As the high-tech 'Shrek' becomes a suprising giant-size success, is the clock ticking for traditionally animated movies?

By Steve Daly and Jeff Jensen
Updated June 22, 2001 at 04:00 AM EDT

A big-budget, critically lauded Hollywood spectacle loaded with romance and cutting-edge computer graphics, bucking to be the box office smash of 2001, not to mention a pop-culture phenomenon — wasn’t that supposed to be ”Pearl Harbor?” Instead, the honor goes to a fairy tale about a flatulent, chartreuse ogre with a Scottish burr. Most observers expected ”Shrek” to be a hit — but $178 million in less than five weeks? Not even the movie’s creators at Pacific Data Images (”Antz”), the Palo Alto, Calif.-based company that produced the movie and is a division of DreamWorks, saw it coming. ”We had a betting pool on what the film would gross,” says supervising animator Raman Hui. ”I said $151 million. That turned out to be the highest anyone bet. So guess what? I won the pool.” His prize: a $100 gift certificate for a massage.

The kitty’s a bit richer for DreamWorks and PDI, with the movie on track to gross more than $240 million at domestic box offices. And yet, the ”Shrek” fable belies a best-of-times/worst-of-times reality in animation — a true tale of two cities. It’s boom time in Digitalville, where ”Shrek” is the latest computer-generated sensation after ”Toy Story” (the subgenre’s big bang, produced by Disney-aligned Pixar), ”Antz,” ”A Bug’s Life,” and ”Toy Story 2.” Realistic digital characters in otherwise live-action movies have proven capable of evoking strong emotional reactions, be it endearment (”Stuart Little”) or utter loathing (Jar Jar Binks). Perhaps more impressive, those early successes have attracted a demographic often dismissive about animation: teenagers.

Meanwhile, in the medium’s traditional, hand-drawn Old Town, tumbleweeds are a-blowin’. The post-”Lion King” gold rush is over. Warner Bros., home to Bugs Bunny, now dabbles in painted cels only sporadically after failing to connect with ”Quest for Camelot” and ”The Iron Giant.” Twentieth Century Fox shuttered its Arizona animation studio last year after two disappointments, Anastasia and Titan A.E. Even last year’s hand-drawn offerings from ‘toon titans Disney (”The Emperor’s New Groove”) and DreamWorks (”The Road to El Dorado”) fell far short of past glories.

Now comes Disney’s ”Atlantis: The Lost Empire,” surfacing amid doubts that hand-drawn animation can still thrill. Though the film, which features some computer graphics, performed impressively in limited release (it goes wide on June 15), ”Atlantis” is nonetheless a marketing and creative gamble, given that it’s a PG adventure targeting boys (shades of ”Titan A.E.”) and eschews the studio’s timeworn musical formula.

Hand-drawn animation’s reversal of fortune has hit hard for those who produce it. The ramp-ups by DreamWorks, Fox, Warner Bros., and Disney (starting in 1994 with DreamWorks cofounder Jeffrey Katzenberg’s infamous split from the Mouse House) fueled a bidding war for talent, causing salaries to skyrocket and budgets to balloon. Pressed to reduce costs, Disney has been laying off staff, and sources say Katzenberg is doing the same at DreamWorks. (Katzenberg declined to comment for this story.) Suffice it to say, the mood within the industry is far from animated. ”I just don’t feel like I could talk about anything, especially with all the layoffs,” says one animation insider. ”I’m sorry about that.” According to Gary Goldman, codirector of ”Titan A.E.” and ”Anastasia” and longtime partner of hand-drawn stalwart Don Bluth, the new austerity is disrupting many artists’ lives. Still, the 30-year animation vet says everyone should have seen this coming: ”It’s like the stock market rise over the last few years — it couldn’t last forever.”

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