LOS ANGELES (Reuters) - The first Academy Award for an animated feature film was a special honor given to Walt Disney in 1939 for the innovation of "Snow White and the Seven Dwarfs." Child actress Shirley Temple presented Disney with a full-sized gold Oscar statuette and seven miniature ones.
The studio founded by the animation pioneer, Walt Disney Animation Studios, has never won the Oscar for best animated feature, a category created in 2002. That is expected to change on Sunday, as the studio's hit "Frozen" is the favorite in a race that has become as diverse as Hollywood's animation industry.
"Frozen" will compete for Oscar gold with films that include box office hits "The Croods," a caveman comedy from DreamWorks Animation SKG (DWA.O), and the yellow minions of Universal Pictures' "Despicable Me 2," produced by relative newcomer Illumination Entertainment.
"It's a tremendously vibrant competitive landscape," said Illumination Chief Executive Officer Chris Meledandri.
A larger number of players creating high-quality animated films helps everyone in the business, he said, because it raises enthusiasm for the genre and brings a wider group of people to theaters beyond the typical family filmgoers.
"Audiences remain urgently interested in the medium," Meledandri said. "It continues to expand our collective audience."
Last year, five studios including Walt Disney Co's (DIS.N) famed Pixar unit distributed animated films that generated $100 million or more at U.S. and Canadian theaters, six if Disney Animation Studios and Pixar are counted separately. This year, the biggest movie at the domestic box office is Warner Bros' animated "The Lego Movie," which has earned nearly $280 million worldwide in three weeks.
Another animated film, "The Nut Job" from Open Road Films, a joint venture of theater chains AMC Entertainment and Regal Entertainment, ranks third on domestic charts this year.
Animated films also draw crowds of moviegoers in foreign markets that are increasingly important to Hollywood. "The opportunities and interest and appetite for animation around the world is very big," DreamWorks Animation CEO Jeffrey Katzenberg said. "These are great stories. They are appreciated everywhere they go, and they go everywhere."
The three biggest box office hits among this year's animated Oscar contenders - "Frozen," "Despicable Me 2" and "The Croods" - have rung up more than $2.5 billion in worldwide ticket sales combined. Two smaller films, "The Wind Rises" from Japanese animator Hayao Miyazaki and French-language entry "Ernest & Celestine," round out the nominees.
BUILDING WITH LEGO
Time Warner Inc's (TWX.N) Warner Bros, the studio built with the help of Bugs Bunny and other Looney Tunes characters, had not been a major player in big-screen animation since its 2006 Oscar winner "Happy Feet." A year ago, the studio announced it created an animation consortium with the goal of releasing one animated feature a year, starting with "The Lego Movie." A "Lego" sequel is now planned for 2017.
"The Lego Movie has fueled our excitement to create more animated films," said Greg Silverman, president of creative development and worldwide production for Warner Bros.
Studios gravitate toward animated films because the big ones become franchises that produce characters that yield revenues beyond the box office. On Monday, DreamWorks announced plans for live entertainment "Shrek" attractions in six cities.
The musical soundtrack for "Frozen" and Oscar-nominated anthem "Let It Go" by Idina Menzel have sold more than 1 million copies each.
With so many studios jostling for screens at the movie theaters, not every animated film succeeded. DreamWorks' 2013 release "Turbo," which generated $83 million in domestic ticket sales, forced it to take a $13.5 million impairment charge, the company said on Tuesday.
"Turbo faced one of the most competitive feature film environments we have seen," DreamWorks CEO Katzenberg said on a conference call with industry analysts.
"Frozen," which has generated more than $980 million in worldwide ticket sales, cemented a resurgence for Walt Disney Animation Studios, which despite Disney's rich history in animation became overshadowed by its corporate sibling, Pixar. The studio founded by Steve Jobs has won seven Oscars in 12 years for blockbusters including "Finding Nemo," "Up" and "Brave." This year, Pixar was shut out of the Oscar nominations for the second time in three years.
'A REAL HUNGER'
The filmmakers behind "Frozen," the story of royal sisters in an icy kingdom, sought to build on Disney's legacy of classic musical fairy tales, said Andrew Millstein, executive vice president and general manager of Walt Disney Animation Studios. The genre had fallen out of favor since 1990s Disney hits like "Beauty and the Beast" and "The Lion King."
"We felt there was a real hunger for these kind of stories," he said, ones that had a "timelessness and relevance" and were also "heartfelt, comedic, with great music."
Illumination scored its first two Oscar nominations for "Despicable Me 2," for animated feature and original song for Pharrell Williams' "Happy." The film was made for $76 million, half of what Disney spent on "Frozen."
Working with a lower budget fueled creativity, Illumination CEO Meledandri said, because the filmmakers did not need to worry about reeling in outsized box office returns. "We were able to take certain risks that we would not have been able to take if there were twice as much financial pressure on us," he said.
"Despicable 2" became a blockbuster with $970 million in global ticket sales. Comcast Corp's (CMCSA.O) Universal plans to release three Illumination films through 2017, including a "Despicable" sequel and a remake of Dr. Seuss classic "How the Grinch Stole Christmas."
Once the Oscars are over, a new parade of animated offerings will begin, starting with DreamWorks' "Mr. Peabody & Sherman" on March 7. Other coming releases are DreamWorks' "How to Train Your Dragon 2," a "Rio" sequel from Fox, and "Big Hero 6" from Disney Animation.
Even DisneyToon Studios, a unit that specialized in direct-to-DVD films, is gearing up to hit the big screen again. Its "Planes: Fire and Rescue," a sequel to last year's hit film "Planes," is scheduled for release on July 18.
(Reporting by Lisa Richwine; Edited by Ronald Grover and Lisa Shumaker)
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