Movie animators have been Hollywood's equivalent of baseball free agents. Courted by major studios over the last five years, they reaped hiring bonuses of as much as $150,000, signed lucrative multiyear contracts and traded in their Ford Escorts for Mercedes-Benzes.
But now some of the companies that bet hundreds of millions of dollars trying to emulate Walt Disney Co. to make the next "Lion King" or "Beauty and the Beast" are retrenching, chastened by pricey box-office disappointments, runaway costs and competing animated movies. As a result, what had been a seller's market for animators has this year turned into a buyer's market for studios.
Ironically, it comes just as Disney's "Tarzan" is poised to become one of the biggest animated films ever. Pulling in $34 million during its opening weekend and enjoying rave reviews, it may well be the most successful Disney animated offering since "The Lion King," released in 1994. And last year, an unprecedented four animated movies--"Mulan," "A Bug's Life," "The Rugrats Movie" and "The Prince of Egypt"--each grossed more than $100 million in the U.S.
But those numbers mask mounting economic pressures on studios. As successful as "Tarzan" will be, it may well prove a high-water mark for years for costs associated with traditional animated movies. The huge expense of the labor and computer effects that put the branch-surfing ape man on screen pumped up the movie's budget to a staggering $150 million.
"It is clear that the business has gone through another cycle," said Walt Disney Studios President Peter Schneider, who oversees family and animated films. "Five years ago we saw animation salaries rise, and today you're seeing them coming down. People are renegotiating contracts, not getting raises--the marketplace has changed."
What's going on in animation mirrors a larger trend in Hollywood: There are way too many movies, and nearly all of them cost way too much to make and market. As a result, profit-starved studios are cutting back on the number of films they release, trimming fat production deals and scrutinizing costs.
"Everybody was getting into [animation], and costs went to a fairly crazy level," said Fox Filmed Entertainment Chairman Bill Mechanic. "We're now seeing a rationalization--you can't make these movies for what they were being made for. Costs went up and the yields didn't change."
The new austerity reflected by industrywide animation cutbacks is in stark contrast to the events starting in 1994. Three major studios--Warner Bros., 20th Century Fox and DreamWorks SKG--plunged into a business long dominated by Disney. Disney's competitors were willing to pay premium prices and offer lucrative contracts to animators on the theory that the investment would more than pay for itself when the box-office and video returns rolled in.
Soon after leaving in a bitter falling-out with Disney Chairman Michael Eisner, former Disney studio chief Jeffrey Katzenberg raided the company for animation talent for the start-up DreamWorks studio, whose business plan placed a big bet on animated movies for its success.
Disney countered by feverishly renegotiating its own contracts. It paid eye-popping sums--more than $1 million in some cases for the superstar animators--to shield them from the poachers. Once viewed as second-class citizens in Hollywood, animators were suddenly writing their own tickets.
"I was seeing 100% to 200% increases in salaries during that time. It was fabulous. I'm nostalgic," said Nancy Newhouse Porter, a lawyer with Crosby, Heafey, Roach & May in Los Angeles, who represents more than than 200 top animators, including "Toy Story" and "Bug's Life" director John Lasseter and "Tarzan" director Chris Buck.
Even lower-level journeymen animators making $1,500 a week under their union contracts were soon being paid $2,500 a week. Rob Moore, executive vice president and chief financial officer of Disney Studios, said that three years ago "an OK animator demanded a premium wage, and we paid it because there was such a demand." Animation salaries, he said, behaved "like Internet stocks."
Disney Recharged Animation in '80s
Since "Snow White and the Seven Dwarfs" debuted in 1937, animated feature films have been dominated by Disney. All 10 of the top-grossing animated films of all time are Disney-released, as are 17 of the top 20. After letting its animation business languish in the early 1980s, Disney recharged it with the 1989 release of "The Little Mermaid," followed by "Beauty and the Beast," "Aladdin" and "The Lion King." Not only did the films do well at the box office, but they also generated huge profits through the sale of videos, T-shirts, figurines and scores of other merchandise. They also spawned profitable video sequels.
Disney employs about 2,000 animators worldwide and has a lucrative venture with high-tech animator Pixar Inc., which has yielded such films as "Toy Story" and "A Bug's Life." By comparison, DreamWorks' animation division numbers more than 300. Fox has less than 300 animation artists, not all on staff.
But competitors soon found out they couldn't all be Disney. And Disney itself couldn't match the success of its own "The Lion King," which made about $1 billion in profit. Although still profitable, Disney films such as "The Hunchback of Notre Dame" and "Hercules" failed to come close.
"One of the things the animation renaissance proved is high-quality, high-production animation done domestically can turn over billions in profits," said Tom Sito, a Warner Bros. animation executive who heads the screen cartoonists union in Hollywood. "But it's also very volatile, and the disappointments can run very deep. It's a high-stakes game."
Warner Bros. began scaling back last year following the expensive flop "Quest for Camelot," which lost about $40 million. Today it is developing lower-budget animated films such as the $50-million "Iron Giant," a far less ambitious production about a boy in the 1950s who befriends a robot from space.
"We decided we were not going to compete with Disney," Warner Bros. co-Chairman Robert Daly said. "We decided to stick with edgy comedies and more adventure-type movies as opposed to breaking-out-in-song musicals."
Fox, which made the modestly profitable animated musical "Anastasia" at a lower-cost operation in Phoenix, also is rethinking its approach. Mechanic said the studio's next animated film, the outer space adventure "Titan A.E.," will cost more than the $60-million "Anastasia," but he's aiming to get budgets "back down under $60 million by being more efficient and trimming labor costs."
"We don't ever want to spend $100 million--we don't think the returns are there," said Mechanic, admitting that "Anastasia" wasn't nearly as profitable "as we wanted."
Daly said that while "Space Jam," a live-action, animated comedy marrying basketball star Michael Jordan with Warner's classic Looney Tunes characters, turned out to be "hugely profitable for us. . . . The downside was we ended up with huge overhead."
He said Warner made the mistake of carrying a staff of about 400 animators while waiting to figure out its next project. Daly readily admits that the decision to go forward with "Quest for Camelot" when "the producer was wrong and the script wasn't ready" was made in haste.
Warner has now scrapped its original plans for a full-fledged animation studio and instead is hiring animators on a project basis.
Nickelodeon has had success by deliberately charting a non-Disney course. Last year's "The Rugrats Movie"--made by the film division of cable channel Nickelodeon and released by its sister company, Paramount Pictures--is generating big profits. Based on the hit Nickelodeon show, the film cost only $25 million--in part because animation work was done in South Korea--and reaped more than $100 million domestically.
Albie Hecht, president of film and TV entertainment for Nickelodeon, said the company will stress modern stories--"instead of classic tales, historical dramas or fairy tales"--with soundtracks featuring rock, pop or hip-hop music.
Paramount also successfully released a "Beavis and Butthead" movie and has an upcoming R-rated "South Park" animated film based on the raunchy Comedy Central show.
Television animation remains relatively strong, although it is usually done more cheaply and often in foreign countries where costs are lower.
Animators May Lose Security of Contracts
Warner's retrenchment was a major step toward putting the leverage to negotiate lower salaries and alter compensation squarely back in the hands of the Hollywood studios. Animators who once were assured of working for years at a studio under a secure contract now might drift from project to project in much the same way crews on live-action films work.
"The place we're going to bring down wages is at the entry level," said Disney's Moore. "And that will also put pressure on the less-than-A-level animators to cut their fees or risk getting laid off."
The shakeout is being felt even at the student level.
"Everyone wanted to be an animator when the studios were ramping up," said Steven Lavine, president of CalArts in Valencia, where many top animators were trained. "Junior colleges got into it trying to train people in one to two years. People coming out of those programs are having a hard time now."
Bob Bryan, a veteran animator who was hired five months ago to work on DreamWorks' "El Dorado" and began his career at Disney 10 years ago with "The Little Mermaid," took a pay cut to come to DreamWorks after being laid off at Disney in January.
"I was at Disney for 10 years, and when a couple of the movies weren't grossing the big bucks, they were looking to trim their budget . . . so in my case and in the case of a lot of people whose contracts were due, we got caught in the layoffs at the first of the year and they didn't renew us."
Dan Boulos, an animator at DreamWorks who over the last decade has also worked at Disney and Warner Bros., said that while he hasn't had to take a pay cut "as of yet," he wouldn't be surprised to see the average animator's salary of $75,000 to $80,000 a year "drop down closer to union scale of about $60,000 to $70,000."