In Dismal Summer, `Despicable Me 3' Producer Delivers $1 Billion

(Bloomberg) -- After Comcast Corp.’s Universal Pictures acquired DreamWorks Animation last year, executives there immediately began talking about Chris Meledandri taking on an expanded role, giving the “Minions” master responsibility for “Shrek” and “Kung Fu Panda,” too.

For many studio chiefs, it would have been a dream job, the kind of dual-management role that creative guru John Lasseter plays at both Pixar and Walt Disney Animation. But Meledandri, who is 58, politely declined, choosing instead to consult at DreamWorks and spend the bulk of his time at Illumination Entertainment, the animation studio he co-founded with Universal 10 years ago.

As Hollywood reflects on the worst summer box office in a decade, Meledandri’s decision to stay focused looks smart. His “Despicable Me 3,” released in June, was one of the summer’s few big winners, passing the $1 billion mark worldwide last Friday. As a whole, the four-film “Despicable Me” franchise now ranks ahead of “Shrek” as the top-grossing animated film series off all time. Two of the pictures are the first and second most-profitable movies in Universal’s 105-year history.

“Chris is one the great storytellers of our time,” said Jeffrey Katzenberg, the DreamWorks co-founder who is now starting his own production company focused on short-form video. Meledandri has a “genius for creating deeply memorable and insanely hysterically funny characters,” such as the Minions and Scrat from “Ice Age,” he said.

Family Fun

Meledandri’s hits, including the “Ice Age” series he worked on for 21st Century Fox Inc. and last year’s “The Secret Life of Pets,” an $875 million hit for Universal, have charmed their way into popular culture, with characters like the lovable super villain Gru and his squeaky, yellow henchmen the Minions popping up on everything from backpacks to theme-park rides.

In person, Meledandri speaks softly and deliberately, as if contemplating every word. Laughs are few. And he’s dead serious when he says he wants to build the Illumination brand into one that stands for family fun. His mission, he said, is simple: “To make you feel good in a world where so many things don’t.”

In Hollywood, Meledandri is known for making films with relatively modest budgets, $75 million on average, half or less than what other studios typically spend for would-be blockbusters. Illumination’s animators work in Paris, where the technical schools are good and competition for skilled workers less intense. His films benefit from the marketing machine of Comcast, which enables Illumination characters to make guest appearances on NBC productions from “The Tonight Show” to the Super Bowl -- free “real estate,” Meledandri called it.

Sneakers, Cartoons

There’s another secret to Illumination’s success, he said: 100 people at the company working on content that promotes the films. Meledandri, dressed in jeans and a black blazer, walked visitors through Illumination’s loft-like offices in Santa Monica, California, 20 miles from the Universal lot. There are display cases in the lobby filled with Minions merchandise. On one wall are storyboards for weekly cartoons that appeared on Twitter.com before the release of “Despicable Me 3.” On another wall were drawings for Minions-themed Puma sneakers, designer apparel and a theme-park attraction in Beijing.

Meledandri sat down to screen a music video from Pharrell Williams, whose song “Happy” from 2013’s “Despicable Me 2” hit No. 1 in 30 countries. Meledandri tapped his feet as Williams appeared on screen, marching on the street near Illumination’s headquarters. The video for “Yellow Light,” a song from “Despicable Me 3,” has 2.1 million views on Youtube.com.

Movie industry colleagues told Meledandri when he started Illumination that he’d never be able to build a long-term business in animation. Many are still surprised, he said, to find out that his 2015 film “Minions” is the second-highest grossing animated picture of all-time, behind only Disney’s “Frozen.” “Despicable Me 3” has taken in almost three times as much as Pixar’s “Cars 3,” which also came out in June.

“The shadow of Disney is so large and looms so powerful that it’s shocking when we go head to head with them and we do beat them,” Meledandri said. He credited his films’ consistency and “populist” appeal.

Frozen Out

Disney, of course, remains the standard-bearer, and its Pixar unit pioneered digital animation and continues to innovate in the format. Since the Academy of Motion Picture Arts & Sciences established an Oscar for best animated film in 2001, Disney and Pixar have gotten the award 11 times. Meledandri was nominated only once, in 2013 for “Despicable Me 2,” and lost to “Frozen.”

“Despicable Me 3” did fall 23 percent short of its predecessor, “Minions,” in the North American box office, though it’s done better overseas. The 2015 edition of the franchise ended up with a global total of $1.16 billion. That trend -- waning interest in sequels in the U.S., with foreign audiences still packing theaters -- was evident in many of the summer’s big releases, including “Pirates of the Caribbean: Dead Men Tell No Tales” and “Transformers: The Last Knight.”

More ‘Despicable’

Unless studios are adding something new or fresh, “American audiences are deserting three-quels,” said Jeff Bock, senior media analyst at Exhibitor Relations.

Hollywood’s dependence on franchises with familiar characters can be limiting, said Meledandri, who has “Minions 2,” “Sing 2” and “Secret Life of Pets 2” in the works. “It’s this enormous focus on event films and making fewer but bigger films with that comes a certain amount of restriction,” he said.

That doesn’t apply to “Despicable Me 4,” which is also in development, he said.

“We have a fantastic story,” he said. “We’re not running out of steam so far.”

To contact the reporters on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net, Anousha Sakoui in Los Angeles at asakoui@bloomberg.net.

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Bruce Rule