Jeffrey Katzenberg on ‘Dragon’ sequels and how Marvel is DreamWorks’ new competition

CANNES – Jeffrey Katzenberg had quite the Cannes. “How To Train Your Dragon 2” played out of competition with a standing ovation from the festival faithful and he found himself awarded Commander of the Order Of Arts And Letters by the French government. It all coincides with the 20th Anniversary of DreamWorks (although DreamWorks' first animated film didn't arrive until 1998) and was some welcome good news for Katzenberg and DWA.

One of the most influential and powerful entertainment executives in the world, Katzenberg took an hour over the weekend for an intimate sitdown with HitFix, Indiewire and Movie City News. It was a frank conversation touching on everything from the future of the global marketplace, the new competition for animated films, the future of his slate, the future of the “Dragon” franchise and just how and when DWA will jump back into movie musicals.

Directed and written once again by Dean DeBlois, “How To Train Your Dragon 2” has already earned strong reviews and could be the early favorite for the 2015 Academy Award for Best Animated Feature Film. It's also likely to be one of the highest grossing movies of the summer and possibly the year.  That's partially because of a dearth of animated releases over the next few months, but also because the first “Dragon” struck an emotional chord with audiences normally left to DWA's main competitor, Pixar.

The new film takes place many years after our Viking heroes and dragons made peace on the island of Berk. It also places our hero, Hiccup, in a new position that could easily be mined for a third film. And, surprise, DeBlois has publicly talked about a “trilogy” of “Dragon” films. His boss, consequently, isn't so sure the story can be completed in one more picture.

“I actually think the amount of story he wants to tell in this third chapter is more than can be done in one film,” Katzenberg says. “He's working on it now and he's a brilliant storyteller and filmmaker. What he has told us about the story, I think, is going to take more than 90 minutes to tell. He is writing the script. It will reveal itself whether all of that story and everything that needs to get wrapped up can be told in 90 minutes.”

With a smile of someone who's been at this quite a while, Katzenberg adds, “I'm pretty sure it can't.”

Thanks to author Cressida Cowell, Dreamworks Animation has 11 “Dragon” books at their disposal to shape the franchise. Like Marvel Studios' three-phase attack, Katzenberg has long in-the-works plans for all his films. Assuming they are successful, of course. He notes, “Just like 'Kung Fu Panda' has always had a long road map — we've always had six chapters to that — 'Dragons' has a long life and road map for it. The TV series is part of that, too.”

To be blunt, “Dragons” also can't come soon enough for the publicly traded DWA. It's been a rocky two years as the company has transitioned from distributor Paramount Pictures to 20th Century Fox. The Paramount relationship ended awkwardly with the disappointing bomb “Rise of the Guardians,” but the Fox deal started off strongly with the surprise hit “The Croods” ($587 million worldwide) leaving many to believe concerns about Fox's ability to handle DWA's global marketing needs were unfounded.

Unfortunately, they were vindicated after two public disappointments in a row, “Turbo” and “Mr. Peabody & Sherman.” While the company had to take loses against both pictures, Katzenberg found himself defending each and arguing that public or media perception is often just plain wrong.

“There's an interesting thing. 'Turbo,' a $100 million movie for us, not considered a success,” Katzenberg says. “In the real world it's a $300 million hit and a brand. For Netflix, it's a smash hit and their second-most popular kids program behind 'Spongebob.'”

On “Peabody,” which has earned $266 million worldwide to date after opening in March, Katzenberg thinks he misjudged the playability of the picture.

“If you don't have a good movie with good playability, good story and good characters? The rest doesn't matter,” he says. “[After some mistakes] I think we can do better than that. 'Mr. Peabody' is at 80% on Rotten Tomatoes. It was an A Cinemascore and an A+ under 18. The idea for 'Mr. Peabody,' the marketability of it, may have been limited to the audience. I think that Fox and our team did a good job marketing the movie, I just think the fundamental idea itself was more limited than 'Dragons.'”
Katzenberg went into great detail about how he determines the potential success of his films. The three pieces of the box office equation are playability, the marketability and the availability of a movie. The playability is the creative quality, the marketability is how you sell it to audiences. And then, increasingly important for DWA, is the availability of your audience. Two of those things have changed meaningfully over the past 18-24 months.  

Beginning with playability, Katzenberg says, “If we made a good movie and it played well we opened to $40-60 million and we got a four multiple on that. And, by the way, 16 for 16 [movies in terms of that success]. I don't know if anyone has ever done that before. And the average box office for those 16 was $520 million. I don't know if anyone has ever done that before. What worked for us was just make a really, really good movie. Storytelling is what matters.”

Marketability, on the other hand, is now being hampered by other four quadrant films which are stealing audiences from animated films in the US In particular; Marvel Studios releases like “Captain America: The Winter Soldier” and “Thor: The Dark World” are the sort of movies now crossing over into “family flicks.” Katzenberg says, “They are not for the 3-, 4-, 5-, 6-years-olds, but 'Captain America' was a PG-13 movie and we're competing for 4/5 the same audience. That didn't exist several years ago.”

He continues, “This competition for it has just caught up with us now. We were in our sort of walled garden. Protected. We competed against other animation. Four or five other animated films a year and the audience was more than happy to see every one of them. In fact, they wanted more of them.”

Availability is perhaps Katzenberg's biggest concern. Theater owners and most studios have championed opening event films outside of the traditional winter and summer seasons, but that sort of year-round competition makes finding a solid release date for an animated film much more difficult.

“I don't think [our] films would do as well if they came the week before, the week of or week after a Marvel movie, or 'Transformers,' Superman or Batman or whatever, because PG-13 has become the new PG,” Katzenberg remarks. “I was blown away a couple of years ago [when] 'Hangover 2' came out and there were 6-, 7-, 8-year-olds going to this R-rated movie and it was somehow OK. So the world is changing in pretty profound ways.”

Katzenberg says this means DWA needs to be more careful about dating their films. He smartly points out, “If a family of four goes to see 'Captain America' and spends $50 between parking and popcorn and all that, you can't assume they are willing to spend $50 more to go see one of our movies or Pixar or whatever [the next week] unless it's exceptional, because people don't have unlimited resources. To assume people can go see a movie every week and have the financial resources let alone the time, availability, for it? Movie-going has never worked that way.”

Now, previous public comments aside, he's still bullish on the movie industry as a growth business. It just means DWA may have to step back from its current three-animated-releases-a-year plan. For example, this year the studio already released “Mr. Peabody” and will open “Dragon 2” next month. “Penguins of Madagascar” was recently pushed into November as the studio's third 2014 film, but two per year is more likely beginning in 2015 and for the foreseeable future.

“We need to be more opportunistic about looking at the marketplace, seeing what the opportunities are and, by the way, even the two that come out in 2016? One of those I would like to be a less expensive movie because it gives us much more flexibility on release dates,” Katzenberg says. “If you need to gross $500 million on a movie there is much more limited real estate to be in, and that real estate in 2016 is super jammed up.”

Even as he admits he's very self-critical of DWA's recent creative and box office performance, Katzenberg is still bullish on the future.  What must pain him, although not discussed specifically, is the huge success of his former employer, Walt Disney Animation, during DWA's rocky road. “Frozen” was a monster financially and culturally and has every studio trying to figure out if animated musicals are really “back.” Katzenberg doesn't miss a beat running down DreamWorks' musical offerings already in development.

“We have several of them that have been in the works for some time,” he says. “We have tried to go kind of a slightly different path on some of them. This movie 'Home' we have coming, Rihanna has actually done 12 songs for the movie. It's not breaking into song. The characters don't sing and dance in the movie itself in it. But it is the soundtrack of the film and the songs have been written very specifically for scenes in the movie and for characters in the movie. It's a different type of musical than a 'Broadway' break into song one.

“Then we have the Untitled Bollywood that we are doing that Kevin Lima is directing. A.R. Rahman and Stephen Schwartz have written 7 or 8 songs for it. That's a couple of years out. It's a pretty ambitious, flat-out musical, break into song. It's well along and Kevin did 'Tarzan' and '101 Dalmations' and he's really, really good filmmaker. We also have 'Larrikins,' which Tim Milchin, the songwriter/composer of 'Matilda,' is working on.”

That being said, it all comes back to comedy for Katzenberg. DreamWorks Animation may dip into a slightly more dramatic tone or center a picture in an adventure setting, but it's the edgy and relevant comedy they are most known for

“Our North Star is 'Shrek,'” Katzenberg says. “'Shrek' is a big, boisterous, subversive comedy. That's what I think distinguishes us from our competitors. Not that they don't from time to time come into our space and not that we don't from time to time go into theirs. It's OK. None of us own these spaces. We walk in and out of them. I would say the next group of things coming from us are more at our core. So “The Penguins of Mad[agascar]” I think, in some respects, is one of the funniest movies we've ever made. It's outrageous and it's just hysterical. “Home” is really an adventure comedy as opposed to a comedy adventure. And “B.O.O.: Bureau of Otherworldly Objects” is our ghost movie next summer with Seth Rogen, Melissa McCarthy and Bill Murray. Just a flat-out, pedal-to-the-metal, hysterical comedy. “Kung Fu Panda 3,” the next story, is actually more broadly comedic. It's actually closer to the first movie than the second movie; the second was dealing with Po's past and had dark elements to it.

“That's just a year and a half, but beyond that there are a whole bunch of things coming.”

“How To Train Your Dragon 2” opens nationwide on June 13.