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Mean, Green Profit-Making Machine

Movies * 'Shrek' is on track to be biggest moneymaker in DreamWorks' relatively brief history.


By this weekend, DreamWorks' computer-animated "Shrek" is expected to surpass "The Mummy Returns" as the highest-grossing movie of 2001. There may be another film released this summer that takes in more money than "Shrek," which just passed $180 million in box office and is likely to end up taking in somewhere between $240 million and $250 million in the U.S., but there's little chance that one will be more profitable.

"Shrek" has turned into the early summer blockbuster that Disney's "Pearl Harbor" had been predicted to be. While the World War II romantic drama sinks quickly at the box office, "Shrek" continues to do well and is on track to become the biggest moneymaker ever for DreamWorks.

In fact, "Shrek" should join such select titles as "Toy Story" and "Star Wars: Episode I The Phantom Menace" as one of the most profitable movies in recent memory, possibly netting DreamWorks $400 million or more over the next few years. With that level of success, the studio started in 1994 by Steven Spielberg, David Geffen and Jeffrey Katzenberg has finally fulfilled its promise of creating the kind of blockbuster return on its investment that they had promised when they created the company. It also vaults DreamWorks into the front ranks of the motion picture animation field, after several moderately successful attempts.

Like DreamWorks' "Chicken Run," "Shrek" was extremely well reviewed and sophisticated enough to appeal to adults as well as children; evening performances were as packed as matinees. The film's script (by "Aladdin" writers Terry Rossio and Ted Elliott) about a lovable ogre (voiced by Mike Myers), his affable donkey sidekick (Eddie Murphy) and a princess in distress (Cameron Diaz) received high praise and seemed to satisfy a wide audience in the same manner as the "Toy Story" films. In addition, critics took delight in "Shrek's" playful satirical jabs at Disney, giving it a kind of hip sensibility.

As with many hit movies, "Shrek" also had good timing. It arrived in theaters in mid-May after a drought in family-friendly films (the only exception being Miramax's hit "Spy Kids," which was pretty much played out by that time). Then it got a boost from the Memorial Day holiday, when its only competition was "Pearl Harbor," which skewed to older audiences and opened to mostly poor reviews and weak word of mouth.

"Shrek's" first real test will come this weekend, when Disney's "Atlantis: The Lost Empire" goes out nationwide, followed by "Dr. Dolittle 2" from Fox opening next Friday and "Cats and Dogs" from Warner Bros., which opens on July 4. But popular family films have greater staying power in theaters than more adult fare--kids go back to a movie they like again and again--so "Shrek" should be able to do solid business for a while.

The profitability level of "Shrek" should be comparable to that of "Toy Story" and close to that of "Toy Story 2," though Disney had to split its profits on both those movies with Pixar, which co-produced the films. Among animated movies, only "The Lion King" and "Pocahontas" were more profitable, the former generating $1 billion and the latter about $600 million, according to sources close to Disney.

The success of "Shrek" is being counted in more than dollars and cents. Company marketing chief Terry Press says that for the first time with "Shrek," the media and theater owners are speaking of the movie as a DreamWorks production. "To refer to it as 'DreamWorks' Shrek' means something, because it implies that it's a name that audiences will recognize and that DreamWorks makes a certain kind of animated movie," Press says.

Brand-name association is invaluable, as the Walt Disney Co. has long known. It's difficult to put a price tag on that kind of mass recognition. And although it will require several more animated hits of comparable quality and success to cement that relationship, for now DreamWorks can content itself with having an animated movie that rises to a level of profitability only Disney has enjoyed to date.

"Shrek" was a moderately inexpensive movie for animation, though not as cheap as DreamWorks contends. Although company executives claim that "Shrek" cost $48 million, that figure doesn't factor in a couple of false starts in different formats. The real price is probably more than $60 million but still below the $90 million or so spent on "Toy Story 2," another computer animation film, and nowhere near the reported $150 million Disney spent on a conventional animation movie like "Tarzan." Factor in "Shrek's" marketing and releasing costs--DreamWorks is famously generous when it comes to spending ad dollars--and the figure is significantly more than $100 million.

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