SUBMITTED BY Kit-Kat

January 19, 2007 — Paul Bond reports "Pirates of the Caribbean: Dead Man's Chest" sold a boatload of DVDs and took in a treasure trove at the boxoffice, but it was merely the runner-up to a cartoon when it came to making money last year. In a report released Thursday, Kagan Research called "Ice Age: The Meltdown" the most profitable, widely released movie of 2006, estimating its cost at $256.4 million and revenue for all release windows at $1.1 billion. When the latter is divided by the former, the result is 4.11, which Kagan calls its Kagan Profitability Index.

At 4.11, "Ice Age" bests Kagan's No. 2 pick "Pirates," which sports a 3.93 KPI. Kagan puts costs at $423.8 million and revenue at $1.7 billion for "Pirates." In fact, four of the top 10 on Kagan's list of more than 160 wide releases last year were CG-animated films, the other three being "Cars" (No. 8), "Over the Hedge" (No. 9) and "Happy Feet" (No. 10). Such results shouldn't lead one to assume that animated hits are easy to come by, though. Kagan analyst Wade Holden said it is quite the opposite.

"Only a few distributors historically have been very successful at it," Holden said. According to his research, from 2000-06 DreamWorks (and DreamWorks Animation), Fox and Disney have had the most success in releasing animated films that score in the KPI profitable range. The firm considers a break-even KPI to be one between 1.4-1.75.

Holden said DreamWorks is tops in the animated category so far this decade, with films that average a 2.32 KPI across its slate. Kagan said that "Pirates" outdid "Ice Age" in just about every other metric, except profitability. "Pirates," for example, will sell an estimated 15.1 million DVDs in the U.S. compared with about 8.4 million for "Ice Age," and "Pirates" generated $423 million at the domestic boxoffice compared with $195 million for "Ice Age."

Rounding out the top 5 for 2006 were "The Da Vinci Code" (KPI of 3.81), "Borat" (3.75) and "Saw III" (3.48). For its report, Kagan excludes from its "total cost" calculations distribution fees, overhead, interest, profit participations and other residuals. Revenue includes, among other sources, domestic and international film rentals, TV rights and worldwide DVD sales.

The company includes in its research only theatrical releases that played on at least 1,000 screens. Kagan editor Robert Marich said that otherwise "someone could have a $50,000 film that made $200,000 in straight-to-DVD sales and make the list." There is the occasional breakthrough small-budget film that makes Kagan's criteria, "The Blair Witch Project" being an example. Kagan also considers "Little Miss Sunshine," acquired last year at the Sundance Film Festival for $10 million, to be 2006's fourth-most-profitable summer release.

Back to the whole of 2006, Kagan said a couple of the biggest, well-known flops were "Poseidon" and "Lady in the Water," which sported KPI ratios of 1.15 and 0.78, respectively. " 'Poseidon' did much better internationally than originally expected after its poor U.S. theatrical release, but ultimately still is unprofitable," Holden said."