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Critter jitters

Studios fret that CGI toons are at a saturation point

John Lasseter has every right to feel like a rock star.

At the Disney annual meeting, shareholders gave him a standing ovation, hailing him as the salvation for everything from feature films to theme parks in his new position as chief creative officer of Walt Disney Feature Animation.

The following week, exhibitors at ShoWest gave him another standing O, pinning their hopes for a box office revival in large part on his “Cars.”

The ascension of a floral-shirt-wearing animator to the top of the Hollywood food chain is not just about the success of his movies. As the film biz continues to lose traction, studios (big and small) seem to think there’s one safe bet left: CGI-animated family entertainment.

Not only do these pics consistently do well at the box office and homevideo, but they create the franchisable characters that have become the lifeblood of modern media companies.

“When you look at ‘Snow White’ or ‘Lion King’ or ‘Toy Story’ … they’ve become Broadway musicals, theme park attractions and much more,” Disney topper Bob Iger said at the company’s recent annual meeting. “In effect, they become part of our culture, and that’s why they create so much value.”

But as with all successful trends in Hollywood, there’s a four-letter word that brings chills to execs: glut. This year has spawned an exceptionally competitive playing field, with 14 animated films — a record-breaking number so out of proportion to recent years that marketers are wondering if the business has the capacity to absorb all of them.

It’s hard to argue with CGI’s track record. With the exception of “Antz,” neither Pixar nor DreamWorks Animation has had a CG toon that grossed less than $360 million in worldwide B.O.

Even critically dismissed pics like Fox’s “Robots” and Disney’s “Chicken Little” comfortably cumed $260 million and $311 million worldwide, respectively. And that’s before uniformly healthy homevideo sales and the vast number of ancillaries clicked in.

The year’s first quarter alone saw the bow of four toons, with the March 31 launch of Fox’s CG tentpole “Ice Age: The Meltdown” (see review, page 65), which is expected to continue the genre’s leggy tradition.

But insiders agree CG’s unbroken success record is likely to change this year, now that every major studio except U has one or two costly toons teed up.

Some, like Disney, Fox and Sony, are upping investment to make toons inhouse, while others, including WB and Par, are hiring outside firms.

Execs fear a reprise of the phenomenon of a decade ago. After the mega-success of “The Lion King,” studios jumped on the bandwagon and made huge investments in cel animation. The results were money-losers that included “The Iron Giant” and “Titan A.E.” Most of the majors promptly dropped out.

“The international market is particularly congested for animated films this year,” notes Veronika Kwan-Rubinek, Warner Intl. president of distribution. “I’ve never seen as many going at once. So the possibility of audience fatigue is a real challenge for films that have similar themes and settings.”

Potential glut isn’t limited to this year alone. With its Pixar acquisition, Disney is committed to two or three toons per year. Already, 2007 is packed with toons ranging from Pixar’s “Ratatouille” to Sony’s “Surf’s Up” to DreamWorks Animation’s “Shrek 3” and Lionsgate’s first entry, “Foodfight!” The market is so full that Disney’s “Meet the Robinsons” and TWC/WB’s “Teenage Mutant Ninja Turtles” are skedded for the same date next March.

While studios are fretting over who will come out a winner, homevideo retailers and exhibs are smiling at their good fortune, betting the barrage will boost overall business. It’s no coincidence that the two major-studio movies that screened in their entirety at ShoWest were Disney/Pixar’s “Cars” and DreamWorks’ “Over the Hedge.”

“Several years ago, we told studios we wanted more G- and PG-rated family comedies, and this year they are finally delivering,” crowed National Assn. of Theater Owners prexy John Fithian at the confab.

“Ice Age” is the only animated sequel coming out this year. The rest are all properties original to the bigscreen that studios hope will create long-lasting, multiplatform franchises.

More than just turning a profit, studios want to create a character like Nemo or Shrek who can generate revenue for decades. (The Walt Disney Co., after all, has been most associated with a cartoon character for more than 75 years.)

“Because the films we make are so expensive, the financial model requires them to have ancillary value,” explains Sony Pictures Animation exec VP Sandra Rabins. “We work very hard to create characters that kids will want to revisit time and time again on DVD, in sequels or in a piece of merchandise that expands the experience.”

That point, more than any other, may explain why Iger is radically reshaping Disney’s animation operation by buying Pixar and installing its prexy, Ed Catmull, and Lasseter in charge.

“The lightbulb went off,” Iger recalled in a recent conference presentation, “when I was at Hong Kong Disneyland watching the parade, and I realized there wasn’t a single character in the parade who had come from a Disney animated film in the past 10 years except for Pixar.”

Even though the acquisition will not close for another month, the new Pixar leadership is already making changes at Mouse House animation. “Meet the Robinsons,” in the works at WDFA, was delayed from December to next March to give Lasseter and his team more input. Disney’s Circle 7 unit, formed to make sequels to Pixar pics, has been shuttered, and its “Toy Story 3” killed.

Toons produced by outsiders, such as April’s “The Wild” and 2005 flop “Valiant,” will likely no longer be distribbed by the Mouse House.

But in a concession to Disney’s bottom line, Pixar will start producing sequels to its own pics internally, with one scheduled to come every other year on top of an original toon of its own and one from Disney’s animation unit annually.

It’s not just domestic exhibs who are eager for more toons. As the film business continues to go global, foreign markets are proving ripe territory for these pics. “Madagascar” took in close to two-thirds of its gross of $530 million outside the United States. Disney’s “Bambi II,” which went straight to DVD in the U.S., has grossed well over $30 million offshore.

And animated pics allow dubbing that won’t disorient the local audiences. “One of the great things about animated movies is in your country, they speak your language,” points out Sony Pictures Digital prexy Yair Landau, who oversees the studio’s animation unit.

“For kids in Mexico City, Boog and Elliott (the main characters in “Open Season”) will be Mexican. In Germany they’re German and in Japan they’re Japanese. People’s experience with them is different than it is seeing Will Smith or Tom Cruise dubbed.”

CGI toons are proving so lucrative that indies are jumping in as well. Production houses that once specialized in commercials or f/x, such as the Orphanage and Laika Entertainment, are investing tens of millions in their own productions without a studio on board yet.

Telco IDT is investing hundreds of millions in a new entertainment division focused primarily on CGI. In a move other indie producers will try to copy, it signed a two-year distrib deal with Fox that starts with “Everyone’s Hero” this September.

But it’s no longer true these indies need to get the interest of a major. The Weinstein Co. has been on an animation buying spree in the past two months, greenlighting or picking up rights to three new toons along with three already in the works. Although “Doogal” misfired, the company was buoyed by the $60 million take for the inexpensive “Hoodwinked.”

“We are working hard on developing many CG films right now, and I believe that with a unique and cohesive storyline, and the right creative team in place, we will be able to succeed in this competitive genre,” Harvey Weinstein says of his company’s renewed efforts, which include both negative pickups and original productions.

But that is what concerns others in the business — the fear that if not done right, lower-budget toons might sour fans on the idea that all CG pics will visually amaze. Not only do animators complain to each other about quality, but studios investing hundreds of millions don’t want to be lumped in with a $20 million toon.

“I think the consumer will understand very clearly the difference between ‘Doogal’ and ‘Cars,’ ” says DreamWorks Animation topper Jeffrey Katzenberg. “The highest-end product is so significantly differentiated from anything else out there that when these movies come out, they are very big events.”

If that’s true, some of 2006’s events, such as DWA’s “Flushed Away” and WB’s “Happy Feet,” will have to differentiate themselves quickly, since they come out within two weeks of each other this fall.

“I believe the market will expand for the films that are strong, but films trying to slip in there and capitalize on what they perceive as a trend are going to encounter very low interest,” predicts FoxAnimation topper Chris Meledandri. “There’s no clearer example than ‘Doogal.’ Prior to ‘Doogal,’ the perception was that a CG film with aggressive marketing is going to have good fortune. But these films aren’t succeeding by accident. It’s the wit and the story.”

Of course, every animation exec thinks he’s the one focusing on wit and story, and somebody else is just trying to ride the wave.

The best hope for so many toons to co-exist may be the hope that animation will stop being seen as a genre and instead simply be a different production method.

“Fifteen years ago when digital effects took off, everyone was worried there was a glut,” notes Janet Healy, IDT’s president of animation. “But pretty soon they became commonplace and effects themselves were no longer a drawing point. You’re seeing some of that in animation right now, with people making movies that look good but may not be compelling entertainment.”

In other words, the best-case scenario will be the day when CG toons are viewed simply as family movies and the quality ones will succeed.

But, if not, 2006 may be the year when CG-crazy Hollywood started to bury audiences under a nonstop blur of talking turtles, mice and moose.

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