Sunday, June 22, 2008

The Market Costs of Touting 'Toons

Variety puts up an article about how expensive selling the latest big budget animated feature is:

Over the last five years, toons were the most expensive movies to promote, easily costing tens of millions more than the average pricetag to promote live-action features ... Last year, "Ratatouille" topped the marketing charts, with Disney spending $54 million to cook up ads for the Pixar-produced pic, according to TNS Media Intelligence. That's compared to the $46.8 million Paramount and DreamWorks spent to tout "Transformers" that year ...

That's something like 15-20% more dollars to advertise the animated feature over the half-animated feature.

There's a reason for the expensive advertising, of course. 1) Studios are trying to boost awareness levels in a wide range of customers, some of those customers fairly hard to reach. 2) Animated features don't have big stars out front to build campaigns around (DreamWorks has tried to change that equation somewhat). And 3) as Variety says, non-sequels are generally seen to need more advertising dollars to catapult them into the marketplace.

This was telling:

DreamWorks Animation is a publicly traded company and relies on the success of its pics to prop up its shares.

This year, the company is relying on "Kung Fu Panda" for most of its revenue, so it needs the film to do well. The same was true for Pixar Animation Studios before Disney acquired it. Each pic affected the company's stock. Even the type of buzz each film was generating had an impact on shareholders before the films unspooled.

DreamWorks -- and Pixar before it -- has a business model that requires every release to be a hit. Think about that a minute. Every time the batter steps up to the plate, he's got to hit a home-run or a three-bagger, or he's cut from the team. That's an almost impossible level of performance for a movie studio to achieve.

(In live action, I can only think of two studios which approached the achievement, and both studios were owned by actors: Douglas Fairbanks Sr. released a steady stream of hits for nine years (1920-1929), and only one, The Mollycoddle, underperformed. Doug's overperformers included Robin Hood, The Three Musketeers, The Thief of Baghdad, Zorro, The Black Pirate, all of them costume pictures. And Charlie Chaplin created a quarter century of hit films (1915-1940), most out of his boutique film factory on La Brea. But even Charlie crashed and burned commercially with his last two, Monsieur Verdoux and Limelight).

DreamWorks and Pixar have built strong, audience-supported brands, yet I still think that the picture-hit, picture-hit model is unsustainable over time. My hat's off to Jeffrey K. for making it work to date, but sooner or later DWA will most likely be swallowed up by some larger entity.

On the other hand, there are all those ancillary markets and products ...


Anonymous said...

2) Animated features don't have big stars out front to build campaigns around

i'd say that most do now, and if they don't, they cast working toward that goal.

Anonymous said...

Bee Movie kind of crashed and burned, didn't it? Dreamworks was able to weather that storm. And Over the Hedge didn't do so well, as I recall.

Still, I don't doubt that more than two bombs in a row would probably cause Dreamworks some very serious financial straits.

But it's doing great, and Kung Fu Panda was truly awesome, its best work by far.

Kevin Koch said...

Over the Hedge made $336 million worldwide, and generated a lot more than that on DVD. No doubt there was hope it would do better, but it was far from being a bomb.

Anonymous said...

Dreamworks has done far better than its neighbor down the street.

Michael Sporn said...

They spend more to make more. They're looking for the ancillary market to make more than the film, so they spend more on the film which acts as an ad for the dolls.

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