”I would take our animation business over theirs right now,” NBC Universal CEO Jeff Shell says
Meanwhile, in that same period, with the same burdens of COVID and on much lower production budgets, Universal’s Illumination and DreamWorks Animation divisions have earned $2.06 billion worldwide from a series of animated hits like “Trolls: World Tour,” “The Croods: A New Age,” “Spirit Untamed,” “The Boss Baby: Family Business,” “Sing 2,” “The Bad Guys” and “Minions: The Rise of Gru.”
NBC Universal CEO Jeff Shell on Monday trumpeted his studio’s achievement. “I honestly think that not only are we challenging Disney Animation, but I would take our animation business over theirs right now,” he said on a conference call with investors. “We have an animation system now that rivals if not surpasses Disney.”
And Universal is following Disney’s costly “Strange World” flop with this month’s “Puss in Boots: The Last Wish,” which has scored rave reviews (93% fresh and 8.3/10 on Rotten Tomatoes) and is tracking for a $20 million opening weekend and a healthy run through the holiday season.
The contrast in box office performance has been stark. Disney’s “Encanto” ($256 million) earned one-third less in late 2021/early 2022 than Universal’s “Sing 2” ($407 million), while Disney/Pixar’s “Lightyear” ($226 million) eventually earned less than both of Universal animated films from this spring and summer: Illumination’s “Minions: The Rise of Gru” ($937 million) and DreamWorks Animations’ “The Bad Guys” ($250 million).
And Disney can’t even blame pandemic conditions for the deficit since every studio faced the same issues with families reluctant to return to theaters and hybrid theatrical/streaming releases.
Disney’s “Raya and the Last Dragon” grossed under $160 million in early 2021 amid a hybrid release (in theaters and also on Disney+ for an extra $30) months after Universal and DreamWorks’ “The Croods: A New Era” legged out to $216 million under similar circumstances. However, even Paramount’s “Paw Patrol” movie earned $145 million in theaters while being concurrently available at no charge for subscribers on Paramount+.
Is Disney’s streaming strategy to blame?
Recently bounced Disney CEO Bob Chapek was willing to trade box office revenue (and new theatrical franchises) for streaming gains, sending animated features like “Soul,” “Luca” and “Turning Red” straight to Disney+ in most territories, including the US This It was at a time when much live-action production had stalled due to the pandemic and Wall Street was all but forcing entertainment companies to mimic Netflix.
“Universal animated titles are all theatrical propositions and that’s really clear to the consumer,” an individual with knowledge of the animation space told TheWrap. “Disney has muddied the brand so the consumer doesn’t know what film is going where.”
Every major studio had to readjust due to the COVID-19 pandemic, with Sony and Paramount leasing or selling many theatrically-intended films to streaming platforms and Warner Bros.’ “Project Popcorn” offering the studio’s entire 2021 theatrical slate in theaters and on HBO Max simultaneously. By 2022, though, Warner Bros. had reverted to a 45-day theatrical window and Sony was offering longer windows for titles like “Spider-Man: No Way Home” and “Lyle, Lyle Crocodile.”
“When Wall Street was judging these companies based on streaming subscriptions, it made sense to drop top movies on the services,” ScreenMedia founder and chief analyst Colin Dixon told TheWrap. “But now that Wall Street has reverted to judging the bottom line, there’s no such incentive to undercut theatrical and considerable post-theatrical revenue opportunities for the sake of subscription gains.”
According to one rival studio executive, Disney “hurt their triple-A perfect brand” by shuffling so many big-screen titles to its streaming service — and not recommitting to theatrical releases sooner. “Audiences used to see the Pixar logo in a theater, they knew they were seeing the best of what theatrical animation had to offer,” the insider said. “Instead, the Disney+ strategy has merely trained people to know they can just watch it at home.”
Disney’s empty cupboard of franchises
It’s tempting to blame Disney’s animation woes on Chapek’s focus on Disney+, but part of the problem is the studio’s failure to greenlight more successful sequels — or to launch a new animated franchise.
Josh Spiegel, the author of “Pixar and the Infinite Past: Nostalgia and Pixar Animation,” noted that the studio released five Pixar sequels and two Walt Disney animated sequels between 2013 and 2019 — including megablockbusters like 2019’s “Frozen II” — but only one since then: the “Toy Story” spinoff “Lightyear” that whiffed at the box office this past summer. “Disney spent a decade selling nostalgia for itself,” Spiegel said, “and by 2020 they were already running out of IP which might justify that nostalgia.”
However, Disney’s not entirely alone here. No original animated film has cracked $300 million worldwide since Walt Disney and Pixar’s Oscar-winning “Coco” ($808 million) did so in late 2017.
The major studio cartoons in 2018 were IP-driven titles like “The Grinch” or sequels like “Hotel Transylvania 3.” A slew of non-sequel and/or original toons that landed in 2019 stumbled badly at the box office: Paramount’s “Wonder Park” ($120 million), DreamWorks’ “Abominable” ($176 million in 2019) and Blue Sky’s “Spies in Disguise ” ($179 million).
Disney’s recent struggles with non-sequel animated features may partially be a case of Disney arriving late to an in-progress problem: Animation may be becoming as beholden to established franchises (“Despicable Me 4”), brand-specific nostalgia (“The Super Mario Bros. Movie”) and marquee characters (“Spider-Man: Across the Spider-Verse”) as with many other theatrical genres.
Animation rivalries can lead to more than one winner
This is not the first time Disney has fallen to second place in market share in the animation genre. Jeffrey Katzenberg’s DreamWorks Animation (explicitly positioned as a theatrical animation rival) arrived with a bang in 1998 with “Antz” and “Prince of Egypt.” The House of Mouse and the House of Shrek duked it out for supremacy throughout the 2000s, trading annual market share victories amid a slowly expanding (and arguably healthier) global marketplace.
Disney soared with Pixar originals like “Ratatouille” (2007), “Wall-E” (2008), “Up” (2009) and “Brave” (2012) while Disney’s in-house animation division was in a post-Katzenberg commercial slump . Meanwhile, DWA offered up brand-new franchises at a time when most theatrical animated were one-and-done propositions. “Shrek,” “Madagascar,” “Kung Fu Panda” and “How to Train Your Dragon” were all hits that produced successful big-screen followups — a strategy that Disney would only periodically pursue until the late 2010s.
Both animation giants were “winning.” Disney eventually pulled ahead, thanks to big-budget animated films becoming less of an automatic theatrical event (and as DWA distribution was handed over to Fox). Soon, Disney began embracing its roots as a purveyor of female-led fairy tale fantasy adventures like “Tangled,” “Frozen” and “Moana.” Simplistically speaking, Disney stopped chasing boys with “Pirates of the Caribbean” knock-offs and started chasing girls with variations on “Snow White.”
Disney now faces a beefed-up rival in Universal, which owns Illumination (home of “Despicable Me” and its minions) as well as DreamWorks Animation, which purchased it from Katzenberg in 2016 for $3.8 billion.
Disney isn’t giving up on theatrical animation
One of the other lessons of Disney’s shift into streaming is that box office performance doesn’t automatically detract from at-home viewership. This summer, the big-screen hit “Thor: Love and Thunder” ($760 million worldwide) and the flop “Lightyear” ($226 million) both registered over 1 billion minutes on Nielsen in their respective opening weekends on Disney+.
And there are increasing signs that even a token theatrical release can boost awareness for a project. “The theatrical launch for ‘Encanto’ was the main driver behind its off-the-charts engagement on Disney+,” one studio insider told TheWrap. “It subsequently exploded in the music, merchandise and live entertainment space, becoming a fixture in the cultural zeitgeist throughout 2022.”
“Encanto” may be a new blockbuster franchise by almost every metric except theatrical box office. It certainly has had a bigger pop culture impact than 2011’s “Cars 2” or 2013’s “Monsters University.” And there’s arguably more audience enthusiasm for a sequel based on newer source material.
Many express hopes that Disney’s new leadership will focus on rebuilding its legacy in animation. “Hopefully, with Bob Iger back at the helm, a renewed emphasis on the theatrical release of Disney’s animated fare will help to return these films to prominence,” Comscore senior media analyst Paul Dergarabedian said.
Market share victory will likely not return to Walt Disney next year, as the studio’s two major animated releases are both non-sequel originals. Pixar’s “Elementals” is currently slated for June 16, 2023 and Walt Disney’s “Wish” on Nov. 22, 2023. Meanwhile, Universal is doubling down on family franchises with “Despicable Me 4” and “The Super Mario Bros. Movie” from Illumination and “Trolls 3” from DreamWorks Animation.
A representative for Disney defended its animation slate. “Both Walt Disney Animation Studios and Pixar films definitely take time to produce between sequels, but in doing so, it allows new IP to be generated, while also releasing sequels to well-established and successful films,” the rep told TheWrap. “Films like ‘Frozen,’ ‘Cars,’ ‘The Incredibles,’ ‘Toy Story,’ ‘Zootopia,’ ‘Wreck-It Ralph,’ ‘Finding Dory’ and more were new IP introduced to audiences in theaters, and they all went on to become some of the highest-grossing and most popular franchises across the company today.”