Pixar needs monster box office for "Nemo"
Reuters, 05.29.03, 2:20 PM ET
By Peter Henderson
LOS ANGELES (Reuters) - It's not giving anything away to say that the upcoming animated feature "Finding Nemo," has a happy ending.
But it's an open question whether the underwater fable created by Pixar Animation Studios Inc. and distributed by Walt Disney Co. will leave investors feeling the same magic glow as young viewers.
The ultimate commercial success of the computer animated tale will play out over several months, but the opening weekend will set the tone, analysts said ahead of the May 30 release.
Pixar, a young studio, and Disney have topped the weekend box office charts on the debut of each of their four co-productions, from "Toy Story" to "Monsters, Inc.," the standard to which Pixar has compared its newest effort.
If Nemo cracks $60 million in box office receipts on its first weekend, it will roughly equal "Monsters, Inc." Even so, Pixar shares have fallen in the few weeks after previous openings, leading some analysts to be wary of the stock now.
Pixar Chief Executive Steve Jobs said this month that he would be "thrilled" with a $30 million starting weekend and that the opening "can have some predictive value, but not always."
In "Finding Nemo," Pixar animators sweated for years with new technology to create a believable underwater kingdom, the setting for a story about a worry-wart father-fish living off the coast of Australia who charges into the unknown, along with a faithful but forgetful sidekick, to find his lost son Nemo.
"It is a buddy movie, it's a road movie, it's an action movie, it's a kid's movie," said Paul Dergarabedian, president of Los Angeles box office tracker Exhibitor Relations, Inc., who has seen "Nemo" and believes it could equal "Monsters."
"I'm looking for the box office to be quite amazing this weekend," he said.
Movie studios have made a science of predicting years of sales from domestic and foreign box office, DVDs and television runs of a movie based on the first weekend's take, but Dergarabedian said it was more difficult to apply a formula to Pixar films which can gain momentum during their runs.
In the United States, "Monsters, Inc." earned more than four times its U.S. opening weekend gross. Foreign demand was roughly the same, with total receipts of $524 million as of February, making it the second-most successful animated movie ever after "The Lion King."
The long-term success of "Nemo" also depends on the DVD release late in 2003 and to a lesser extent whether children snatch up "Nemo" toys from licensees who pay a percent of their revenue to Pixar and Disney.
McDonald's Corp., for example, is ready to roll out Happy Meals with "Nemo" characters, PepsiCo Inc.'s Frito-Lay is tempting snackers with a trip to Australia and Kellogg Co. is ready with cereal promotions.
Hasbro Inc. is making "Nemo" toys that will be sold at Disney Stores and other retailers. However, Disney spokesman Gary Foster said the summer launch of "Nemo" made it difficult to compare to the November launch of "Monsters."
"As far as merchandise, it's hard to compare apples to apples. (The) holiday (sales period) is of course huge to begin with in terms of merchandise," he said.
If the movie fails to make the $60 million mark on the first weekend, Pixar can justifiably point to "Shrek," a rival animated blockbuster which also opened in the early summer and showed long legs.
"Nemo" has lots of room to stretch with minimal competition for about a month, said financial analyst Dennis McAlpine.
But he predicted Pixar's stock would face hard times in any case, since it has typically eased after the opening of its movies following pre-release runups. McAlpine forecast a drop of around 20 percent, or $10, in the month after the opening and recommends selling Pixar shares, which he does not own.
Pixar shares hit a recent high of over $59 on May 7 after a roughly two-month rally. After a fall below $52 they have risen in the last week to trade above $55 Thursday on the New York Stock Exchange.
The shares could be further pressured by lack of progress between Pixar and Disney on a new distribution deal that could replace the current one, which includes two films after "Nemo," said McAlpine. He does not expect a deal before next year. (Additional reporting by Jackie Sindrich in New York)
Copyright 2003, Reuters News Service