LOS ANGELES, July 9, (RTRS): Paramount is getting into the animation game with a bold plan that could leave DreamWorks Animation in the lurch. The studio announced on Wednesday that it is launching an in-house animation division and expects to release its first film through the unit in 2014. Paramount Chairman & CEO Brad Grey said budgets on each of the division’s films will be in the $100 million range and that the studio plans to release one picture a year. “That’s a price point we think is a smart business,’’ Grey told TheWrap. “The global market is vibrant for family fare, particularly if we stick to that price range.’’

The move seemingly frees the studio from its role as DreamWorks Animation’s distributor, allowing Paramount to own the animated films it releases outright instead of settling for a small fee. Grey declined to discuss any possible extension of the studio’s distribution pact with DreamWorks, which expires in 2012. A spokeswoman for DreamWorks Animation declined to comment. The companies recently partnered on “Kung Fu Panda 2,’’ which has grossed $157 million near the end of its North American run. Its 2008 predecessor finished up with $215 million. Paramount released its first computer-animated effort earlier this year, “Rango.’’ Featuring the voice of Johnny Depp, it made $240 million worldwide, but cost $135 million to produce, making it something of a box-office underachiever.

Positioning
Paramount is clearly positioning itself as a major player in the animation field, but breaking in won’t be easy. Once the domain of Disney, its Pixar division and arch-rival DreamWorks, the animation landscape has become increasingly competitive one in recent years.
“With pretty much every major studio having an animation unit, the competitive pressure in the market has intensified for everyone,’’ Tony Wible, an analyst with Janney Montgomery Scott, told TheWrap. “It hurts your windows and makes it harder to secure screens and licensing dollars.’’
Warner Bros. and Fox have ramped up their animated output scoring hits with films such as “Happy Feet’’ and “Ice Age,’’ and Universal launched its own division, Illumination, headed up by Chris Meledandri in 2007. Sony also has an animation division.
Grey said Paramount will draw on corporate siblings in the Viacom empire, particularly the kids cable network Nickelodeon.

“We will build our animation division hand in glove with Nickelodeon. They make great family movies, so it makes a lot of sense to work with them and with Viacom’s consumer products division to build this into a global film business,’’ he said.
For years, the knock on Paramount has been that it was little more than a high-end clearing house for other peoples’ movies. in addition to its distribution pact with DreamWorks Animation, it also released the successful “Iron Man’’ films on behalf of Marvel.
Paramount is now working to strengthen its production arm, a move that takes on greater urgency in the wake of Disney’s 2010 acquisition of Marvel. Still, some analysts were skeptical about its strategy.
“Paramount has proven that it is really a powerhouse studio, but I’m not sure this initiative will really move the needle,’’ said Marla Backer, media analyst with Hudson Square Research.