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Mr. Incredible versus Shrek
Battle of the cartoon studios erupts again as Pixar hero battles the green ogre on DVD.
November 7, 2004: 7:19 PM EST
By Krysten Crawford, CNN/Money staff writer

NEW YORK (CNN/Money) - Movie buffs flocking to "The Incredibles" will see a story of an overweight ex-superhero living in suburbia and newly unemployed when he secretly returns to his crime-fighting life and uncovers a sinister plot.

But for producer Pixar Animation Studios, Mr. Incredible is battling darker forces, namely the rise of its chief nemesis, DreamWorks Animation.

On Friday, the same day "The Incredibles" arrived in theaters nationwide, DreamWorks counterattacked by releasing its most potent weapon -- "Shrek 2" -- on DVD.

"You think that's an accident?," said independent stock analyst Dennis McAlpine. McAlpine suspects DreamWorks is parrying a thrust at Pixar and especially its production partner, Walt Disney Co.

While the DVD didn't put much of a dent into the box office release -- "The Incredibles" took in $70.7 million this weekend according to preliminary figures -- the simultaneous arrival points to the growing rivalry between Pixar and DreamWorks.

Both studios have been on a tear lately. Pixar's stock hit what was at the time an all-time high of $82.28 a share last week, the same day that DreamWorks Animation began trading on the New York Stock Exchange after its $812 million initial public offering.

This past Friday, Pixar set an all-time intraday high of $85.10 on buzz about the new movie.

DreamWorks (up $0.10 to $40.45, Research) shares soared their first day and were up 44 percent from their offering price in late trading Thursday.

Battle of the egos?

This isn't the first time that DreamWorks has tried to one-up its chief rival with a same-day release.

And McAlpine thinks the studio's motive is not about business -- it's personal.

Shrek 2 could ring in more profits, but Mr. Incredible won't be far behind.  
Shrek 2 could ring in more profits, but Mr. Incredible won't be far behind.

DreamWorks Animation CEO Jeffrey Katzenberg was head of Disney's animation arm when he bolted in 1994, after being passed up for the job of president at Disney.

Katzenberg, instead, teamed with Steven Spielberg and record industry guru David Geffen to form DreamWorks, with the idea of building the company into a full-fledged entertainment shop.

While Katzenberg and crew focused on DreamWorks, Disney concentrated on its existing deal with Pixar: The two studios split production costs, and Disney distributes the films and retains exclusive rights to the library.

The venture has been lucrative for both, with their six smash hit films outperforming each one that came before it. "Finding Nemo," released in 2003, became the top-grossing animation movie ever and has, according to DVD Exclusive, sold more DVDs than any other film.

Now comes "The Incredibles," the sixth film from the Disney-Pixar duo.

It's their first film to be rated PG (as opposed to G) and based on human characters. And the story about a family of ex-superheroes lured from suburban retirement back to fighting crime is expected to generate a stellar opening weekend. Some analysts forecast a three-day haul of more than $80 million.

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DreamWorks, meanwhile, has had a tougher time spinning gold from its computer animation films, with one notable exception -- Shrek.

The original 2001 movie about a green ogre who finds love while battling an evil lord generated a whopping $479 million in worldwide ticket sales.

This summer's "Shrek 2" edged aside "Finding Nemo" when it set new records for an animation film with a worldwide haul of $879 million at the box office.

Somebody blinked

While Friday's release of "Shrek 2" poses a bigger box office threat to Nemo's DVD record than it does to "The Incredibles," the timing isn't a coincidence.

"It seems to me that Mr. Katzenberg is nudging (Pixar chief Steven Jobs) and Mr. Eisner," said McAlpine, noting that DreamWorks has at least twice before timed DVD releases to a Pixar-Disney box office debut. Michael Eisner, Disney's CEO, plans to step down in 2006.

David Mantell, an analyst with Loop Capital Markets, agreed that DreamWorks is sending a message to its rivals.

From a business standpoint, however, Mantell said the bigger threat to "The Incredibles" comes next week, when Warner Bros. releases "The Polar Express," its first major push into computer animation. Warner Bros., like CNN/Money, is owned by Time Warner (Research).

Disney, Walt, Co

That said, the jab from DreamWorks is coming at an especially sensitive time for Disney (up $0.11 to $26.43, Research) and Pixar (up $3.59 to $84.45, Research). Their coproduction deal expires after next year's release of "Cars."

Earlier this year, Jobs broke off negotiations, after the two sides could not agree on terms for a new deal, amid reports he didn't get along with Eisner.

The impasse leaves Pixar and Disney at a crossroads. Pixar has been scouting for a new distribution partner, one that would receive a far smaller slice of revenues than Disney pockets under the current deal.

And Disney has been preparing for life without Pixar by beefing up its own animation division. But Disney's track record with non-Pixar animated films is less than stellar.

For that reason, some analysts think Disney needs Pixar and its creative know-how more than Pixar needs Disney.

Friday's release of "Shrek 2" on DVD could be Katzenberg's way of reminding Eisner that "he made a mistake and should have brought (Katzenberg) in to run the company," said McAlpine.

If so, Katzenberg recently shied away from the ultimate battle of the studios.

"Shark Tale," the latest DreamWorks animation about an underwater mafia of sharks, was originally scheduled for a Nov. 5 release. When Disney put "The Incredibles" on the same calendar, Katzenberg blinked.

"Shark Tale" debuted Oct. 1.  Top of page

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