Animation Isn’t Easy: Pixar and Dreamworks Suffer Complications

dreamworks animation

The animation industry has had a solid 2013, especially thanks to Walt Disney Animation Studios’ (NYSE:DIS) latest flick, Frozen, but recent reports elucidate that despite this year’s box office boom, several animation studios are showing signs of struggle — and might not fare as well in 2014 as they did in 2013. According to Businessweek, for the first time in a decade, there is no new Pixar film slated for the new year, and both Pixar and Dreamworks Animation (NASDAQ:DWA) employees are now suffering job losses.

Last February, Dreamworks Animation was forced to lay off 350 employees after its film Rise of the Guardians crashed and burned, and now Pixar is navigating the same woes as it delays its film, The Good Dinosaur, rescheduled from May 2014 to November 2014, which resulted in a small round of layoffs. As a whole, animation studios fared well in the second half of 2013, with Frozen, Despicable Me 2, Monsters University, and The Croods all reeling in high totals, but the films’ box office successes and Golden Globe nominations still aren’t keeping animation hotshots like Pixar and DreamWorks Animation from feeling the pinch and preparing accordingly.

Businessweek highlights that the entertainment industry is now more competitive than ever, and the old favorites cannot conserve money the way the younger companies do, so as studios like Pixar and Dreamworks forge ahead, they are forced to stay  cautious about picking their battles, sticking to their brands and resisting the temptation to mirror newer companies that release films at a quicker pace, but at a lower cost and quality.

Pixar is still the biggest player in the animation field, but competitors like Universal and and Disney still affect its business, because they are able to debut films faster than Pixar does — and at a lower cost. Universal’s Despicable Me 2, for example, made $100 million more than Pixar’s Monsters University, but was made in a must shorter time span and within a lower budget ($76 million). Universal has failures of its own to navigate, but it still doesn’t have an established brand to protect like Pixar does, so the studio is willing to take more risks than Pixar is and not worry as much about its reputation.

Beck of Pixar via Businessweek explains that, ”They want to protect the brand. They have a standard there. Animators go in and pitch things, and John Lasseter asks, ‘How is this any better than a Dreamworks film? How is this something we’ve never seen before?’” Dreamworks has also been known to operate under the go big or go home strategy, but the problem with that technique is that if you go big and it goes bad, your studio especially suffers, moreso than Pixar or Disney does because they don’t go as big. This was the case with Dreamworks’s Rise of the Guardians. The film tanked, a layoff of 350 employees resulted, and the studio is still feeling the pain.

That’s exactly what Pixar is now trying to avoid, and that’s why it will push The Good Dinosaur back more than a year. The studio is simply not willing to take a gamble on quality, because if they go big and then lose big, they not only suffer a tarnished reputation, they also suffer a hurting bank account. Thus, it’s certainly a new entertainment sphere that old favorites are now navigating, and it’ll be interesting to see how companies like Pixar and Dreamworks stand up to their newest rivals.

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