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.