Big-Budget Animation

I saw the over-hyped but still very good Pixar film WALL-E this weekend (stunning visuals but the screenplay's originality petered out about halfway through). The film brought in a healthy $62.5 million, but what caught my eye was WALL-E's estimated $180 million price tag -- making it one of the most expensive animated movies ever made.

Does putting that much investment into a non-live action movie make sense? The target audience, young children and I'd guess one parent, is smaller than one for a big budget flick from another genre which can potentially appeal to a number of demographics.

Looking at recent global box office returns reveals an interesting pattern. Since 1994, there've been 15 animated movies made that had budgets over $100 million (not adjusted for inflation). Over the same period, 105 live-action movies with $100+ million budgets were made, according to data from The Numbers. It turns out that the profit margins for the average big-budget live-action movie has been markedly better: 209 percent versus 129 percent.

But the situation is reversed for medium-size budget movies of between $50 million to $100 million. Here, the profit margins for animated movies are significantly better: 348 percent versus 136 percent.

What accounts for the difference? Big-budget clunkers seem to explain some of it.

Four out of the 15 $100+ million animated movies, or 27 percent, actually lost money: Final Fantasy: The Spirits Within, Home on the Range, Treasure Planet, and the Road to El Dorado. For the live-action set, a smaller 15 percent didn't manage to break even at the box office.

WALL-E is sure to turn a profit before it reaches DVD, thanks in part to the minimal dialogue which should go over well in foreign markets. Still, this weekend's performance came in below expectations: After the box office take was announced today, the price of the WALL-E contract on the Hollywood Stock Exchange, which reflects how many millions the film is expected to make in its first four weeks, dropped $23 to $175.