Universal/Pixar? Shrek 2 effect on Disney renewal?

[Jake Lipson]

This is an opinion column from <a href=http://www.themeparkinsider.com/columns/kevin/17.cfm target=blank>Theme Park Insider</a> on the Disney/Pixar situation and why in the author's opinion Universal is the studio with which Pixar should tie the knot next. It also discusses how the success of Shrek 2 and other summer movies such as Harry Potter and the Prisoner of Azkaban and Spider-Man 2 may have an effect on Pixar's choice of distributor. Not to mention, what effect will Disney's cheapquels to Pixar movies have on Pixar?

I'm not sure if I agree with everything that's said here, but either way it brings up interesting points and I thought it would be worth discussing.

Shrek 2 opened big this past weekend, but few imagined exactly how big. The second-biggest three-day weekend ever with $109M, $5M short of Spider-Man's record. The largest Saturday ever with just under $45M. And the largest five-day weekend ever - even bigger than Return of the King - with a smidge under $129M.

Think Pixar didn't notice this? The Disney-distributed Finding Nemo made $70M on its opening three-day weekend and Pixar must be wondering why Disney, the self-professed number-one marketer of family entertainment, fell $39M short of the Universal-distributed film. Sure, sequels tend to have bigger weekends than their originals, but EVERY Pixar movie's opening weekend has been bigger than the previous one. But not one of them more than doubled its take, like Shrek 2 did, and not one of them increased more than $60M. Monsters, Inc beat Toy Story 2 by a mere $5M, and Finding Nemo beat Monsters by just under $8M. Every Pixar movie has been called a "home run" by analysts, yet Disney can't seem to create a whole lot more excitement for followup projects.

Many have said Disney didn't give Nemo everything they could have, which is hard to argue against when the movie was the second-highest grosser of 2003. But when Nemo was released on DVD, it sold more on its first day than any other DVD up to that time. Why couldn't Disney make sure the film broke records when it opened in theaters? Did they undermarket? Or was their marketing campaign to blame? Something was certainly amiss.

Whatever the reason, Universal has now put Disney in a very poor light, and itself in the spotlight. Not only did Universal break records this weekend, but they actually kept the original Shrek on screens longer than Monsters in 2001, and it made more money domestically. Plus, the green monster won the Academy Award and the blue one didn't.

In fact, Disney hasn't been able to open a movie in a record-breaking category since 2001, which they did with Monsters (biggest November opening). Not that weekend-opening records are all there is, but breaking records gets you more free advertising from the media than opening at number one does. Record-breaking or not, a huge chunk of a movie's gross, especially in the summer, comes from that weekend.

How many movies has Disney opened big since that magic 2001, the same year Pearl Harbor opened big? Let's look at debuts over $35M. Disney had Monsters, Nemo and Harbor, of course. Add in Signs, Scary Movie 3, Pirates of the Caribbean, Sweet Home Alabama and Lilo & Stitch and Disney has opened eight movies really big in 3 1/2 years. In the same stretch, Universal opened Bruce Almighty, The Mummy Returns, The Hulk, 8 Mile, Jurassic Park III, 2 Fast 2 Furious, American Pie 2, Shrek, The Fast and the Furious, The Cat in the Hat, Red Dragon, The Scorpion King and this year's Van Helsing and Shrek 2, which are still going strong. Fourteen films with openings over $35M. So who exactly has the marketing might?

Even scarier is how far Disney has fallen in this category. Prior to 2001, both studios opened six films at more than $35M, yet read the last paragraph to see how both companies have fared since. Even worse, Universal has marketed four big films this year (ignoring Connie and Carla) and all four opened above $25M; Disney has also marketed four big films (ignoring The Ladykillers, Teacher's Pet and Confessions of a Drama Queen) and every last one of them opened below $20M. The Alamo grossed $20M TOTAL.

Opening weekends aren't everything of course, but people shouldn't look at Disney's record 2003 as proof of their marketing aplomb. Those numbers are seriously misleading, since if you go by what the studios actually made, then you would have to subtract almost half of Disney's Nemo take, making Warner Bros, New Line, Universal and Sony bigger earners. If you go by marketing ability, then you would have to add in the DreamWorks films Universal distributed, making it the undisputed champ. Spin it yet one more way, in average dollars per film, and New Line is the major winner, with Universal right behind.

Ignore all the math and you still have to realize that 2003 was a freak year in which Disney actually had more than one or two hit films, which is what they usually get. Universal, which has been the number one studio since the mid-90s, has only recently lost its position due to behemoths like Harry Potter and Lord of the Rings, but has still posted impressive numbers.

So Pixar has no reason to try to rework a Disney deal, right? Even if Eisner was gone from the picture? Not necessarily. Disney still owns the characters from every film Pixar has so far produced and could make sequels to any of their films whenever they feel like it. A wretched Toy Story 3 could seriously damage Pixar if too many people don't understand that Pixar had nothing to do with it. Imagine the Pixar film that opens after people become appalled at what their beloved Buzz and Woody have become. How many millions would that cost the Pixar film?

Still, Pixar can always make a future deal with Disney to produce those sequels. Personally, if I were Steve Jobs, I would gladly give Disney 30%(ish) of the profits if Disney agreed Pixar would be the only company to create sequels for those films. Pixar should be willing to take a big cut if they want to ensure their creations don't get seriously mistreated. If such a deal is undoable - and there isn't really a reason it couldn't happen since Eisner should be gone by that time - then Pixar needs to realize they need to find the company that will do the most for them in 2006. Eisner or no, Disney is not that company.

So then why is Universal that company? Sony and Warner Bros both have proven they can open films in a big way. But Pixar needs to go into the decision with the realization that they may not be the biggest animation studio out there when they break free from Disney. The two Shreks have shown how loose their grip on the top position is. If Pixar joins up with Universal, then Universal will have to make sure the animated films produced by Pixar and DreamWorks do not cannibalize each other. With someone else, that studio would be more likely to put a Pixar film up against a DreamWorks film, since that's the way these guys like to work.

Take this November as an example. Universal placed DreamWorks' Shark Tale in early November, a spot where many family films have succeeded. Disney promptly placed Pixar's The Incredibles on the same date, forcing Universal to either go to war or to retreat. Universal wisely retreated to early October. What would have happened had Shrek 2 been the DreamWorks film involved? Universal certainly wouldn't have blinked then. Would Disney change their date? Or would Disney let the two films fight it out? I think this past weekend hinted as to whom the winner would have been in that scenario. Pixar can't afford to be in that position.

Had Pixar already been in the Universal fold this year, none of this would have happened. Shrek 2 and Shark Tale would have remained in their original spots and The Incredibles could have been given a plum spot around Independence Day. And the Incredibles characters could have been all over NBC this spring, a network that viewers actually watch. Sony can't promise that. Warner Bros can't promise that. Fox can promise network exposure, but doesn't open many non-Star Wars films big.

Many think Pixar has delayed their selection process to see how the Eisner brouhaha comes out. That may be partly true. I think Pixar is also waiting to see how The Incredibles finishes the year compared to not only Shrek 2 and Shark Tale, but to Sony's Spider-Man 2 and Warner's Harry Potter as well. If either of those don't improve upon their predecessors, like Shrek 2 certainly will, expect Pixar to take that fact into serious consideration.

Then there's the theme park synergy. Yes, this is a theme park site so you had to figure I would eventually get to it. Rumors have Pixar a bit peeved that it took so long for WDW to get a Toy Story attraction, and even longer for Disneyland to get a clone of it. Then there's the highly popular Monsters, Inc, which is still unrepresented. Add the embarrassing Nemo "parade" at DCA and the half-assed Living Seas overlay at Epcot and Pixar has to be wondering if the company, both on the movie side as well as the theme park side, will ever show them any love.

Meanwhile, over at Universal, Chicken Run became a USH attraction almost immediately, and Shrek got star treatment with Shrek 4-D on both coasts less than two years after the first film debuted. Even the highly profitable Mummy movies didn't get attractions that quickly. If Universal promises some serious attractions with speedy opening dates, Pixar might start drooling all over the dotted lines before they can ever sign them.

Marketing muscle, serious synergy and quality theme park attractions... why would Pixar go anywhere else?

[Ludwig Von Drake]

It's definelty an interesting article though a bit on the long side.

[MickeyMousePal]

NO, NO, NO, NO, NO

[GOGOinVegas]

I guess this is relating to the theme park industry mainly, but who knows if there was ever a deal involving attractions or of their timeframes?
If you consider that Disney probably had an inkling that they would part ways at some point, why invest in something they knew they would eventually be competing against in some form.
I just want to say also, that even though Shrek 2 did great numbers, and people talk a lot about records being broken, its really a combination of many factors, including the ever rising Ticket price increases ($9.00 here) and probably the general hunger of the public for this type of movie. Shrek has a wider audience than a lot of movies of this type, and lets face it, Well made Digital Movies, because of Home Theatres, DvDs, and the like are HUGELY popular right now. Like a drug crazed junkie, I cant wait to get the next shiny silver disc to feed my widescreen TV. I dont even really think theres as much competition as they would have us believe. Im not going to skip seeing the 'Incredibles' because Shrek 2 or any other Digitally animated feature opens the same weekend. The average person knows what they want to see, and many would see BOTH at some point. And then later, OWN both, which is where the real money is now anyways.
Sorry if I rambled, J M 2cents

[Tolhurst]

I remember not being impressed by the trailer of Finding Nemo.. I went because of Pixar's track record.

[2099net]

Firstly, nobody complained about Finding Nemo's box office at the time. In fact, records were broken then and everyone was slapping each other on the back. Shrek 2 comes along and for what ever reason (mass public stupidity I think ) it breaks a record and then everything else done in the past is rubbished. I think not.

As GoGo says - there's potentially lots of reasons Shrek 2 did better. The Shrek 3D DVD would have helped, plus all those damn free moviecash tickets (how many millions of the box office are from moviecash tickets?) plus, as is generally accepted sequels open bigger than original films (but generally trail off faster). Also the other films on release at the time affect box office takings. And then there's the "star power" with the voice artists heavily promoted and pushed. Something that on the whole people on this board dislike.

Secondly, Universal may have done OK on Shrek II, but their own Van Helsing (a $180m movie) did not perform as well as expected. And it's not from Universal failing to promote the film. Other films by Universal that missed the mark include The Cat in the Hat (not as big as The Grinch which is the reason the film was made), plus I predict Thunderbirds will be a box office disaster. One fluke success (which everyone is putting down to the content of the film, not the marketing) does not a great distributor make. Does anyone think Shrek 2's success will result in Shark's Tale getting similar box office openings or not? I don't think so. The whole argument is academic if it's not about substainable opening weekends. The only fair comparison would be if Disney/Pixar released Toy Story 3 the same year as Shrek 2 was released.

Thirdly, Pixar would have to be wary of any shared copyright deal with Universal. Like Disney, Universal has lots of other media outlets (including NBC now) where they could take advantage of the characters and films with smaller rewards for Pixar. (The whole issue of divisions of the same company in negotiations with themselves - see this article for similar problems with Disney). Pixar actually want full copyright control of their films - which means even if they did have their films distributed by Universal, an automatic presence in Universal parks is not given.

Forthly, Universal have a good relationship with Dreamworks, and an even better one with Spielberg and Amblin (thanks to the Amblin/Universal Jurassic Park films - Have you ever noticed how Universal bend over backwards to keep Spielberg happy with their Amblin Entertainment DVD releases?). If Universal did decide to distribute Pixar films, it would be bound to cause a rift with Dreamworks and, therefore, Speilberg himself. I actually think the politics of their existing relationships would make them think more than twice about taking on Pixar's films.

[Uncle Remus]

i hope that the Incredibles make more money than Shrek 2. if the Incredibles dont beat the box office gross for Shrek 2, i hope that the Incredibles will win the Best Animated Feature oscar.

[TheZue]

For the amount of Marketing that's been put into Shrek, it had better have broken records. They've been advertising it for almost a year, Shrek's head is EVERYWHERE! There is a giant picture of Shrek on the front of the 7-11 down the street right now. I'd love to see some numbers on how much they spent advertising this one.

Over advertising is really risky too. I almost didn't want to go see Shrek 2 at all because I was sick of seeing Shrek everywhere, but it was my enjoyment of Shrek one that got me there. These mass advertising campaigns can backfire big time, so the typical disney way of doing things isn't necessarily bad.

I have a feeling Shark Tale isn't going to do as well as the Incredibles. It has the same feel to it as a few of the other animated movies that haven't done so well, like Sinbad. The Incredibles just seems new and interesting:)

I have no clue about who Pixar should end up with, but agree that Universal may not be the best pick since Dreamworks will most likely get the priority treatment. I don't think the theme park thing has a huge impact on it either, Pixar has a complete Bug's life area in DCA. Many of Disney's other new movies aren't well represented in the park either. That and Universal Studios is lame

[Christian]

I just don't like the character designs in Shark Tale . . . or in Shrek for that matter. There's just something very stilted and awkward about them. They realize they can't look exactly like Disney/Pixar stuff so they think their only alternative is to look lame.

[AwallaceUNC]

Not a very strong article, for reasons that others have already posted. Shrek 2 and Nemo can't be fairly compared. This little problem of confusing medium and demographic is sneaking up again. Just because both are animated using CGI does not imply that both are subject to comparison. Nemo is a family film, and Shrek 2 is a film that attracts children on one level and adults on another. There's a key difference there.

The DreamWorks bandwagon is really starting to take on a lot of weight, and it won't be long before it breaks. Crediting a studio as the best-suited for animated forays based solely on one movie and its sequel isn't reasonable. Shrek is its own animal- a parody that they can either live out or run into the ground (most likely the latter). Outside of that, I see no evidence to suggest that it's the new Disney. I mean, sure, Ice Age did well, but the only Pixar film it can take on is A Bug's Life. Even going back to 1995, when ticket prices were lower, Toy Story made more. On the whole, Disney and Pixar have each been incredibly more successful than Dreamworks- even moreso when you add their profits together. And there's not a Shreck of evidence that the future will be any different.

Another unfair argument is that Universal churns out a greater number of successful films per year than Disney. This is due almost entirely to the fact that Universal simply churns out more movies in a year, period. The percentage matters more. I won't argue that Disney isn't in a rut, though.

Even worse, Universal has marketed four big films this year (ignoring Connie and Carla) and all four opened above $25M; Disney has also marketed four big films (ignoring The Ladykillers, Teacher's Pet and Confessions of a Drama Queen) and every last one of them opened below $20M. The Alamo grossed $20M TOTAL.

What?? I might as well say, "Home On The Range remains the year's biggest animated blockbuster (ignoring Shrek 2)." There's no denying that Disney isn't on its A-game right now, but at least present valid arguments.

Pixar needs to realize they need to find the company that will do the most for them in 2006. Eisner or no, Disney is not that company.

So then why is Universal that company?

Excellent question. He never answers it. He spends one paragraph telling us why other companies (Sony, WB, Fox, etc.) aren't that company. Then he entirely fails to tell why Disney isn't that company. He finishes up the argument by telling us that Universal already has DreamWorks, and that would compete with Pixar... thereby completely contradicting his entire argument to that point.

What would have happened had Shrek 2 been the DreamWorks film involved? Universal certainly wouldn't have blinked then. Would Disney change their date? Or would Disney let the two films fight it out? I think this past weekend hinted as to whom the winner would have been in that scenario.

So?? Astonishing... there is actually no point to this sentence, other than Shrek 2 is a bigger success than what he thinks Incredibles will be. 'Yip yip yip yahoo,' that's just evidence that he's placing all his stock for Dreamworks on this one film.

Pixar can't afford to be in that position.

Wasn't he just saying that they NEEDED that position not three paragraphs ago?

As for The Incredibles, I think it will almost undoubtedly be an enormous success, provided Disney does their part with marketing. It may not match up with Shrek 2 (unlikely, but certainly possible), but that won't prove anything on DreamWork's behalf. A Shark's Tale? I see Ice Age-like results, maybe a little better. I'll be interested to see what the bandwagon looks like then.

-Aaron