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“Despicable Me 2” was one of the box office winners, with more than $750 million in ticket sales.

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Flood of animated films cut into Hollywood's profits

  • Article by: Richard Verrier Los Angeles Times
  • September 8, 2013 - 2:00 AM

With computer-animated movies, studios seemingly can’t get enough of talking animals, planes, cars, monsters, cavemen, snails and little blue creatures who live in mushrooms.

But there are signs that the abundance of animated movies may be nearing a saturation point as family audiences confront a growing number of choices over what they choose to spend their movie dollars on.

“We’re all sitting at a very delicate point,” said Chris Meledandri, chief executive of Illumination Entertainment, which produced the popular “Despicable Me” films. “Everybody has been able to survive so far, but as more films are planned, it’s inevitable that there will be more acute cannibalization off each other.”

This year will see the wide theatrical release of 11 animated movies — up from six a decade ago — including six studio movies in the summer alone, making it one of the most congested periods ever for computer animated movies. In total, 75 animated movies have been released since 2008, according to Hollywood.com. And an additional 13 movies are slated for release in 2014, not counting films released in fewer than 500 theaters.

“There’s a huge number of animated films coming out,” said Paul Dergarabedian, president of the box-office division of Hollywood.com. “There’s no question studios are going to commit huge resources to animation, but I think there’s a learning curve about how audiences react to films and how often they are released.”

The flood of computer-animated movies is reminiscent of the late 1990s, when Disney blockbusters such as “The Lion King” spurred others to jump into the business — only to fail with a string of box-office clunkers, such as “Iron Giant,” that led to widespread layoffs.

Most of the recent movies, however, have fared well at the box office, some hugely so. Universal scored a massive hit with “Despicable Me 2.” Since its release July 3, the Universal sequel, produced for $76 million, has raked in more than $750 million, making it the most profitable movie in the studio’s history.

But there also have been some high-profile stumbles.

DreamWorks Animation, one of the industry leaders, had an unexpected misfire this summer with its computer-animated release “Turbo,” released just two weeks after “Despicable Me 2.”

The film made $21 million in its opening weekend, less than half what the studio pulled in for the opening weekend of its prior movie, “The Croods.” Just five months earlier, DreamWorks took an $87 million write-down on its holiday movie “Rise of the Guardians,” which helped trigger the first-ever layoffs at DreamWorks this year.

Chief Executive Jeffrey Katzenberg has cited market overcrowding in explaining the weak opening for “Turbo.”

“We just ran into a perfect storm of way too many movies,” Katzenberg recently told analysts. “We’ve never experienced this level of animation congestion in a period of time.”

Some industry veterans say Hollywood may be saturating the market with too many animated movies, with characters and story lines that begin to look too familiar.

“As things go in Hollywood, something is seen as successful and everyone jumps onboard,” said Wade Holden, an analyst with research firm SNL Kagan. “When there are more choices and families only have a certain amount of dollars, they’re going to throw their money behind one film or the other and that’s why we’re starting to see some of these big [computer-generated] films miss.”

But Holden says the genre is here to stay, noting that animated films typically outperform other types of movies at the box office. In an analysis of average box-office grosses by genre, SNL Kagan found that animation consistently ranked second behind action movies in each of the past five years. Animated movies also are appealing because they generate more revenue from DVD and toy sales than any other genre.

“Despite the fact that some movies fail, overall the animated genre is one of the most consistently performing,” said Dergarabedian, the Hollywood.com executive. “It’s been a pretty mighty profit center. As long as families keep making kids, studios are going to keep making these movies.”

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