This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 11, 2017).
LOS ANGELES -- NBCUniversal's $3.8 billion acquisition last year of DreamWorks Animation put characters like Shrek and Felix the Cat under the Universal Pictures roof. Now, the Comcast Corp.-owned studio's plan for those characters is taking shape.
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The best case study yet is "Trolls," the November 2016 release whose box-office success led executives at Universal to develop the neon-haired dolls into a Netflix Inc. series, NBC holiday special, live-entertainment attraction and theatrical sequel. "Trolls" was the first DreamWorks title released following the acquisition, and it grossed $350 million at the world-wide box office.
Now, Universal is hoping "Trolls" can become that all-important prize for a Hollywood studio today: a franchise minting money far beyond the theater. Box-office volatility has led studios to invest in departments that provide steadier revenue streams than ticket sales, whether through theme-park attractions, consumer products or digital entertainment. Studios' prioritization of franchises has also catapulted the value of characters like the Trolls, which can be dusted off and turned into sequel-spawning, toy-selling concepts if they prove a hit with audiences.
The franchise playbook has been perfected by Walt Disney Co., which plugs characters into an assembly line that keeps them in the public consciousness between movie installments that can seem secondary to the toys and theme-park tickets they sell.
Universal, with its Universal Studios theme parks and corporate cousins like NBC, is in a better position than nearly any other major studio to create its own version of the Disney playbook, analysts say.
The studio has nonetheless had to play catch-up, spending billions on the DreamWorks acquisition and expanding its brand-development division 10-fold in the past two years to more than 400 employees across 14 offices. The division oversees consumer products, digital products and live entertainment tied to Universal properties, whether in a "Fast & Furious" live show or "Jurassic World" videogame.
The efforts are overseen by president of brand development Vince Klaseus, a Disney veteran hired by Universal in 2014.
Mr. Klaseus was part of the due diligence team that evaluated the DreamWorks deal, and he said the "Trolls" production stuck out as a franchise opportunity.
"A lot of it comes down to the world itself," he said. "Does a kid connect with a character? Do I aspire to be that character or be with that character?"
The DreamWorks Animation acquisition supercharged Mr. Klaseus's efforts, flooding his department with the Trolls and dozens of characters.
"Trolls'" box-office total, including about $154 million in the U.S. and Canada, didn't break records but it did exceed expectations.
The staying power of "Trolls" surprised some executives at Universal, who thought the movie would be a one-and-done deal. Following its theatrical release, the title generated strong digital sales, and young girls -- a demographic relatively untapped by Universal properties thus far -- expressed interest in consumer products in studio surveys. Another encouraging metric: Many fans were producing their own "Trolls" content and uploading it to YouTube.
Now efforts are under way to keep "Trolls" in the marketplace ahead of a sequel in February 2020.
A "Trolls"-themed holiday special will air on Comcast's NBC network in late November, followed by a 52-episode Netflix show order premiering in the first quarter of 2018. A live attraction "Trollseum" follows later next year and new "Trolls" digital shorts are being produced by DreamWorks employees and uploaded to YouTube once a week.
In many ways, Universal's plan for "Trolls" resembles what former DreamWorks Chief Executive Jeffrey Katzenberg spent several years trying to build, with his own television, digital and consumer-products arms.
But DreamWorks could never escape investor impatience with its rocky box-office returns, and the studio was too small for its nontheatrical department to pick up the slack.
As studios grow more focused on the franchise model, only major players will be able to manage it successfully, said Craig Moffett, a media analyst at MoffettNathanson. Few companies could develop a television special and immediately program it on a major network like NBC, for example.
"It takes real scale," he said. "It's not transformative for Comcast, but it does create value that DreamWorks couldn't create on its own."
Write to Erich Schwartzel at email@example.com
(END) Dow Jones Newswires
October 11, 2017 02:47 ET (06:47 GMT)