Last year, studios and Hollywood labor unions lobbied hard to ensure animated movies and shows could compete for California’s expanded film and television tax credit program.
The payoff came last week, when three animated movies were among the nearly 40 film projects that received a production incentive in the latest round of awards, the California Film Commission announced Thursday.
Walt Disney Co.-owned 20th Century Studios received $21.9 million for “The Simpsons Movie 2,” Disney Entertainment Television got $3.5 million for “Phineas and Ferb” and DreamWorks Animation was awarded $24.7 million in credit allocation for a yet-untitled animated film.
The three are the first animated feature films to receive tax credits from the state of California. (Last month, two animated shows — a spin-off of “Rick and Morty” and “Stewie,” which branches off from the “Family Guy” cartoon — also received tax credits.)
I spoke with DreamWorks Animation Chief Operating Officer Randy Lake about the award, which he called a “potential game changer” for the Glendale-based studio known for the “Shrek” and “Kung Fu Panda” franchises.
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“Unlike live-action, our projects are years long,” he said. “You’re talking about not just a job for six or nine months on set. It’s literally three or four years that these projects can take. It’s long-term employment.”
Like most of Hollywood, the animation industry has suffered from the effects of the 2023 dual writers’ and actors’ strikes, as well as the retrenchment in studio spending after the initial rush to invest in content for streaming services.
And like much of U.S. film and TV work — particularly in California — the animation business has been deeply affected by the increasingly rich tax credits offered by other countries.
Over the last 15 years, countries including Canada and Ireland have slowly built up animation hubs, aided by their local talent and lucrative production incentives specific to animation and visual effects.
For instance, visual effects and computer animation unit Sony Pictures Imageworks, which Lake ran for years, relocated its Culver City headquarters to Vancouver more than a decade ago.
DreamWorks, too, has outsourced work to partner studios, particularly in Vancouver and Montreal, as costs in the U.S. have increased and studios face pressure to rein in their production expenses while theatrical box-office revenue has become less reliable.
Just three years ago, DreamWorks cut about 70 jobs across its corporate functions, feature films, TV and technology departments. In 2024, Disney-owned computer animation studio Pixar laid off about 175 employees as it pulled back on its production of streaming series.
But with the recent tax credit allocation, DreamWorks will hire about 100 people in California for its upcoming untitled film. Those jobs would probably would have been outsourced to a third-party studio, Lake said. Keeping all of the jobs on that film in California helps improve collaboration among the teams and foster more creativity, he said. Today, DreamWorks has about 1,000 employees.
To understand why the new incentives are meaningful, consider that a DreamWorks Animation movie similar to the one that received the credit will typically have a crew of about 400 to 500 people.
That film is a big feature, though Lake declined to share details since the project hasn’t been announced.
Both the Animation Guild and studios have pointed to the incentive as a way to bring back animation jobs to the Golden State.
“Studios have been chasing animation tax credits in other states and countries for years, so it’s incredibly rewarding to see them use California’s for the very first time,” Marissa Bernstel, a trustee on the union’s executive board and member of the task force that helped lobby for the expanded production incentives, said in a statement last week. “The results feel very real, and I’m excited to see what future employment opportunities the incentive inspires.”
Lake said DreamWorks hopes to take advantage of the state incentives for all of its full-budget films.
“We’ll be applying for the next window,” he said, adding that he hoped they will be successful so “we’ll be able to have more and more of our films be fully produced in state. That’s the goal.”
Stuff We Wrote
Film shoots
Number of the week
Lionsgate’s “Michael” had a massive opening weekend with just over $217 million in global box-office revenue. In the U.S. and Canada, the Michael Jackson biopic hauled in about $97 million, far surpassing studio expectations.
The film, which stars Jackson’s nephew, Jaafar Jackson, as the late singer, chronicles the pop star’s rise from his early days in the Jackson 5 through the growth of his solo career. The movie ends in 1988 while Jackson is on tour for his hit album “Bad.”
The premiere for “Michael” marks the biggest domestic opening for any biopic, musical or otherwise. The 2015 movie “Straight Outta Compton” previously held the record for highest opening weekend total for a musical biopic, with $60 million in the U.S. and Canada, followed by the Queen biopic “Bohemian Rhapsody” in 2018, which had a $51.1-million domestic opening.
Critics’ reviews of “Michael,” however, were largely negative. Many noted the plot sidesteps the child sexual abuse allegations against Jackson and said the film presents a more one-dimensional view of the singer.
An earlier cut of the film did end in 1993 and addressed the allegations, but that ending had to be scrapped due to a clause in a legal settlement with an accuser that stipulated he could never be pictured or mentioned in a dramatization of Jackson’s life. Jackson and his estate have denied that the pop star abused children.
What I’m watching
I finally finished the Hulu series “Paradise” this last week, which kept me guessing about literally everything all the way until the end. I’m interested in seeing where this genre-morphing show goes next season.
