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The Rise and Fall of DreamWorks Animation, Part 2: Fall

UPDATE 3/29: Well! Now Home has gone and ruined my entire beautiful narrative arc by wildly outperforming even the most rosily optimistic predictions during its opening weekend, with an estimated $54 million. With that total in its pocket, even under the worst imaginable scenario, it should still glide past $100 million in the United States with ease - $150 mil is certainly in play - and combined with its sterling overseas performance so far, it shouldn't have any problem turning a profit for DreamWorks. The day of reckoning has been put off.

It will be interesting to see how this plays out. As DreamWorks's only 2015 release, the studio won't be able to build up any momentum, but it gives the powers that be a good chance to breathe easily and take a good long time to re-work their future plans. Hopefully the right lessons are learned from this ("Non-white girls can sell movies, too") and not the easier wrong ones ("That absolute piece of crap made us money! We don't ever have to try again!), and hopefully it will encourage this and all other animation companies to experiment a little bit more with new properties instead of just retrenching to sequels every time someone says "boo". -Tim

Tim here. Last week, we took a tour through the peak years of DreamWorks Animation, during which time the House That Jeffrey Katzenberg's Hatred of His Old Bosses at Disney Built established itself as the biggest gorilla in American feature animation. And as 2010 dawned, the studio was on the verge of a remarkable achievement. That year, DreamWorks released three feature-length theatrical films – the most any studio had ever produced. It proved to be a great year to do so, an extraordinary year for animation: five of the year's top ten films at both the domestic and worldwide box office were animated, an unmatched record.

That, of course, is exactly the problem. Having perfected a factory for producing animated features that anyone could follow, DreamWorks was as responsible as any studio for the glut of animation that hit in 2009 and has continued largely unabated ever since. By making its products too ubiquitous, the studio was making them routine and increasingly easy to ignore.

Not that it was apparent from the first of the year's releases, How to Train Your Dragon, which netted DreamWorks its best reviews ever and remains its highest-grossing Stateside release without the word "Shrek" in the title. [More...]

It was, surely not coincidentally, the studio's first truly director-driven project; having been run out of Disney by John Lasseter, Chris Saunders and Dean DeBlois were given largely free rein at DreamWorks to make the movie they way they wanted. The result was a terrific artistic triumph; in any year that Pixar hadn't sent its most beloved characters hurtling into the flames of Toy Hell and making every one cry for 20 straight minutes, it surely would have won the Best Animated Feature Oscar.

Only two months after Dragon, though, DreamWorks got a dent. Not a big dent. But when Shrek Forever After opened, it only grossed $238 million domestically. That's still more than Dragon, and its $752 million worldwide dwarfs the other film's take. It was also, however, a significant drop from Shrek the Third, a film that had been largely disliked. And thus, for the first time, DreamWorks could see the real proof that if they continued to churn out derivative crap, people would drift away. And drift they did, right over to the competition: new studio Illumination Entertainment exploded out of the gate with Despicable Me, a film that copied the DreamWorks formula down to a T, only making a film that was, generally speaking, simply better than most of what DreamWorks had been able to make. The results were felt immediately with the fall release of Megamind, which had the same basic hook – "root for the supervillain, who turns out to be a cuddly guy" – and turned a profit without making any real impact.

In 2011, the studio turned back to what they did best: sequels and brand expansion. And it's only here that the full force of DreamWorks's oversaturation and overstretching is revealed. For both of the films, summer's Kung Fu Panda 2 and falls Puss in Boots, a spin-off of the Shrek franchise, did muted business despite solid reviews (both were Oscar-nominated, the second and last time that DreamWorks competed with itself in the Best Animated Feature category). Kung Fu Panda 2 in particular is a confusing case: coming off of a successful and well-liked precursor, it only did around three-quarters of the first film's box office in the States and barely scraped above it worldwide, despite three years of significant expansion of international markets.

The muted performance of the 2011 slate brought the first rumblings of concern: after years of a happy partnership with Paramount, the studio began hunting around in 2012 for a new distributor. They signed a deal with 20th Century Fox in August, by which time they had premiered Madagascar 3: Europe's Most Wanted, and all seemed well: the film became the seventh DreamWorks release to crack $200 million in the U.S., while nestling in as their third highest-grossing film worldwide, behind only Shrek 2 and Shrek the Third. But any sense of security was about to be horribly undone: with little motivation to push it very hard, Paramount dropped the holiday release Rise of the Guardians into theaters with very little enthusiasm, and the odd conceit – The Avengers with Santa Claus and the Easter Bunny, essentially – and heavily stylized designs didn't draw in audiences. The film became DreamWorks's lowest-grossing CGI film in the States, barely clawing its way above $100 million, and it triggered the first round of what would eventually become a familiar sight: DreamWorks executives attempting to formulate, in public, a new plan to move forward in the hopes of keeping their increasingly shaky investors from bailing.

2013 and the Fox deal opened brightly: Chris Saunders made his second feature for the studio, this time co-directing with Kirk De Micco, The Croods. Though not a Zeitgeist-tapping hit at the level of Shrek or even Dragon, the film turned a nice profit and met with reasonable enthusiasm. As spring turned to summer, DreamWorks began to announce its plans to diversify: having already found success with TV spinoffs of How to Train Your Dragon and Madagascar, it was looking to increase its online and television presence, with the vanguard of that process being a new deal with Netflix to produce several different exclusive cartoon series for the site. All this optimism hit a brick wall in August, when the company released Turbo, an uninspiring hybrid of Pixar's Cars and Ratatouille starring Ryan Reynolds as the voice of a snail. Though critics weren't terribly hard on it (and they should have been), the film tanked: with a paltry $83 million domestically, it was the studio's lowest-grossing film in ten years, and its overseas performance still couldn't force it into profitability. DreamWorks was forced to take the first of several write-downs, and to make matters worse, the very first project of their Netflix deal was a Turbo spin-off cartoon.

It was at this point clear to anyone who cared to pay attention that the guiding minds of the studio had no real creative ideas, and the company's dire 2014 proved this impression. Spring saw the release of Mr. Peabody & Sherman, a nostalgia piece based on a property that nobody in the under-12 target audience had ever heard of; summer's How to Train Your Dragon 2 and Thanksgiving's Penguins of Madagascar were both following TV series that had done much to dilute the audience's eagerness for more theatrical adventures. Dragon 2 ended up profiting enough internationally to recoup its budget – its chilly American reception remains baffling eight months later, as does its more recent Oscar loss – but even the overseas love for Madagascar couldn't help Penguins out of the red. In 24 months, only two of the studio's five releases had turned a profit, and two of the failures had been dire.

In the wake of Penguins's failure, DreamWorks executives massively restructured their studio, leaving a staggering number of animators to face an increasingly cutthroat job market. Meanwhile, they retained the creative minds who dealt with this crisis by cutting several of their most promising projects in development to focus on sequels to films that already underperformed (Kung Fu Panda 3, How to Train Your Dragon 3), odd kiddie flicks that seem determined not to do any business outside of America (Boss Baby, Captain Underpants), and yet another nostalgia project for people in their 40s (Trolls – yes, as in the little dolls with Technicolor hair). From a business standpoint, The Croods 2 is the studio's only in-development project that has any strong justification (though I imagine Dragon 3 at least will turn a neat profit); from a creative standpoint, do any of them?

And thus we arrive at the impending release of Home (which was swapped with Penguins in the hope of boosting the latter's box-office success), the solitary DreamWorks feature of 2015, and a film that looks almost universally appalling: the solitary nice thing anyone has to say about it is that its protagonist is a tween girl of color, a unicorn-like rarity in kids' films. Pre-release tracking suggests it's going to be another costly flop. Thus does the focus on business smarts at the expense of thinking about what people might enjoy seeing reach its natural conclusion. Let us leave DreamWorks now on the precipice of another write-down and another stock tumble, and a future supported almost solely through merchandising and TV. For all that I've disliked and outright hated DreamWorks through the years, I find this sad. Things were more interesting when DreamWorks was thriving; between 2001 and 2010, it almost single-handedly shaped the current landscape of commercial animation. As Home comes along to put yet another nail in its coffin, I can't help but feel an odd sense of loss that the cinema landscape is losing such a dominant voice, even if I've almost never liked the things that voice has said in the past.

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Reader Comments (20)

Really well stated, Tim. Oversaturation, brand dilution and creative stagnation are a toxic mix. The only thing I'd add is that they also totally shot themselves in the foot (and head and chest) by making all of their movies so damn expensive. If they want to pull out all the stops for a marquee franchise picture like the Panda and Dragon series, God bless, and if they want to take a flier on an ambitious new project like The Croods, all the better. But $145m for Peabody? $135m for Penguins and Turbo?

That would be like if Disney spent $150m on Planes.

March 27, 2015 | Unregistered CommenterRoark

When things go wrong in the film business they can go wrong quickly and brutally.
I don't really see Dreamworks coming out of this tailspin. It's unfortunate because animation is a beautiful art, and the layoffs cost so many jobs. Your summary underlines the major mistakes other studios have made or are on the verge of repeating.

1. Over-saturation: If a studio makes too many films of the same type the public turn off.
Marvel & DC comic book films - Studios may think there is no limit, but the Dreamworks downturn proves that you can kill the golden goose.

2. Sequels vs. Original content: Dreamworks tried to play it safe by doing so many sequels, too soon. Their content is always predictable, the male is always the lead, he is always misunderstood, (different) and then saves the day, and is accepted. No "Brave" or "Frozen" came out of Dreamworks, which just shows how uncreative they are.

Dreamworks is suffering now for their greed and lack of originality, and that sounds very familiar to me. What other studio will bite the dust because they choose what seems safe until it drives them into the ground?

March 27, 2015 | Unregistered CommenterLadyEdith

I'm not sure its really fair to question the decisions to make Panda 3 or Dragon 3. The sequels may have underperformed (I'm not sure that's completely fair, as both sequels were over £600 million worldwide), but they were good films (I'm a big fan of Panda 2 which I much prefer to the original and Dragon 2 was a bit more muddled than the first, but was still by far the best animated film last year) and both clearly laid the narrative groundwork and expectation for a third movie. Even if both take a hit and 'only' do £450 - 500 million, that will still mean profit and continuing awareness in both TV and merchandise. To my mind, The Croods 2 is clearly far more of a risk - it screams 'freak hit' to me and appears to have no real lasting cultural footprint or zeitgeityness (it's a word!)

March 27, 2015 | Unregistered CommenterIanO

Roark: Hit the nail on the head. $145 million for Peabody: The only reason I can fathom is that quite a bit of that was them still paying Robert Downey Jr even though he didn't show up for the recording sessions. (I honestly think we got a slightly better adaptation because of it (RDJ probably would have sleepwalked through just playing himself where Burrell got darn close to the original voice because he COULDN'T be seen screwing up that badly in front of a bigger paying audience), but there's no way that's more than, MAXIMUM, a $110 million movie. And with what that movie wound up grossing, the difference between being a $145 million movie and a $110 million movie is the difference between a small loss (at $145 million, needs to gross $290 million to be read as breaking even. At $272 million, that's a loss of $9 million.) and a small profit (at $110 million, needs to gross $220 million to be read as breaking even. At $272 million, that's a decent but unspectacular profit of $26 million.), respectively.)

March 27, 2015 | Unregistered CommenterVolvagia

IanO: Why the heck are Trolls and Boss Baby scheduled while all of their significantly more promising concepts like Bureau of Otherworldly Operations, Mumbai Musical, Alma and Me and My Shadow are all TBA? Surely committing to one of those (ESPECIALLY Alma) will help stop the malaise?

March 27, 2015 | Unregistered CommenterVolvagia

Yeah, the only idiotic thing about Panda 3 is how long it took to make after the initial film/cliffhanger. The second film, at least according to Box Office Mojo, outearned the first film if you add international markets and it has enough cultural cache (or did, at least) to make at least one more profitable film (plus, these films are quite good). Dragon 3 is less desirable but I get it.

Overall though, I loved this article. It reads like vintage EW, back when they relished the behind-the-scenes stories of Hollywood and the studios.

March 27, 2015 | Unregistered CommenterJohn T

Volvagia: Totally. Look at the budgets for some of the other non-Disney, non-DreamWorks animated films in recent years: $50m for Book of Life and the Planes movies, $60m for The Lego Movie, $76m for Despicable Me 2. I don't think anyone could honestly say, outside of Dragons 2, that the extra $60-70m DreamWorks spends vs. its competitors is resulting in a significantly superior experience. If movies like Turbo, Peabody and Penguins were budgeted in the $75m range, we'd be talking about them as modest hits, not studio-threatening disasters. DreamWorks is just locked into a certain scale of production, and it, as much as any other factor (though they're all related), is why the studio is circling the drain now.

March 27, 2015 | Unregistered CommenterRoark

Volvagia: I have no idea, I'm not sure which films Dreamworks has cancelled, though BOO sounds depressingly like R.I.P.D. I would guess that, with Trolls at least, there's probably some financial arrangement with the producer of the dolls that makes it more attractive to a company who seem to be running a mile from the type of adventurous animated film that a Rahman/Schwarz musical implies

I do think that the interview that Jeffrey Katzenberg gave last year should be highlighted, double underlined and tattooed on his ass for its presumptuous triumphalism and sort-of-dismissal of Dragons 2

"I would say the next group of things coming from us are more at our core. So "The Penguins of Madagascar" I think, in some respects, is one of the funniest movies we've ever made. It's outrageous and it's just hysterical. "Home" is really an adventure comedy as opposed to a comedy adventure. And "B.O.O.: Bureau of Otherworldly Objects" is our ghost movie next summer with Seth Rogen, Melissa McCarthy and Bill Murray. Just a flat-out, pedal-to-the-metal, hysterical comedy. "Kung Fu Panda 3," the next story, is actually more broadly comedic. It's actually closer to the first movie than the second movie; the second was dealing with Po's past and had dark elements to it"

March 27, 2015 | Unregistered CommenterIanO

Volvagia how are losses calculated? Is there a marketing cost that's assumed for most big budget films ?

March 27, 2015 | Unregistered CommenterRami

@Rami: re: Marketing costs - The rough calculation used to get an idea if what a film needs to make to be in profit is :
cost of the film - $100,000,000. production costs
marketing - $ 50,000,000. roughly 50% of whatever the production cost was
Total Cost = $150,000,000. film needs to make over $150.million to be in profit.

This is a rough guide which I got from Kim Masters (KCRW -The Business).
Marketing of films is very expensive which is why studios frequently do co-productions and pre-sell distribution rights.

March 27, 2015 | Unregistered CommenterLadyEdith

back in the day i used to hear that you had to gross roughly 2 1/2 times what you cost to make (factoring in all the expenses that come along past your initial budget)... which is why movies are always such risky propositions and why low budget movies are the way you go if you can pull it off. Clearly there's a lot of waste. Magic Mike cost only 7 million to make so Soderberg & Tatum cleaned up. But how is it that they can make Magic Mike for only $7 million and it looks just as good as movies that regularly cost 80 million?

March 27, 2015 | Registered CommenterNATHANIEL R

I think there's solid creative justification for HTTYD 3, the 2nd one already started expanding on the world in a really nice way, Valka is thus far under explored, and most importantly - Hiccup's arc feels unfinished. Dragon 2 was a very satisfying movie in and of itself, but the lead character's development over the course of the series has been done in such a way that I would feel rather let down if that were the end of it. Really the position he's in by the end of the last movie is such that lends itself to the least stock-characterization of the series thus far.

Also Trolls is a really financially unviable idea, i'm surprised they didn't scrap it.

March 27, 2015 | Unregistered CommenterArlo

Dreamworks should sot have oversaturated the animation market with making so many films, their films do not have event factor with them anymore. Home is Dreamworks 31st animated film. Do you know what is WDAS 31st film? Aladdin. It took WDAS over 5 decades to get there. And Dreamworks only the occasional good film in their library, they do not have a the classics they should. Their brand recognition is not really positive.

March 27, 2015 | Unregistered Commenterchinoiserie

I don't really post here very often, but I'm always reading. I wanted say that Tim, I really like your animation column. This 2 parter in general was great. I disagree with putting How to Train Your Dragon in the "Fall" part of the studios history because to me it's their peak, but that is really just splitting hairs. Great work.

March 27, 2015 | Unregistered CommenterJeff

I love how well you put everything into perspective Tim. It is fascinating how successes are sometimes the root of failures.

March 27, 2015 | Registered CommenterNATHANIEL R

I want to make it WAY clear: I think Kung Fu Panda 3 and Dragon 3 are artistically great directions for DreamWorks to go, and I'm more excited for those than anything else they have going on. But if they both slide as far from their respective part 2s as those did from Part 1, in terms of box office, it's going to go ugly for the studio.

And I wanted to second everything Roark said about DWA's weirdly inflated budgets compared to Blue Sky and Illumination and Warner. A studio should absolutely be able to survived all of these movies making around $200 million world wide, but they're spending Pixar-level money on projects that look as polished and complex as what Pixar was making 10 years ago.

March 27, 2015 | Registered CommenterTim Brayton

Great two articles, Tim.

And yes, if the budget + marketing was $150m then they'd need to gross around $300m probably to break even on a film like this. Although some films can make their entire budget back purely through licencing fees and product placements (see the recent Spectre news of the production receiving $20m from India to make them look nice!). I read a stat once that only one in ten big budget productions actually ever make it into the black although I'm not sure how accurate that is today (I heard that about maybe ten years ago?)

March 27, 2015 | Unregistered CommenterGlenn Dunks

I didn't know Home is the #31 DreamWorks film already.
When I think of how it all began....
I do like a lot of their movies, including Kung Fu Panda 2 or surprisingly The Rise of the Guardians.
Of course massive success can make studios greedy and too much will lead to failure, but that's what life is. We learn from failures.... well, mostly.
Even Disney had quite a hard time the last years before Frozen. Pixar also.
But they got back on track and I think DreamWorks will get theere too again.

March 28, 2015 | Unregistered CommenterSonja

Interesting pair of articles, Tim. I've never been into DreamWorks films (and not intentionally-- I didn't even know that half of their films were DW releases until these posts) and seeing them all lined up makes me realize: the DreamWorks aesthetic is really quite ugly. 'Dragon' is beautiful, and maybe the backgrounds of Kung Fu Panda, but otherwise, their stuff looks so CGI and their human characters so doll-like.

March 28, 2015 | Unregistered CommenterEvan

What they should do is cancel Trolls and Boss baby and make promising movies like Alma and anothrr original like Me and my shadow.

April 18, 2015 | Unregistered CommenterDguy

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