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BusinessFeature Film

‘Captain Underpants’ Could Dramatically Alter The U.S. Feature Animation Industry

Feature animation executives will be keeping a close eye on this weekend’s opening of Dreamworks Animation’s Captain Underpants: The First Epic Movie for a very good reason: its performance has the potential to dramatically alter the U.S. feature animation landscape.

Captain Underpants marks a couple of historic firsts for Dreamworks – and for L.A. feature artists, they might be considered worrisome firsts: the film is the first Dreamworks production outsourced to a non-Dreamworks studio and it’s also the first Dreamworks film produced in Canada. At a budget of just $38 million, it is also the cheapest Dreamworks cgi film ever made.

Despite its low cost, the entertainment value in the film looks high, as seen in the clips below. Characters may not move with the level of nuance as in How to Train Your Dragon or Kung Fu Panda, but the Captain Underpants aesthetic universe doesn’t demand it either. One could argue, in fact, that the reduced budget forced Dreamworks to innovate, resulting in more stylized and funnier-moving animation than anything previously seen in a DWA production.

We first reported that Dreamworks would produce Captain Underpants in Canada back in 2015. While the story and pre-production were handled at DWA in Glendale, California, under director David Soren, the film’s animation, lighting, and effects were produced by Mikros Animation Montreal, a subsidiary of France’s long-standing Mikros Image, which itself was acquired by Technicolor in 2015.

Dreamworks didn’t just save a few million by outsourcing the film – they saved closer to $100 million. The Hollywood Reporter revealed the startlingly low $38 million budget in a story this morning. Compare that to the last couple Dreamworks pics, The Boss Baby and Trolls, each of which was estimated to cost around $125 million – and that was after significant belt-tightening at the studio in recent years to bring costs under control.

Underpants is described by the Reporter as a “radical experiment in low-cost studio animation,” which is true when you think that Universal’s Illumination, considered among the most budget-conscious of the American majors, produced its recent films Sing and The Secret Life of Pets for around $75 million apiece.

However, it’s important to remember that there may be some artificial reduction in the production cost as well. The words you won’t see mentioned anywhere in THR’s piece are subsidies and tax credits. It’s not clear what role they played in Underpants’ ultra-modest budget, but in the past, the Canadian government has generously helped American film studios. It is logical to assume that Captain Underpants would have a higher production cost if not for the assist from Canada.

But director David Soren told The Hollywood Reporter that he also attributed the lower budget to “a commitment from the studio to lock down the story early and not tinker with it too much.” Nailing down the story, combined with a faster than usual production schedule of around two years, also played roles in allowing Dreamworks to deliver at this price.

Industry projections for the film have been modest (too modest in our opinion), but even if the film opens somewhere in the $20-30 million range, it will be viewed as a success, especially considering the money that Dreamworks has spent in the past to launch franchises. It’s too early to say what all of this means, but everyone should watch closely.

  • Josh Evans

    As someone displaced to Canada to continue working in the vfx industry which has moved, in large part, here…I’m not surprised. I would much rather work in the US, but the jobs just aren’t there anymore. It’s pretty frustrating.

    • Beamish Kinowerks

      You’d rather work in the States?! British Columbia is the greatest place on earth. The most amazing food, people, and culture there

      • JamScoBal

        Maybe so, but it is probably a pain to be away from family and such. Most people would rather not move for work.

      • Josh Evans

        I’m in Montreal. It’s not really my cup of tea. Another factor is that my (sizable) student loans are all in the states, transferring canadian dollars to us dollars every month and watching the amount slim down due to the exchange rate is a painful experience. XD

      • siskavard

        While true, the real estate here is insane. It’s difficult to raise a family here, especially on an animator’s salary. Everything else is top notch, however.

  • Anonymous

    I agree with the lock down story comment made by the director. Too many animated films have release dates before the finished script. And every time something gets changed there’s a price tag attached to it.

    • Axolotl

      Agreed! I’m not crazy about the look of CU but I think this is a sound principle. I wish animation studios would take a page from Hitchcock and the Coen Bros. (in more ways than one.)

  • Dante Panora

    The fact that people can make decent looking CGI theatrical animation for under 50 million dollars is a really big deal. What with nimble collective on the rise we could see more animation studios than ever before in the U.S. and Canada in the next 10 years.

    • Josh Evans

      I mean shoot, the VeggieTales Jonah movie looked really great, did decent in theatres, and had a budget of $15 million if I recall. It’s entirely possible.

    • Fried

      I had always thought that the high cost of these movies was not because CG was expensive, but because of all the re-writes and tech development they did for the film over the years. Isn’t that why Tangled’s budget sky rocketed even though it virtually ended up looking the same as Frozen who was half its budget?

      • Marc Hendry

        Tangled had the high cost of a regular Disney CG film, AND the high cost of rewrites and extensive R&D. So you’re mostly right, but also CG is very expensive in the first place

      • JoshBowman

        That’s because Tangled came first with all the tech and then Frozen coasted in on top of all the tech developments…that plus a butt load of unused R and D.

    • vgmaster9

      We should also see more studios capable of making 2d hand drawn animation, now that we have high end software like TVPaint and Toon Boom Harmony.

  • Davion Alexander Blackwíng

    Honestly, I am sorry to say, that yeah, this is the future of Dreamworks. It was horrifying how Katzenberg just.. washed his hands towards Dreamworks, sold it to Universal who will prostitute it and harm it in the worst way possible. Considering how Universal are accostumed to being cheap **** with outsourcing Illumination, and as we can see, it ALWAYS brings them money, it’s safe to assume this is gonna be the future of Dreamworks.

    Everyone with a brain knows Dreamworks’ future is not at all looking bright. Just like Illumination’s.. starting to make sequel after sequel, not caring about doing anything artsy, just profit. We know Dreamworks already did a lot of sequels before (they started the sequels on theatres thing) but, like.. at least those were good and still had production values but I see Universal.. just making pure, garbage.

    • Alan Wilcox

      ok I have despised dreamworks for the past decade and I thought that universal buying dreamworks was a good thing at first but now I am starting to realize that it is more of a financial cancer

    • Too Many Cooks

      I mean, most of DreamWorks’ movies haven’t been that good. There have been some good ones, but I don’t see it as a loss.

    • ike

      You see outsourcing as something inherently bad. As European, I see it as a way fellows from not the U.S. are able to work on feature films that will be seen around the world. Outsourcing happens in every industry, and from an investment point of view it makes sense to do it in animated movies too.

      And don’t forget that one man’s garbage is another man’s treasure. You might not enjoy Illumination movies or sequels, but they do have production value whether you like them or not.

      • Detect

        “You see outsourcing as something inherently bad.”
        It is bad when the U.S. outsources all their jobs and gets no jobs sourced back in to them in return. No one from Korea is hiring an American studio to animate their TV series. It’s kind of a big reason why no 2D animators can find work anymore to the point where even Disney closes down it’s 2D departments sans for those one or two veterans on staff.

        • “No one from Korea is hiring an American studio to animate their TV series.”

          On the other hand, consider Rock Dog. Financed by Chinese companies, animated by Reel FX (The Book of Life, Free Birds) in the U.S.

        • GW

          There is one Japanese studio, Sanrio Film, that had several of their films animated in the US. This was during the late 1970’s. A Mouse and his Child and Metamorphoses were both their films. The former they distributed and I believe financed and the latter they produced. Personally, I wouldn’t say that their American made films are their best, especially from a plot standpoint, but that’s irrelevant to the point I’m making.

      • Troy

        For the poster above it is inherently bad for studios to rely more than 98% of their production work as that would tighten jobs available here in the U.S. and potentially devaluing any newcomers worldwide. It is not an issue if said animators are single and young, but we have veterans and people having families at some point of their career. By outsourcing jobs to other countries animators obviously have to go nomad and travel to which studios that has jobs available. I understand that people from other countries need opportunities like this and are not willing to move to the U.S. however if us here in america are able to move from this country to the next, there is no reason that other people from various countries to do the same.

    • Davion Alexander Blackwíng

      It’s not that outsourcing is bad (if the animation quality is still as good) it’s more or less the cheapening of the movie quality and production values that Universal will put Dreamworks through. It’s already showing, with all the little steps they have been taking.. unnecesary sequels to everything, barely doing anything original. I dunno. Regardless of their movies being on-and-off, I liked Dreamworks somewhat, how they used to be before. But now they’re just gonna be awful.

    • Chinoiserie

      Dreamworks made a sequel to pretty much every film it was profitable to make on. Just look at the list of box office mojo and the budgets/profits.

  • Troy

    Normally this would be an issue for animators, but we pretty much hear this doom and gloom on a daily basis, so on another perspective: easier way to start your own animation studio. Does this work? On paper probably likely. Is it a good idea? Depends on a variety of factors, mostly if the said owner is an animator or not. Would the industry support this type of business model? I don’t think I’ll answer the obvious, however which is more important individual growth or industry survival?

  • Skip.

    I’m sure that the bean counters at DreamWorks Animation are going to argue the case moving forward that the Captain Underpants model is the way to go. The real Problem with this Animation Studio is that they they simply haven’t had the best track record. Kung Fu Panda, and How To Train your Dragon were great films in my opinion, but the studio has also made a lot of films that I did not care for, like A Sharks Tale, Ants, the Bee Movie, Mega Mind,and Home amongst others. I’ve seen lots of kids rewatch Kung Fu Panda over and Over, but it is a chore trying to get anyone to sit through a Sharks Tale or Bee Movie once, at least in my experience.

    Some projects like Captain Underpants, can be made on a lower budget because that is what the Project calls for, in terms of visual style, and tone and the needs of the story that is being told. Where as a film like say How to Train your Dragon 3 calls for a more developed visual style, with characters in more detailed environments, character animation that needs to express greater emotional depth and things along those lines. If moving forward all Animated films are going to fallow the Captain Underpants production model, than the variety of stories, and depth at which they are being told are also going to be scaled back. Is that what anyone wants?

    I know that when Pixar releases the Incredibles 2, I would hate to see a film like that confined to the perimeters of a $35 Million Dollar Budget, Opposed to that film being confined to the Perimeters of whatever Brad Bird decides needs to be done to tell the best story possible.

    Dreamwork’s may need to fallow the Captain Underpants Model in order to make the Studio Profitable again, but if their primary concern is making animated films for $35 Million or less its going to show, and I don’t think that approach will work forever. My recommendation would be to do what you need to do to survive, but the emphasis needs to be on telling the stories to the best of their ability.

  • Andres Molina

    To be real honest, I think outsourcing animation can tricky for the animation industry. First, my god, am I surprised to hear that Captain Underpants was produced at a mere $38 million, I expected something like $65-75 million, but $38 million, its pretty amazing. Now outsourcing animation can be tricky, because its not just the production cost and tax reduction, but also take account what company is doing the animation. Now, if Captain Underpants can rake in a solid profit with such a small budget, then it truly make a large impact in the entire industry, and convince animation companies to start outsourcing to other companies for cheaper cost. Rango itself is a good example of outsourced animation, a 107 minute feature with incredible, near-photorealistic CGI, and while the usual Pixar film today would cost around $200 million, Rango was produced at only $135 million. While it was developed and created by Nickelodeon and Blind Wink, they outsourced the animation to Industrial Light & Magic, which could be a prime contributor for the films incredible visuals. Now again, Rango was animated by Industrial Light & Magic, so the animation quality might not have been the same if it outsourced by another company. Forgetting about the cost, outsourcing a film (depending on the company) could either result to a better looking or worser looking animation, because not all outsourced companies have the same amount of resources and tools, and the money these outsourced companies want will vary, and location can also vary as well. One reason Captain Underpants was cheap was because it was produced by Mikros. Inc, a small company in Canada, a different country and might’ve led to tax reduction, which could’ve helped push the budget down to $38 million, alongside its extremely stylized, extremely cartoony art style. Keep the art style completely intact, but had it been outsourced and animated by ILM, the film would’ve ended up with a very different budget, because they would’ve used a different scale or level of resources, even if it was produced at the Vancouver facility. Although some studios could outsource their films, for different reasons: either due to tight production schedule or because the studio itself doesn’t have the resources to produce it in house. I think in my opinion, the last animation studio that would outsource their films is Pixar, because not only because they have the money and a big enough staff, but they have enough resources and technology to produce quality CGI-visuals. If Pixar were to ever outsource their films, they would probably outsource it to Industrial Light & Magic (because not only was Pixar once part of ILM and Lucasfilm, but because both company share the same technology and have the same level of resources, plus ILM’s San Francisco facility and Pixar are only 15-30 minutes apart, depending on traffic). But yeah, to be able to produce good CGI as such miniature budgets is amazing, and an achievement on its own.

  • Maybe they produced it for so cheap because they feared many parents wouldn’t want to take their children to a movie about a fat guy in his underwear. That’s just my theory.

    • Dáibhí wotshissurname

      Well, they made enough bank with the books that they would go on to make a movie out of it

    • Marielle

      I wonder if Captain Underpants is popular in other countries. Maybe they had low expectations for its performance internationally and decided on a small budget.

  • Mark Mayerson

    The Canadian dollar was in the neighborhood of 77 cents during the production, so even without tax breaks and subsidies (which undoubtedly were there), the production saved a substantial amount of money.

  • mechasus

    DreamWorks started with the two films per year strategy to differentiate themselves from what Pixar was doing, and it’s no surprise that Illumination’s influence led to more budget-cutting and outsourcing. Illumination was the canary in the coal mine that determined that you could make films in the mid/low eight figures and make a killing off of it. By doing this in DreamWorks’ name, they can leverage DreamWorks’ library of properties (including Classic Media), possibly make more films in a year (given their more global scale), and have enough money left over to bug every person on Earth with ads and endorsement deals in the weeks leading up to the film.

  • J

    A low Canadian dollar and subsidies accounting for over half of labor costs. That’s where the majority of savings are.

    • That’s what I’m thinking too. And this isn’t really new, Canadian services studios have been using exchange rates and subsidies for decades. Speaking of subsidies, is it at all possible to know how much the taxpayer contributed to this production? e.g. Quebec contributed x amount of dollars towards this production y, creating a savings of z for Dreamworks.

  • Too Many Cooks

    Sausage Party did it first a year ago, and look at how happy the animators on that project were!

    • ea

      At least we got a successful R-rated animated film out of it.

      Lesser budget = more risks.

      Maybe one day we’ll get an award-winning R-rated film

      • Too Many Cooks

        Didn’t Waltz with Bashir win some awards?

  • David Zweig

    Just a thought (that admittedly sounds naîve and incomplete)…

    Toy Story had a budget of $30M. Despicable Me…$69M. I can’t help but see something here.

    While TS revolutionized feature film animation, and there were some technological advancements that made DM possible, what is clear is that story and characters matter above all else.

    Production leads in the animation industry are great at charging crazy prices to their studios for building revolutionary technological concepts on a film’s budget, while producing a mediocre film in the end. Yet other films seem to use their resources more effectively.

    My bet would be that a studio which focused on films that placed story first, while simplifying design and expedited animation in a way that speeds up production and render time will lead the pack.

    Yes, Merida’s hair in Brave was a technological masterpiece. True, the wings on the Tooth Fairy in Rise of the Guardians were magical. And holy cow the fact that you can map each building in San Fransokyo to real plots in San Francisco is incredible. But none of these efforts made a difference in the success of their respective films. Each film stood on its story and characters alone, and not just their box office numbers reflect that—in fact, most are successes, particularly thanks to international box office numbers.

    When characters and stories are compelling and wonderful, families spend money. The sooner the animation industry acts smarter and produces lean, inspiring and well-designed stories, the better.

    • Marielle

      That’s exactly what Chris Meledandri has been saying in interviews for years. He intended his studio to be that leader you speak of. It’s working well for them, but I appreciate what Pixar and Disney are doing with their animation and I’ll keep supporting their movies.

    • Kit

      It needs to be said that Captain Underpants comes with a enormous built in audience from the books. No risk involved. No development needed. The film is probably some somewhat likable version of characters but the title is really enough. Diary of a Whimpy Kid is the live action comparison.

  • Johnny Marques

    I hope i’s successful essentially to signal that you don’t need to spend 200 million dollars creating a CGI feature film. You can produce smaller-scale efforts with a focus on different kinds of visual stylization. Of course it depends on the project.

    • Doug

      I agree. I was thinking of Disney’s embrace of their style for 101 Dalmations. They were forced into it due to financial constraints and that innovation made them profitable again. I’m not a big fan of the outsourcing thing and am hopeful that if this film meets its goals that the message of this will be the budget to profit ratio and not the bean counter perspective which could likely be, “we need to outsource everything in order to be successful!!”….

  • Austin Durose

    Funny… out of all of the other films mentioned above with their large budgets, this is the only one I am bothered about seeing. And although Iove the creative animation style, I think the main draw for me is that I will actually enjoy a fun and well thought out story! Realistically they should have had the narrative locked down pretty early on if they want to stick closely to the book.

    • RCooke

      The books don’t really have stories. They’re cute–nut the film story would have to be created from scratch other than some broad ideas.

  • Eye roll

    To be fair I think blue sky paved the way for this look and I wouldn’t give 100% credit to dw for “innovating.” Personally I don’t have too much interest in over the top animated movies like this. I wish that dw had handled their business better so we could still see higher budget films, but just less of them and with more effort in the story (or maybe more trust given to the writers and artists from executives?). Maybe there is a plan for high budget films still… I don’t know. I liked where the look of how to train your dragon was going and no other studio seemed to be doing it quite like that. I’m not one of those people that gets bent out of shape that 3D doesn’t look like 2d. Of course not it’s a different medium and should be explored and taken advantage of. Now on one hand dw Glendale is looking like what pdi once was and and on the other hand we are celebrating outsourcing and underpaid artists? Eye roll. Illumination is illumination… can dw maintain their own identity?

  • Marielle

    It’s on par with what DreamWorks spent on TV ads for The Boss Baby.

  • Matt Norcross

    Hopefully if DreamWorks’ Captain Underpants is a success, Disney especially decides to lower their budgets of future films. They don’t have to spend more than $100-200 million on a movie all the time.

  • Glad that Universal saved a few bucks – but I heard it was a tough run for the crew. Much harder to create a good vibe when the creative leads and directors can’t be physically among their crew. Personally, I’d prefer if my Canadian Federal tax dollars supported meaningful stories like the highly collaborative Canadian-Irish – Luxembourg co-production The Breadwinner or at least toward co-operatively beneficial projects like Canadian/American shows Paw Patrol, Justin Time or True and the Rainbow Kingdom … but hey, I’m biased!

  • Jack Rabbit

    It looks like a step backwards in the development of CG.

  • Renard N. Bansale

    Given the film’s positive reception, I think I’ll need to see the film again soon—it didn’t impress me with its break-neck mania. which didn’t even draw one instance of guttural hilarity out of me. (Goodness, even Baywatch gave me one of those.)

    • Roman Reigns Owns The IWC

      I know other people who really laughed, maybe it’s just not your type of humor?

      • Renard N. Bansale

        Films like Captain Underpants (and The Lego Batman Movie, which I also didn’t like) make me question what makes people actually laugh. The jokes in those films are cheaply thought out and rapidly dispensed with little care. Why did I chuckle the most with the secretary being put on hold? Because the film kept revisiting it and (kinda) building on it until the payoff in the middle of the credits. I wanted to laugh during the fake credits and fake positive reviews, but I couldn’t because they were mostly just there. *Try harder.*

        I’ll take Shaun the Sheep every day over Captain Underpants.

        • Roman Reigns Owns The IWC

          I did like Lego Batman, I thought it was a good Batman satire up here with Spaceballs. Don’t assume your taste is gospel though.

  • Chinoiserie

    It looks like you we wrong about the box office, it seems to have made 23M OW.

  • RhMTeo

    That mean many people in US will lose their creativity job if it continues….Thrump

  • Josh Evans

    This budget is pretty suspicious. Canada gives roughly 77 cents to the dollar back in subsidies and incentives. I’m truly doubtful that this number is accurate, more likely it’s the cost after taking advantage of the kickbacks.

  • dermot walshe

    I wondered what todays American political climate might make of this story ….produce them all in the U.S. regardless of the cost ? A friend saw the premiere up here…..said it was great. I think that’s all the customer wants……nice-looking fun films. Keep them coming no matter who makes them !

  • Alberto Herrera Jr.

    This news is a really big deal, since the big name animation studios now have a way to produce animated films at a cheaper price. Illumination has always done that with their films, since they outsource their animation to Illumination Mac Guff in Paris, France. (Which was formally named Mac Guff until Illumination acquired the studio in 2011) That tactic worked out so well for them, since most of their movies make over $500 million worldwide on a budget of $65 – 75 million.

    But I hope that the animators at Mikros Image were not treated like dirt while they were working on Captain Underpants. I don’t want to see another behind-the-scenes controversy like what happened during the production of Sausage Party at Nitrogen Studios.

    But it’s still cool how DreamWorks Animation outsourced the animation to a tiny Canadian animation studio. This might inspire DreamWorks to open a division in Canada to make lower budget animated films, or to animate certain scenes for the DreamWorks films that are made in Glendale, similar to how one-third of Kung Fu Panda 3’s animation was produced at Oriental DreamWorks in China. As long as the animators are treated fairly, then I will be sold on that happening.

    BTW, the Captain Underpants movie was so awesome! When I was a kid, I loved the book series, (I have read books 1, 2, 3, 4, 5, 8, 9, and 10) so naturally, when the movie was announced, I got really excited for it, and the movie exceeded my expectations. I greatly admire all of the hard work that they put into it. I really like the mediums of animation that were used in the film (CGI animation, 2D animation, sock puppetry, and the classic Flip-O-Rama sequences). I also enjoyed the humor, the voice performances, the hidden references to the books, (such as the Everything Except Fabric Softener store and Wedgie Woman being shown in a comic) and the story, which cleverly mixes the first 4 books into one big story. I would definitely recommend this movie to the fans and the non-fans of the Captain Underpants book series.

    DreamWorks Animation, you made me proud.

  • Alberto Herrera Jr.

    This news is a really big deal, since the big name animation studios now have a way to produce animated films at a cheaper price. Illumination has always done that with their films, since they outsource their animation to Illumination Mac Guff in Paris, France. (Which was formally named Mac Guff until Illumination acquired the studio in 2011) That tactic worked out so well for them, since most of their movies make over $500 million worldwide on a budget of $65 – 75 million.

    But I hope that the animators at Mikros Image were not treated like dirt while they were working on Captain Underpants. I don’t want to see another behind-the-scenes controversy like what happened during the production of Sausage Party at Nitrogen Studios.

    But it’s still cool how DreamWorks Animation outsourced the animation to a tiny Canadian animation studio. This might inspire DreamWorks to open a division in Canada to make lower budget animated films, or to animate certain scenes for the DreamWorks films that are made in Glendale, similar to how one-third of Kung Fu Panda 3’s animation was produced at Oriental DreamWorks in China. As long as the animators are treated fairly, then I will be sold on that happening.

  • akear

    This is just yet another industry the US is no longer competitive in. Soon there will be nothing left for the US to outsource. Hollywood is losing its ability to entertain the world.