Not sure if this has been posted yet...but worth the read. I'm not sure how much more I can take of schumacher spewing BS outta his mouth. -Clutch
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Disney Delivers 'Lilo & Stitch'
On Competition-Driven Budget
By BRUCE ORWALL
Staff Reporter of THE WALL STREET JOURNAL
For a beach scene in Walt Disney Co.'s new animated movie "Lilo & Stitch," co-director Chris Sanders wanted to dress a young Hawaiian woman named Nani in a "tankini" swimsuit sporting many thin horizontal stripes. But his production team warned that such a detailed outfit would be labor-intensive to animate and cost more.
So in the completed movie, Nani hits the surf in a teal-and-blue number with just three thick horizontal stripes across the top and bottom pieces -- a simpler, cheaper result that Mr. Sanders says is "pleasing and believable" without detracting from the movie's creativity.
No one at the fabled Disney animation studio was counting stripes a few years ago. "If the filmmaker made a decision that it was important to have the stripes on the shirt, the stripes were on the shirt," says Duncan Orrell-Jones, senior vice president for finance at Disney's feature-animation unit.
But that was before Disney was hit with a double whammy that caused the profitability of its animated films to crater. The cost of making each movie soared far over $100 million, reflecting both an undisciplined production process and a big run-up in animator salaries as newcomers such as DreamWorks SKG created competition for talent. At the same time, the box-office performance of many Disney animated films fell off dramatically. Declining video sales and some weak Disney releases played a part. The company's films also face a big increase in family-film competition: When "Lilo & Stitch" opens Friday, it will be sandwiched between last Friday's blockbuster release of "Scooby-Doo" and next week's "Hey Arnold! The Movie," which is based on a Nickelodeon cartoon.
Staggering Impact
The impact on Disney's bottom line has been staggering. In the early and mid-1990s, the company could reliably count on each new release to generate hundreds of millions of dollars in profits. But recent titles, such as "Atlantis: The Lost Empire" and "The Emperor's New Groove," have been little more than break-even propositions -- a far cry from 1994's "The Lion King," which cost just $50 million to make and generated more than $1 billion in companywide profits.
That's why fixing the economics of feature animation ranks high on slumping Disney's priority list, right alongside repairing its ailing ABC broadcast network. For more than three years, Disney's feature-animation chief, Thomas S. Schumacher, has been charged with a tricky task: to dramatically reduce the cost of each film without the audience noticing that anything is missing.
Mr. Schumacher has led an aggressive cost-cutting exercise, essentially halving the size of the feature-animation department while aiming to regain control of a production process that had become excessive during the unit's renaissance. It all adds up to a major revamping of how Disney's animation studio operates. These days, Disney's animation team weighs details it didn't give much consideration to in the past, such as how many characters are seen in each frame, or whether there's too much motion in the background. Those seemingly small matters, which the audience usually doesn't notice, can make a big difference for the bottom line.
The pared-down approach gives the company a better chance of financial success, even if "Lilo," pronounced Lee-lo, performs only modestly at the box office. "I have to be able to survive in that economic climate, not just in the blockbuster climate," Mr. Schumacher says.
A Thing for Elvis
"Lilo & Stitch" is the story of a quirky Hawaiian girl who adopts a rambunctious, genetically engineered alien named Stitch, mistakenly thinking he is a stray dog. The company is betting that "Lilo" combines classic "Disney values" with a sassier approach than its recent duds. Lilo is a misunderstood girl whose oddball habits include lying in her room listening endlessly to Elvis Presley's "Heartbreak Hotel." Earlier this year, Disney promoted the alien, Stitch, with a series of irreverent ads in which he was planted improbably in scenes from past Disney classics, such as "The Little Mermaid."
"Lilo & Stitch" is Disney's first full-scale attempt to adjust to the new reality. It was made at a cost of about $80 million, about half the $150 million-plus it took to produce Disney's last major animated hit, 1999's "Tarzan." Though successful, "Tarzan" was the film that told Disney how bloated its animation unit had become. A crew of as many as 573 top-dollar Disney artists generated 170,000 individual drawings to achieve the film's richly detailed visual look and feeling of rapid motion. "Lilo & Stitch," by contrast, required about 130,000 drawings -- comparable with "The Lion King" -- and at its peak, the artistic crew numbered just 208.
Mr. Schumacher says that "Tarzan" would have been a considerably greater financial success for Disney had it been made with the lower salaries and cost-control measures now in place. "Tarzan" grossed about $450 million world-wide, and generated an internal rate of return of 14% on Disney's investment. Using the new processes, Mr. Schumacher says the return would have been 35%.
The audience, he insists, wouldn't know the difference. "I promise, you would see exactly the same movie," he says. "I would simplify things that you can't see."
The changes have been painful. By this time next year, Disney will have slashed the number of jobs in its feature-animation department to about 1,100 from a high of 2,200 in 1999. It has also cut salaries drastically, reflecting the drop-off in competition for animators over the past two years as some competitors dropped out. Mr. Schumacher concedes that the downsizing has hurt employee morale.
Sneaking Up
The snarky atmosphere is evident in a hallway at the Disney studio that serves as an open forum for Disney artists to work out their frustrations via caricatures of their bosses and co-workers. In one, an animator tells Disney CEO Michael Eisner: "You wouldn't know a good idea if it snuck up and bit you in the @#$?!"
Disney's feature-animation department grew at a furious pace in the late 1980s and early 1990s. It still had just 275 employees in 1988, and about 950 in 1994, when "The Lion King" came out. Hungry for more successes like that, Disney began adding staff to increase production. Other studios soon began setting up their own animation operations, hoping for a piece of the action. Mr. Eisner inadvertently contributed to Disney's woes when in 1994 he denied a promotion to studio chief Jeffrey Katzenberg, who was widely credited with the success of "The Lion King." Mr. Katzenberg went on to help create Disney's fiercest competitor, DreamWorks, where he oversees animation.
The competition for animators drove labor costs through the roof, a troubling development because salaries represent more than 80% of each film's cost. Top animators who were making about $125,000 in 1994 were pulling down more than $550,000 annually by 1999. It wasn't just top "character animators" who benefited: Some "background artists" saw their salaries jump to nearly $300,000 from about $120,000 during the same period, and "cleanup artists" in some cases saw their pay rise to more than $250,000 from less than $50,000.
Disney's problems went beyond salaries. In the name of upholding "Disney quality," the animation team rarely held back on bells and whistles. The productions grew more complex as the artists crammed more detail and more characters into each scene. Some extra costs came with new digital tools that the studio was just learning to use.
Mr. Schumacher notes that, decades ago, the late Walt Disney realized that not every film had to show off the company's technological virtuosity; "Dumbo" could be less complex than "Pinocchio," as long as it still packed an emotional punch. Disney today is trying to do the same thing with "Lilo" by providing more compelling characters and story in a simpler visual package.
Phil Lofaro, executive vice president for feature-animation production, said Disney at some point realized that at the pace it was going, "Tarzan" would require more than 190,000 individual drawings to complete. When a quick review of history showed that many previous Disney classics had required 130,000 or less, Disney hit the brakes.
But it was too late. The company's method of managing film production was based on doing anything and everything necessary to meet the release date, rather than assigning each film a budget that had to be heeded. To complete all of the complicated tasks it had set out for itself on "Tarzan," workers had to be pulled off other productions for the sprint to the finish, often at overtime rates. The crew swelled to nearly twice the size of the one that made "The Lion King." As "Tarzan" wound down, the company was already deep in a self-examination designed to understand why it was spending so much money -- and to find a way to cut back.
A big break came when animator salaries fell precipitously after some upstart rivals, such as News Corp.'s 20th Century Fox, bailed out of the business. As Disney employees' contracts came up for renewal, the company was able to cut salaries dramatically, though pay rates still remained well above 1994 levels. An animator making more than $550,000 in 1999 might now be making $225,000, for example; the clean-up artist who peaked at $250,000 has been ratcheted down to about $140,000.
But with those cost savings came morale problems. "Downsizing is always painful," says Andreas Deja, a top animator at Disney who drew Lilo in the new film. Mr. Deja said he understands, and even applauds, the changes in the production process aimed at boosting profitability. But staying positive amid layoffs is a challenge when artists are "running into people in the hallways and they're moving out of their apartments and homes," he says.
Mr. Schumacher also decided that not every film had to be an all-out epic. While the company would still produce some of them, at a projected cost of about $100 million each, other films could be mid-size, such as "Lilo & Stitch," or even cheaper, such as "Chicken Little," a computer-animated movie being readied for 2005, which is targeted at around $60 million. The idea is to get the average film cost down to less than $80 million. Separately, Disney's television-animation unit has already been making very inexpensive projects such as "The Tigger Movie," a $15 million film that became quite profitable when it sold $45 million worth of tickets domestically.
"Lilo & Stitch" provides a look at how the new process works. Mr. Sanders, a veteran script writer for the studio but a first-time director, had the Stitch character in his head for years. In the late 1990s, he developed it into a film script with Dean DeBlois, his co-director and co-writer. Mr. Schumacher agreed to make the film using the Disney animation studio in Orlando, Fla.
'Suspicious Minds'
Planning the production with representatives from every department in the studio, Messrs. Sanders and DeBlois set out to prioritize where their money would be spent. Mr. Sanders says that a healthy budget for music was important to him, because he wanted veteran composer Alan Silvestri to score the film. And because of Lilo's Elvis fixation, Mr. Sanders needed enough money to license songs such as "Stuck on You" and "Suspicious Minds."
To make sure that was possible, the directors made compromises in other areas. They decided against putting goofy hats on Stitch, or a flower in Lilo's hair, because those decisions would needlessly add complexity that would barely register with the audience. They wanted to place cute designs on the midriff-baring shirts worn by Nani, Lilo's big sister, but backed off in most cases after finding that those small details alone would add $250,000 in extra costs. Instead, Nani wears the same shirt, in different colors, throughout the film. Rather than putting a complicated hibiscus flower on a Hawaiian dress that Lilo wears, they designed a much simpler Hawaiian-looking leaf that serves the same purpose.
The directors also worked with the finance crew to sometimes limit the characters or motion in particular sequences. "They never came out and said, 'You can't have this.' But they would say, 'What do you really want out of the scene?' " says Mr. Sanders.
When Lilo frolics on the beach early in the movie, for example, production supervisors expressed concern about the number of characters planned for each frame, spelling out how much "character footage" it would take to animate the sequence. "It's important that it feels like a populated beach," Mr. Sanders replied. They designed a compromise that involved positioning the characters in a way that would minimize movement and cut down on the number of drawings necessary.
Unlike most past Disney films, "Lilo & Stitch" was finished on time and on budget several months ago. In fact, there was a little money left over, which Mr. Schumacher let the directors use to animate an extra closing sequence.
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