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Author: DCWD40 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 49978  
Subject: #13 and #14 Date: 3/5/2013 10:39 AM
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While The Avengers was #1 last year, Brave and Wreck-It Ralph were #13 and #14 on a worldwide basis. Combined, the two animated flicks brought in almost $1 billion at the box office and their DVD sale numbers will be among the best in the industry. Not bad for a combined production investment of $350 million.

But, is DreamWork Animation's trouble a sign that the high-cost animation market is reaching capacity for product? Disney's 2011 Mars Needs Mom's is the industry's biggest bust with its production budget to $150 million and worldwide revenue of $39 million. But, Rise of Guardians was #26 at the box office in 2012, had a production budget of $145 million, and earned $302.6 million, yet was still a major financial disappointment for DWA. I wonder if DWA's troubles will lead it to be sold to someone who has the deep pockets to be able to absorb a really bad showing at the box office.

Don't get me wrong. Animation still sells. Ice Age was #5 and Madagascar was #8 in 2012. Even low budget Dr. Seuss came in at #21. But the Disney marketing machine could only produce $19.2 million for Arrietty in the US. But, unless a new technology arrives that drives down the cost of top-flight animation, there is the risk that the cost of production will be such that a major failure at a smaller studio like DWA will cause them to cease production or at least exit the high-end market.

W.D.
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Author: esxokm Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 48457 of 49978
Subject: Re: #13 and #14 Date: 3/6/2013 7:17 AM
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W.D.,

Here's some food for thought for you.

I'm fascinated by the success of Adam Sandler's Hotel Transylvania. According to Box Office Mojo, the film had a budget of $85 million. It grossed worldwide $341 million.

The question is: shouldn't Disney and DreamWorks Animation be able to make animated features that are successful and are made on an $85 million budget? It's not that it should be done every time out -- indeed, it is important for movies with high budgets to be made. There are ROI reasons for it.

But in the case of DreamWorks Animation, clearly some low-budget strategies could help alter the company's risk profile in a positive way.

I think the key to DreamWorks Animation and Disney's future success is to create at least two opportunities every year for story/concept-driven lower-budget animated projects that help spread the risk. And voice talent should not be paid much money (yes, that is generally the rule, but if a movie is a hit, from what I've read, there is a good chance talent will receive ludicrous-sized bonuses; please see the book on DreamWorks SKG, The Men Who Would Be King, and read about the bonuses the Shrek talent received once that movie completed its opening weekend -- bonuses that were not necessary to give contract-wise, I might add).

And again, Hotel Transylvania should be looked at a case study. I never saw the film, but I liked the marketing campaign. We must ask ourselves: why can't more movies be made for $85 million?

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Author: DCWD40 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 48475 of 49978
Subject: Re: #13 and #14 Date: 3/14/2013 1:33 PM
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I'm fascinated by the success of Adam Sandler's Hotel Transylvania. According to Box Office Mojo, the film had a budget of $85 million.

esxokm, I agree. Cost does matter.

I think Mr. Iger is on record for trimming down the number of Disney movies each year so there is a better focus on what goes out to the public. I read that statement to say that Disney movies will be more expensive because they get a more complete handling, from writing to post production. A special effects movie for an industry low budget isn't in the works for Disney.

One bonus of the LusasFilm purchase is that Disney got a best-in-class special effects studio in the bargain. Although Mr. Lucas was not known for producing inexpensive movies, Disney does have the ability now to walk into the special effects department and say, "How can we get the most bang for the bucks" and maybe at the same time say, "we'd like to keep the effects budget under $30 million." They are not outsiders anymore so they just might get better advice, and listen to it, now that it is from an in-house source.

It is hard to not be impressed with the value Disney got for $220 million with the Avengers. The special effects are really special. It is also hard to not get the point Mr. Iger is trying to make. The story line from the movie will translate into theme park rides, toys, games, books, and many other products. Spending more to get the best at all levels makes sense.

The Studio would probably reply to this post with this: You are measuring the Studio based on the film's cost and its own sales. If you considered all the other sources of revenue, the movie is a bargain of major proportions.

The reason I disagree with Mr. Iger's slimmed down movie schedule is because the international market is growing so quickly. Movies that bomb in the US don't also have to fail elsewhere. John Carter took in just $73 million in the domestic market but still managed to gross $210 million in other markets.

I think there are lots of opportunities in the lower budget movies. Ted was made for $50 million but grossed $546 million. Hunger Games cost $78 million and grossed $691 million.

The news media will note that Lincoln was made for $65 million but only grossed $258 million (70% US). But, does anyone think that there are gobs of Russians or Chinese that are anxious to look-in on Mr. Lincoln? The movie dominated in the market where it needed to work. Why can't Disney find more movies in that budget range and below that would dominate world markets?

W.D.

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