal, humorous titles that built the studio’s brand. The two exceptions, both hits, were How to Train Your Dragon 2 and The Croods.
Yes, Dragon 2 is a big feather in the studio’s cap as 2014’s highest-grossing animated film. Its $618.9M worldwide beat the first installment’s $494.9M by 25%.
The film is also a leading contender for the Best Animated Feature Oscar, with director/co-writer Dean DeBlois and producer Bonnie Arnold working on a third. However, three animated big-budget features a year is far too ambitious for such a narrowly configured entertainment company. As part of its just announced restructuring, DWA wisely is cutting back to two titles a year – one original and one franchise title – and trimming average budgets 14%, to $125M.
Also not helping DWA in the least is that the openings for its films have dropped significantly in the past two years, from the days when 2004’s Shrek 2 ($108M FSS) and 2007’s Shrek The Third ($122.5M) jump-started summers; heck they’re even off from the $60M weekend bows of Kung Fu Panda 2 and the second and third Madagascar films. The defense always has been that the films will leg out in U.S./Canada and that they’ll post bigger numbers abroad — excuses that mostly are true. But that’s been hard for Wall Street to swallow, particularly given the immediacy that stock prices jump or slide in response to a film’s opening.
Looking further under the hood of DWA, “inconsistency” has been the studio’s flaw, per one insider, and there’s a need to go back to basics in making “compelling entertainment” like Dragon 2 that resonates. Continuing on the same course would be futile. The studio’s mission always has been about family entertainment, but what has enabled such films as the Shrek sequels and Kung Fu Pandas to cross over to bigger numbers “have been fanboys, teens and twentysomethings,” says one distribution analyst — even more than 3D. During the Paramount years, when the technology was nascent, 3D would rep a large share of a DreamWorks title’s take (about 60%). But that share has flipped with family audiences shelling out for 2D mostly.
Outside of the success of The Croods ($587.2M worldwide) and Dragon 2, every DWA title released during the past two years has its own reason for crashing. Penguins Of Madagascar failed to open during the Thanksgiving holiday frame — when everyone goes to the movies — making $35.4M over five days, below its initial projections in the low-$40Ms. The pic’s current cume is $80.8M. One studio B.O. analyst says, “I don’t think the movie was compelling enough to make people want to go see it in a theater when they can stay home and watch the TV show for free.” The Nickelodeon show, even in such markets as Germany, also crimped Penguins’ box office. Despite bottoming stateside, the film is on its way to make 3.75 times its domestic B.O. with a foreign take of $300M. However, the rule of thumb is that huge B.O. results stateside create an even more want-to-see abroad.
Last March’s Mr. Peabody & Sherman, based on the 1959 character from Jay Ward’s Rocky And Bullwinkle Show cartoon series, was just out of its time — 55 years later — and as one marketing consultant puts it “too clever” for audiences. When the film was being tested, a constant comment from mothers, the decision maker in the household when it comes to heading to the multiplex, was that Mr. Peabody was too sophisticated. Moms don’t go to the movies to think, but to escape. The $145M gamble opened to $32.2M stateside, finaled at $111.5M and only made 1.5 times its domestic B.O. abroad ($161.4M); stellar DWA titles can do close to three times that.
In 2013, the $135M snails-as-cars feature Turbo posted a $21M bow and a domestic take of $83M. One insider close to the film attributed its misfiring due to its “lack of layered complexity and sharp sense of humor,” which audiences clearly shelled out for respectively that summer with Pixar’s Monsters University ($82.4M opening, $268.5M final cume) and Universal/Illumination’s Despicable Me 2 ($83.5M opening, $368.1M final domestic).
With the right property, DWA can count on winning abroad. Box office analysts point to DWA’s strong footing in burgeoning multiplex territories such as Russia and China. “All DreamWorks Animation titles get into China,” said one rival studio executive, noting how DWA chief has “ingratiated himself very well with the Chinese.” In China alone, How to Train Your Dragon 2 amassed $65.1M, while Kung Fu Panda 2 remains the biggest feature toon in the country with $92.2M. Similar to the U.S., Korean and Australian family moviegoers don’t opt to pay in 3D, however, China, Russia, Germany and Holland are big 3D markets for DWA fare. Canada also is a strong 3D market for DWA, as theaters don’t provide a 2D/3D pricing tiers like those chains in the U.S.