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Missing the Market

Hey, gang!

Jim Hill here. And what a pleasure it is to welcome Sean Kennelly on board at JHM. At this website, we pride ourselves on trying to bring you a different take on what’s really going on in the entertainment industry. And given that Mr. Kennelly is a hardened industry vet, I’m sure that Sean is going to bring something interesting to the table.

To give you a brief bit of background on Mr. Kennelly:

Affectionately dubbed “the Disney freak” by his family, Sean comes to us on the heels of a 7-year tour of duty at several of the major Hollywood studios (Fox, DreamWorks, Columbia Pictures) and is a regular contributor to “Creative Screenwriting” magazine.

That’s a rather impressive set of credentials, don’t you think? Alright, that’s enough jabbering on my part. Without any further ado, here’s Sean Kennelly with his take on what’s currently going on the feature animation field …

For the last few years we’ve all been hearing how traditional forms of animation are dead (2-D, stop motion) and that computer animation is now the king. The problem with all this is that it focuses all the attention on the format and forgets that it is the story that keeps people in their seats. That and being aware of the expectations of your core audience.

What’s a core audience you ask? It’s the people who come back every time to see a certain genre of film (horror, drama, action-adventure, umm…animation?). Given some core audiences age and either drop the genre and move on, or they keep coming back. The key for any studio is to figure out who that target audience is and do all in their power (and marketing budget) to get them there for the opening weekend. Beyond that they hope word of mouth from that weekend is positive and will bring in even more people outside the demographic, making the film a box office winner.

Sounds simple enough. Unless you fool yourself into thinking that you can somehow change or broaden your core audience by adding elements you believe will appeal to another audience – one you hope will bring you even more praise and money. But sometimes pride can get in the way. And serving two masters is trouble in the making.

Take the example of Walt Disney Feature Animation. Started by Walt Disney back in the 1930s with “Snow White and the Seven Dwarfs,” they created films of such quality that they became a brand name which was synonymous with quality. However after Disney’s death in 1966, the guardians of his legacy could not hold on to the magic and it faded.

Still it was the only game in town and it stayed that way for years. No other studio had a feature animation division and no one wanted to challenge the king, even if Disney was no longer alive. But Disney badly needed some innovation and change.

Ron Miller, Disney’s son-in-law and head of Disney, made some improvements with the launch of the Disney Channel and the creation of Touchstone Pictures. Yet it wasn’t until Michael Eisner and Jeffrey Katzenberg came on board in 1984 that things really began to move. Hailed as an animation renaissance by many enthusiasts, the new Disney era saw an ever increasing box office [world-wide box office in millions with parenthesis – including the U.S., Canada & the rest of the world markets]. New classics such as “The Little Mermaid” ($211), “Beauty and the Beast” ($377), “Aladdin” ($504) and “The Lion King” ($783) came out on a regular basis and there seemed to be no end in sight.

Consumer confidence was riding high with each new release and parents lined up with their kids to see every Disney animated film knowing that they were in for a good time. It was a golden age. But then something happened.

Pocahontas” ($346) came out. While the initial weekend at the box office seemed to indicate that the film was loved by all ($29 million vs. “Lion King” $40 million), it dropped off 45% the next weekend. While this is almost standard in the movie industry these days, Disney never experienced such drops with their animated films.

For comparison, “The Little Mermaid” actually gained +39% in its second week while “The Lion King” dropped a small -16% in its second week. And while you can argue all you like about the film or the market place, the numbers don’t lie. If people like it, they come and the movie makes money. A good movie always has “legs” meaning it doesn’t drop off dramatically and continues to play or sometimes to even build an even bigger audience over time. It may not be the #1 film but it will do business.

Some fans and parents were disillusioned. It looked like Disney, smelled like Disney, but inside it was an entirely different experience. Beautiful as the visuals were it was, at its core, an adult drama with a few songs and cute animals thrown in to pacify the little ones. Only the little ones were not pacified. Mom and Dad weren’t too happy either. No wonder families were headed to the exits.

Still, Disney usually made great animated films so everyone was willing to let this one pass. I mean, you can’t expect to bat a thousand every time you release a movie. It just doesn’t happen. So while audiences were disappointed, they eagerly waited for the next film.

Then “Hunchback of Notre Dame” ($325) came out. Audiences came out in droves hoping to see what magic Disney had conjured with this classic tale…but got burned. Again. The movie contained even more adult drama with some very suggestive and lusty dances thrown in just to add fuel to the fire. The film actually managed to frighten the little ones at times, not to mention how tough it was to explain why the villain was singing “this burning desire is turning me to sin”. Mom and Dad were red in the face this time.

What happened? Jeffrey Katzenberg decided to make a bold move into a new demographic – adults. Though much of the public was not aware of it, Katzenberg’s animation philosophy came out in a 1999 interview. “Seventy years ago, Walt Disney took a certain technique called animation and told the kind of stories he wanted to tell, which were fairy tales, stories and films for children, which was a lovely idea and informed everything he did. I respect and admire that. But it’s not what I want to do. What I want to make is a Spielberg movie in animation, or a Barry Sonnenfield or a Martin Scorcese or a David Lean. The tradition up to now has been to do things cartoony. We don’t mean to be pretentious, but we set out to do fine art. I’m not saying that cartooning isn’t fine art, just a very, very different style.” [“Fine Tooning,” Caroline Westbrook, “Empire,” Issue No. 115, January `99, pp 108-111.]

Though he left Disney in 1994, just after “The Lion King” was released, his influence and philosophy was all over the releases that followed. You see with a 3-5 year production pipeline, it was years before Katzenberg’s philosophy left the building. But the damage was already done. Disney was no longer golden. They lost the touch. The core audience deserted the Disney brand at an ever increasing rate until the real low point was reached years later with “Home on the Range” ($103).

So who is the core audience for a Disney animated film? David Stainton, former Disney animation chief, nailed it in a 2003 Los Angeles Times interview where he said that the core audience for Disney animation was 4-10 year-olds and their parents. That doesn’t mean other ages or demographics don’t enjoy or appreciate the films, it just means that the boatload of the box office cash will come from this group. Deny it at your own risk. Disney did and DreamWorks joined them in playing to the wrong crowd.

When Jeffery Katzenberg left Disney to form DreamWorks SKG in 1994 he brought with him his adult animation philosophy, creating films such as “Prince of Egypt” ($218), “Road to El Dorado” ($76 million) and “Spirit: Stallion of the Cimarron” ($122). Gone were the cutesy characters of animation days gone by, replaced by more adult themes and stories (“Prince of Egypt” & “Road to El Dorado”) as well as experiments in realism (“Spirit”) where the animals never really spoke or sang. Beautiful animation? Yes. But it produced a pitiful box office (with the exception of “Prince of Egypt” which had a core religious audience that helped drive the numbers up). Remember these are world-wide numbers, not just U.S. & Canadian box office (known as domestic box office).

What went wrong? David Stainton again summed it up nicely. “If you think you’re making a movie for everybody, you’re making a movie for nobody.” And that’s what happened. By ignoring the core audience (4-10 year-olds and their parents), they actually undermined their own business. Nobody came to see the films. So where did the audience go? They fled to the only company making animated films for children and their parents, Pixar Animation.

Before he left Disney, Katzenberg made a 3-picture deal for Pixar Animation. The deal saved financially troubled Pixar, which was surviving by producing computer animated commercials for outside companies. The result was “Toy Story” ($361) which came out in November 1995, the very same year as “Pocahontas”. Yet it was still #13 at the domestic box office when “Hunchback of Notre Dame” opened…in JUNE of 1996. This was a film with legs. Eerily similar to Disney’s rise in the 80s and 90s, Pixar built an ever increasing audience with each new release. “A Bug’s Life” ($363), “Toy Story 2” ($485), “Monsters, Inc.” ($525), “Finding Nemo” ($864), and “The Incredibles” ($631). And while “The Incredibles” did less business than “Finding Nemo,” keep in mind that it did better box office than every Disney animated movie ever released with the exception of “The Lion King” and “Cars” looks to be another kid-friendly picture.

DreamWorks caught on and had monster hits with “Shrek” ($484), “Shrek 2” ($920), “Shark Tale” ($363) and “Madagascar” ($527). While there still seems to be a more “adult” influence in these films, they manage to be kid-oriented enough to bring in the core audience and a whole lot more.

Even other studios such as 20th Century Fox figured it out. After making an animated teen action-adventure bomb called “Titan A.E.” (hint: teens are the LAST demographic to see an animated film) that brought in $36 million world-wide, they bought Blue Sky Studios and made “Ice Age” ($382) which has already spawned a sequel. Obviously they learned their lesson too.

But did computer animation save the day? I don’t think so. It was lucky timing. Pixar came on the scene and picked up the core animation audience just as Disney took aim at a different demographic. And like any brand-loyal consumer, the public figured if it was computer animated, it must be good. Studios caught on and thus we have a whole new herd of computer animated films coming out. Will they all be winners? If they have good stories and play to the core audience, they might. And 2-D or “traditional” animation has just as much a chance at succeeding as any other style of animation out there, but it may take time to rebuild the brand. Disney and DreamWorks collectively killed it yet they may be the very ones who could save it. In fact it was no surprise to me to hear about “Enchanted” and the possibility of a traditional animation revival. The fact that Pixar’s leadership is spearheading this effort just shows that they understand that the style of animation has nothing to do with the success of the picture as long as you remember the moral of this story.

What is the moral of this story, you ask? Play to your core audience. Whether it’s a demographic or fans of a particular genre, know your audience and give them what they expect. Even DreamWorks finally realized this after “Sinbad” ($73 million) performed so poorly. I honestly loved the film, but it was nothing more than an animated action-adventure film which was NOT geared to 4-10 year olds. I worked at DreamWorks when it was released and I saw it coming. I knew there was no hope for it because it played to the wrong crowd. That summer as DreamWorks solicited story pitches from the employees (something they do annually), the written notice specifically stated that this year they would not be taking any action-adventure stories. Lesson learned. To infinity and hopefully beyond!

Jim Hill

Jim Hill is an entertainment writer who has specialized in covering The Walt Disney Company for nearly 40 years now. Over that time, he has interviewed hundreds of animators, actors, and Imagineers -- many of whom have shared behind-the-scenes stories with Mr. Hill about how the Mouse House really works. In addition to the 4000+ articles Jim has written for the Web, he also co-hosts a trio of popular podcasts: “Disney Dish with Len Testa,” “Fine Tooning with Drew Taylor” and “Marvel US Disney with Aaron Adams.” Mr. Hill makes his home in Southern New Hampshire with his lovely wife Nancy and two obnoxious cats, Ginger & Betty.

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