Why Netflix Cartoons Crush Everyone Else

Bloomberg ... and Cartoon Brew among others ... have caught on to the fact that Netflix is hammering other kid content providers:

Viewership of the three most-popular networks for the very young -- Nickelodeon, the Disney Channel and the Cartoon Network -- is down more than 20 percent this season from year earlier. ...

Netflix, whose shares have climbed 58 percent this year, is ramping up the competition further by bringing more youth-oriented production in-house. Last year, it hired Melissa Cobb away from a DreamWorks joint venture to run a kids and family division. ...

The youngest entertainment-seekers are being raised on the internet, and cord-cutting will accelerate as new batches of babies joins them. The networks have to figure out how to make more money from the shows they produce, whether they’re streamed or broadcast. ...

Netflix figured out ... oh ... a half-dozen years ago, that its job was to capture eyeballs. And that if they could capture young eyeballs, they could probably get them to stick around to watch all the other offerings on their service.

So they went to Jeff Katzenberg and DreamWorks and threw money at him: "Jeffrey? You make us a whole lot of content, which you can own but we can show, we'll help you build a new division and help keep your company afloat."

Mr. Katzenberg knew a corporate lifeline when he saw one, and agreed to the deal in about three eye-blinks. And lo! DreamWorks Animation TV was born, and the division was soon staffed, top to bottom, with animation pros who knew how to put series together, lots of series.

Jeffrey is now long gone, and there have been some division hiccups along the way, but the basic mission has been fulfilled: DreamWorks got an infusion of cash, a lot of animation was produced in relatively short order, and Nick got its desired kid content to lure young eyeballs away from Nick, Cartoon Network, and the Disney Channel.

The plan worked like a charm.

So now here we are in the middle of 2018, and the other animation producers/distributors are running to catch up with Netflix. Disney will be streaming its animated product soon, and other producers will quickly follow. Netflix, of course, has a long head start. The service had years to figure out that consumers wanted to see the shows they wanted to see when they wanted to see them, and that they wanted to be their own programmers: How to Train Your Dragon at 3 on Monday and Kung Fu Panda at 5 on Tuesday. (None of this "wait for Power Puff Girls to come on"; just point, click, go.

Netflix has been adept at training hundreds of millions to come to them for content, and NF's menu is wide and deep. Good luck to everybody else who caught wise to what Netflix was doing four years in, and who climbed on board the next train out of the station*.

* There is, of course, a reason why this happened. Other providers had old distribution systems they owned and desired to protect, so they foot-dragged on newer distribution technologies. This happened in much the same way that big-established movie producers hung on to silent movies after the upstart Warner Brothers Studio had opened its own mint producing talkies in 1927-28. Then as now, other producers scrambled to catch up.

History doesn't repeat itself (maybe) but it certainly rhymes.

Weekend of Vengeance

Another super hero movie stuffed with animated effects (what's new?) tops the Big List:

THREE DAYS OF GROSSES

1) Avengers: Infinity War -- 4,475 -- $245.6M -- $245.6M (1st Weekend)

2) A Quiet Place -- 4,101 -- $10.6M (-49%) -- $148.1M

3) I Feel Pretty -- 3,440 -- $8.2M (-49%) -- $29.6M

4) Rampage -- 3,508 (-607) -- $7M (-65%) -- $77.8M

5) Black Panther -- 1,650 (-280) -- $4.4M (-11%) -- $688M

6) Super Troopers 2 -- 2,125 (+87) -- $3.4M (-77%) -- $21.9M

7) Truth Or Dare -- 2,420 (-648) -- $3M (-58%) -- $35.1M

8) Blockers -- 2,324 (-810) -- $2.9M (-57%) -- $53.1M

9) Ready Player One -- 2,365 (-843) -- $2.5M (-66%) -- $130.8M

10) Traffik -- 1,046 -- $1.5M (-61%) -- $6.7M

11) Isle Of Dogs -- 1,001 (-946) -- $1.4M (-60%) -- $27M

So let's tote up the score card: the one animated feature on the list, Isle of Dogs has fallen out of the Top Ten after six weeks and now sits at #11.

The partially animated Avengers rules at #1; A Quiet Place (#2) has CG space aliens; the hybrid animated feature Rampage comes in at #4; the super hero flick Black Panther, replete with visual effects, is right behind at #5, and Spielberg's partially-animated Ready Player One holds down the 9th position.

So animation figures in six of the top eleven movies America now watches. Impressive.

End of "Sabbatical"?

John Lasseter is coming to the end of his Mouse-compelled Time Out:

As the most powerful man in animation nears the end of a six-month "sabbatical" for personal "missteps," CEO Bob Iger must soon determine [Mr. Lasseter's] fate. ...

At this point, some insiders believe Iger is quietly preparing to name new heads of Pixar and Disney Animation — those floated include Docter for Pixar and Rich Moore and Jennifer Lee at Disney Animation. But some veterans are angry, saying that the company allowed Lasseter to dominate — and to take credit for the work of others — for too long, only acting in the wake of the #MeToo movement. ...

I was in the camp of classical cynics who said: "Lasseter will come back; the Disney Company spent a lot of money to acquire Pixar and he's just too valuable for the conglomerate to toss him overboard."

Now I wonder.

John Lasseter is and was a talent. He's got a long track record of hit animated features that proves he knows how to put popular movie franchises together. But he's also a man with demonstrated appetites for wine, women and good times, and that now is a problem for the corporation that made him rich.

In the post Harvey Weinstein era, the post Bill O'Reilly and Bill Cosby eras, can Disney afford to bring John back? Even if he's wearing an ankle bracelet?

Maybe Disney has already determined a Plan B. They will let John go, then quietly engage him (from time to time?) as a consultant. Or maybe they will simply thank him for his service, hand him an engraved Mickey Mouse statuette along with a retiree's silver pass for Disneyland, and let him slip away into the sunset.

Whatever the outcome, we will discover what it is soon after the six-month time-clock runs out.

Sequelitis

When your first hybrid animated movie -- a reboot of a Robin Williams hit hybrid animated movie -- collects $957 billion at the global box office, you kind of know there will be another serving in the near future:

Jumanji: Welcome To The Jungle surpassed the Sam Raimi-directed Spider-Man’s $403.7M to become Sony’s highest ever domestic grossing hit. The final domestic tally was $404.1M ... [Sony] chairman Tom Rothman revealed that the next Jumanji will arrive December 2019. ..

As inevitable as night following day.

Weekend B.O.

The most popular hybrid feature on the Big List.

The Top Ten list of Box Office winners:

THREE DAYS OF GROSSES

1) A Quiet Place -- 3,808 theaters (+219) / 3-day: $21.1M (-36%) / Total: $131.4M/ Wk 3

2) I Feel Pretty -- 3,440 theaters / 3-day: $18M / Wk 1

3) Rampage -- 4,115 theaters (+14) / 3-day: $17.6M (-51%) / Total: $63.2M / Wk 2

4) Super Troopers 2 -- 2,038 theaters /3-day: $16M / Wk 1

5) Truth or Dare -- 3,068 theaters (+39) / 3-day: $7.7M (-59%) /Total: $30.1M/ Wk 2

6) Ready Player One -- 3,208 theaters (-453) / 3-day: $7.5M (-35%)/ Total: $126.1M/ Wk 4

7) Blockers -- 3,134 theaters (-284) /3-day: $7M (-35%)/ Total: $48.2M/ Wk 3

8) Black Panther -- 1,930 theaters (-250) / 3-day: $4.6M (-20%)/Total: $681M/ Wk 10

9) Traffik (LG), 1,046 theaters / 3-day: $3.8M / Wk 1

10) Isle of Dogs -- 1,947 theaters (+8) /3-day: $3.3M (-40%) / Total: $24.2M / Wk 5

If you count Rampage, Ready Player One, and Black Panther as hybrid animated features (and I don't see how you couldn't, since there's a LOT of animation in each), then there are four animated features in the Big List.

And as I write here, none of the hybrids, though they might be counted as "live-action" flicks, could exist without the large dollops of animation that decorate each one.)

Inside a Hybrid Production

The Gray Lady details here how one of Rampage's action scenes was put together.

"The action with Dwayne and Naomi was real... The angles with George [the giant ape] were were a plate. ... And we did face capture with Dwayne on the skydiver because we weren't going to have Dwayne and Naomi sky-diving. ..."

It's been true for a couple of decades now: any blockbuster worth its salt has massive amounts of animation in it. You can call any super-hero feature a hybrid animated movie because without animators and compositors sitting at their computers working long hours, the motion picture won't exist. You'll just have actors in funny costumes emoting in front of green screens.

So the trick for our fine, entertainment conglomerates? Find the effects house with the lowest bid for the work that you can, and the country that gives you the biggest dollop of free money.

Working With China

... also known as "riding the big Chinese dragon".

China seems to be one of Washington D.C.'s bete noirs of the moment ("They're robbing us blind!"), but Hollywood is well aware that the Middle Kingdom is now the second largest movie market and will likely soon be #1. Therefore this makes sense:

Jackie Chan and Constance Wu will voice-star in Sony Pictures Animation's Wish Dragon, a contemporary retelling of the classic genie-in-a-bottle tale from One Thousand and One Nights. ...

The feature, which is aiming for a 2019 theatrical release in China, is a Chinese co-production with Chan's Beijing-based Sparkle Roll Media Corporation and Base Animation. A U.S. and international release are also planned. ...

You will note that Sony is going the co-production route, and it isn't with Aardman, but a studio in mainland China. This is a savvy move, and it can't escaped Sony's notice that a hybrid animated epic (Rampage just opened over there, and pulled in $55 million for its opening stanza, about $20 million more than it earned stateside.

American entertainment conglomerates are well aware that they need a reliable pathway into one of the most lucrative movie markets on the planet. They can either do it with a movie star popular in China (Dwayne Johnson) or they can do a Chinese co-production that assures them of a big distribution footprint when the feature is ready to roll out.

The co-production strategy is a viable choice. Sony ain't stupid.

#3 in the Franchise

NBCUniversal is keeping a 2019 release date for one of the movies it (in part) bought DreamWorks Animation for all those many months ago:

Universal Pictures said today that the third installment in DreamWorks Animation’s lucrative and toon Oscar-winning franchise now is titled How to Train Your Dragon: The Hidden World. The pic is keeping its March 1 release date. ...

Currently, HTTYD3 is the only pic slated on its new date. Everest is now pitted against an untitled Warner Bros event movie. ...

A couple of years ago, the plan was to release Dragons in the Spring of 2018. But, as often happens, story development takes its own sweet time. And if you need to move release windows back by ten months, well that's what you do.

Organizing Nick

The editors at Nick animation have worked without an Editors Guild contract for decades. Several times they've agitated and signed cards; each time the studio brushed them back. Now, however, the brush-backs have ceased:

... An independent arbitrator this morning signed off that a clear majority of the currently nearly three dozen Nickelodeon Animation Studio staff members had inked union cards and sought IATSE and its Local 700, the Motion Picture Editors Guild representation. ... Nickelodeon and parent company Viacom reiterated their decision not to challenge the move towards unionization. ...

This new collective step joins the IATSE agreements that NAS already has in place with the Animation Guild among others. It also is another feather in the 81-year-old Editors Guild cap to bring Hollywood workers into the collective bargaining fold.

This is doubly impressive because Nick has never been an easy walnut to crack. And the national political landscape is tilted heavily against labor unions.

New Blood

Paramount Animation continues to recruit DreamWorks Animation execs to fill up its leadership roster.

Paramount Pictures has named “The Boss Baby” producer Ramsey Naito to the post of executive vice president at Paramount Animation. Naito received an Oscar nomination for DreamWorks Animation’s “The Boss Baby” along with Tom McGrath. She will report to Paramount Animation’s president, Mireille Soria. Paramount made the announcement Thursday.

Back in the days when I walked around the Paramount lot, going trailer to trailer to see what Paramount Animation was working on, artists mentioned that the upper management at PA seemed to be a little hazy and unfocussed about where they wanted to steer the studio. The product that came out of the place seemed to underscore the point.

Since then, Mireille Soria (a long-time DreamWorks Animation exec) has come on board, and now Ms. Naito. Hopefully they will help goose the profitability and quality of the shop. (There have been a long line of top-notch creative people with good track records -- Mark Dindal, Ed Gombert, Don Hahn, etc. -- who have come through Paramount Animation, but most have departed.)

"Howard"

Veteran producer Don Hahn has made a documentary titled Howard, celebrating the life and career of Howard Ashman, one of the major creative forces behind the Disney animation Renaissance that took place during the late 1980s and early 1990s ...

The Little Mermaid, Beauty and the Beast and Aladdin were pushed to dazzling entertainment heights because of his contributions with song lyrics, story development, character development. Re Ashman's work on The Little Mermaid director Ron Clements recalled:

Howard Ashman and Alan Menken came out to California after writing “Part Of Your World.” All the other songs [were written] in the animation building 9in Glendale], so you could hear the songs being written right down the hall. Then we’d bring Jeffrey in, and Howard and Alan would perform the songs for him. We were really on a high. ...

Sadly, the euphoriaa wouldn't last long. Howard Ashman passed away before Beauty and the Beast was completed. And Aladdin, which had initially been developed by Mr. Ashman, was nowhere close to finished when he died.

Howard Ashman was only 39 when he succumbed to AIDS. All three Disney animated features with which he was involved ended up blockbusters and classics. We can only speculate what Mr. Ashman might have been accomplished if he'd been allowed to live a normal span of years.

Barbelled Retirement Investments

Way back at the turn of the century (this century, not the last one), investment guru Peter Bernstein noted:

... Over the long 75-year span from the end of 1925 to the end of 2000, a portfolio of $100 fully invested in stocks would have generated a compound return of 11 percent a year compared with 9.3 percent a year for a 60/40 portfolio—assuming no taxes and full reinvest- ment of dividends. This spread of less than 2 percentage points looks modest, but it is far from chicken feed when compounded over 75 years. ...

But consider the following. Equity performance was all over the place. The annual return on stocks ranged between a glorious 54 percent rise and a horrible 43 percent swoon; on eight occasions, losses were greater than 10 percent. Although the 60/40 portfolio was inevitably affected by the high stock volatility, the 40 percent in bonds helped the balanced port- folio come through with a more comfortable spread, ranging from a 40 percent gain to a 9 percent drop. ...

So it would seem that the prudent strategy would be to set up a 60% stock, 40% bond portfolio and let it ride. (I used to suggest the allocation to people who asked me about how to position their money in the Animation Guild's 401(k) Plan.)

However. There are times when doing a 60% stocks/40% bonds allocation might not be the swiftest of moves. Another investment guru (Rick Ferri) thinks he knows those times:

The 60/40 mix is a solid starting point for a discussion about asset allocation for investors who are accumulating assets for retirement. However, ... the center of gravity shifts when a person stops accumulating assets and starts taking income from their assets. The corrected ideal asset allocation for beginning a discussion on asset allocation with a pre-retiree or retiree is 30% stocks and 70% bonds. ...

This is a conservative mix that has enough equity to growth with inflation and enough fixed income to keep portfolio volatility at bay. Historically, a 30/70 allocation has earned the highest Sharpe ratio. This is the point on the efficient frontier that has earned the best risk-adjusted return. ...

Finally, there were five periods when higher volatility in 60/40 portfolios were accompanied by a losing annualized 5-year return. In contrast, 30/70 portfolios lost money only one time. ... This is the type of consistency in returns retirees can become comfortable with. ...

Investing is simple (rumors to the contrary). All you need to do is:

1) Stick with index funds. (They're low cost.)

2) Be diversified ("total market" indexes work well).

3) Don't jump in and out of your investments. (In other words, do a mix of stock and bonds that you can live with through market ups and downs.)

4) Make your investments more conservative* as you get older. (You can do this manually ... or with Target Date funds that do the heavy lifting for you.)

What makes investing hard? People do stupid things with their stocks and bonds and find it difficult to break the stupidity habit. They panic when there's a market down draft and sell equities at the bottom, or they get overly enthusiastic during a market high and start performance chasing. Studies show that the most successful investors are ones with iron discipline or amnesia**.

There is no "perfect plan" so don't waste time searching for one. Execute an investing strategy that's doable, and stick with it.

* One simple route to take: from 20-45 have a 60% stocks/40% bonds portfolio; from 45 on have a 40% stocks/60% bonds portfolio. Barbells

** Fidelity Mutual Funds did a study that showed the best investors at Fidelity were the ones who forgot they had investments at Fidelity.

Red Hot Animation Markets ... And Hotter Wage Disputes

The Hollywood Reporter informs us:

As expected, animation is becoming the hottest genre among the streaming giants. On Wednesday, Netflix announced a 10-episode, straight-to-series order for Paradise, P.D. ...

[The series] becomes the latest adult animated comedy to land a straight-to-series order as streaming giants including Netflix, Amazon and Apple are all making aggressive plays in the genre. At Netflix, it joins the recently announced Tuca and Bertie, ... and a roster that already includes critical favorites Big Mouth and BoJack Horseman. Apple recently made waves with a two-season order for Central Park, from Bob's Burgers creator Loren Bouchard and Josh Gad. ... The animated musical features a star-studded voice cast. ... And Amazon is also diving into the adult animation drama, teaming with BoJack creator Raphael Bob-Waksberg (also behind Netflix's Tuca) for Undone, its first half-hour animated comedy series.

Adult animation, sources say, is poised to explode as the next hot genre as Netflix and fellow streamers look for the next big thing after aggressive plays in scripted and stand-up comedy, among others. While animated series can be a challenging nut to crack creatively ... they are more financially attractive than scripted fare, where salaries for top stars continue to escalate. Animation also transcends demographics and is useful in streamers' bids to have something for everyone.

For the artists and writers who do the work, the explosion of animation on streaming video platforms (aka "the internet") is a mixed blessing.

On the positive side, the plethora of new shows provides jobs for board artists, screen writers, designers and cleanup artists. Thanks to the various streaming services, employment in the Los Angeles cartoon business has climbed to new highs.

On the negative side, for Subscription Video on Demand (the fancy name for what Netflix, Amazon and others provide) there are no salary minimums, even for union work. The "New Media" clause of union contracts stipulates budgetary tiers for streamed animated shows before higher wages kick in. The problem? Tiers in the animation guild contract are keyed off of live action rates, and cartoon budgets are far lower, so the triggering points for better pay are never reached.

With more streamed product created each year, the "low wage" problem is becoming acute. Three years ago, both SAG-AFTRA and the Animation Guild swallowed the vaseline sandwich of New Media "anything goes" salary minimums to reach final deals. But in 2018, SAG-AFTRA is resisting the kind of New Media language it signed onto in 2015. And TAG, starting new contract talks next month, has put an improved New Media clause at the top of its agenda.

The Weekend Box Office -- March 30-April 1

"RPO" opens above projections, containing an abundance of CGI.

Spielberg's latest science fiction spectacular tops the Big Chart. Sherlock Gnomes drops two runs to #6, while Isle of Dogs comes in at #11.

THREE DAYS OF GROSSES

1) Ready Player One -- 4,234 -- $41.2M -- $53.2M (1st weekend)

2) Acrimony -- 2,006 -- $17.1M -- $17.1m -- (1st weekend)

3) Black Panther -- 2,988 (-382) -- $11.3M (-34%) -- $650.7M

4) I Can Only Imagine -- 2,648 (+395) -- $10.75M (-21%) -- $55.6M

5) Pacific Rim: Uprising -- 3,708 -- $9.2M (-67%) -- $45.6M

6) Sherlock Gnomes -- 3,662 -- $7M (-34%) -- $22.8M

7) Love, Simon -- 2,024 (-410) -- $4.8M (-37%) -- $32.1M

8) Tomb Raider -- 2,788 (-1,066) -- $4.7M (-53%) -- $50.5M

9) A Wrinkle In Time -- 2,367 (-1,056) -- $4.69M (-43%) -- $83.2M

10) Paul, Apostle Of Christ -- 1,473 -- $11.5M

11) Isle Of Dogs -- 165 (+138) -- $2.8M (+74%) -- $5.9M

There are two other animated products out in theaters. Peter Rabbit (#14) still resides on 1,667 screens, taking in $2,005,000 for a domestic total of $110,651,126.

Meantime, the resilient (and Oscar-winning) Coco has collected a grand total of $209,498,871. It remains on 120 screens.

Distances Between Men and Women

Deadline reports that there is a wee gap between the pay for Disney men and women working in the United Kingdom:

Men Earn 22% More Than Women At Disney In The UK As Hollywood Studio Publishes Gender Pay Statistics ..

Disney pays men 22% more than women in the UK – gender pay statistics that put it behind the national average as well as rival U.S. studios including NBC Universal and Viacom. ...

This compares with NBC Universal, which has a mean pay gap of 3.2% and 6.2% on a median basis, while Viacom’s Channel 5 pays women 2.85% more than men on a mean basis and production group Endemol Shine UK, which has no gender pay gap. ...

Meanwhile, women make up the highest percentage of L.A.'s unionized animation work force in thirty-plus years:

The Animation Guild now has approximately 4230 artists, writers and technicians under its jurisdiction at studios in and around Los Angeles. Of these, slightly more than 25% are women. ...

A half dozen years ago, women comprised 18% of animation employees*. Women have steadily climbed as a percentage of the artists, technicians and writers working in the business. And women now comprise more than half of the students at Cal Arts and other mainstream animation and art schools. This is a considerable turnaround from the seventies and eighties, when females comprised a small minority of Cal Arts's (and other schools') student bodies.

* In the 1960s and early 1970s, women made up close to 50% of Animation Guild membership. At that time, most worked in ink-and-paint positions and technical jobs such as animation and final checking.