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Disney Has a Lot Riding on a Tiny Chicken

A lot is riding on a very little chicken. With this weekend's release of "Chicken Little," (search) The Walt Disney Co. (search) hopes to reverse the fortunes of its moribund feature animation division and regain the dominance it lost to competitors such as Pixar Animation Studios (search) and DreamWorks Animation SKG Inc. (search)

In addition, a special 3D version of "Chicken Little," to be shown on 85 screens nationwide, could recapture the imagination of moviegoers who have been staying away from theaters in record numbers. It might also provide the final push for the transition to digital cinema, an initiative that has stalled because of the cost.

That's a lot to ask of a diminutive, bespectacled hero who has enough on his hands persuading his dubious neighbors once again that the sky is falling.

Disney has not tried to soften its expectations for the movie. In television ads, the company boldly proclaims, "A whole new era in Disney animated entertainment begins."

A new era is sorely needed. For decades, Disney was the undisputed leader in animation, starting with the 1937 release of "Snow White" and running through the 1990s with "The Lion King" and "Beauty and the Beast."

But in recent years, Disney has bombed at the box office with lackluster hand-drawn films such as "Treasure Planet" and "Home on the Range" while Pixar has churned out computer-generated hits that included "Finding Nemo" and "The Incredibles."

Disney has since abandoned hand-drawn animation altogether. "Chicken Little" will be its first fully computer animated film. Pixar will release its seventh, "Cars," next year.

"I do know that over time, we have to be able to compete with Pixar and DreamWorks and Sony and all the rest," said David Stainton, chairman of Walt Disney Feature Animation. "Disney animation is not an also-ran enterprise, it is a leadership enterprise and that's what our expectations are."

Disney's animation unit has traditionally fed the entire company, providing characters that can be used at its theme parks, on TV shows and for direct-to-video sequels. Mickey Mouse and Winnie the Pooh generate billions of dollars a year in revenue for the company.

None of the studio's last five feature animation films have sold more than $100 million in tickets domestically. By comparison, Pixar's last movie, "The Incredibles," grossed $261 million at the domestic box office. "Madagascar," from DreamWorks Animation, raked in $193 million.

Investors are looking for worldwide box office of around $350 million from "Chicken Little" according to David Miller, an analyst at brokerage firm Sanders Morris Harris.

The film's performance could affect ongoing talks between Disney and Pixar. After an ugly public split last year, in which Pixar chief executive Steve Jobs called off talks for a new distribution deal, the two sides have been negotiating again.

"I think Steve Jobs is watching 'Chicken Little' very closely," Miller said. "If the film underperforms relative to his, he may use that as a nugget of leverage."

Executives throughout Hollywood will be watching how the 3D version of "Chicken Little" does at the box office. More 3D films are already in the pipeline from other studios. Academy Award-winning director Robert Zemeckis is making two — next year's "Monster House" from Sony Pictures and "Beowulf," due in 2007 from DreamWorks.

Interest in 3D has come and gone since the 1950s, but studios began to take the format seriously again after a 3D version of last year's "The Polar Express" from Warner Bros. grossed more than $45 million. The offering used technology developed by Imax Corp.

The film broke the one-day box office record for an Imax film and will be rereleased next month.

Other companies, including RealD and In-Three Inc., began to show their technology to Hollywood studios, encouraged by director George Lucas, who said he would like to release all six of his "Star Wars" movies in 3D format that can be shown in regular movie houses.

Disney decided at the last minute to make a 3D version of "Chicken Little" then set out to persuade theater owners to install new, silver-coated screens and expensive digital projectors to show it.

The technology is not cheap. It costs at least $7 million for a studio to convert a 2D film into 3D. In addition, RealD charges theater chains as much as $200,000 for a five-year license for a special screen, software and digital projector that can also show regular movies.

The goofy glasses needed to view the film cost about a buck each, an expense that Disney is bearing for "Chicken Little" but will likely be offset by marketing partners in the future.

If the new 3D takes off, it will come just in time for exhibitors.

Theater chains have been suffering through a yearlong slump that some blame on teens spending more time playing video games or surfing the Web. Others said fans are just tired of the lousy string of movies coming out of Hollywood.

Steve Starkey, the producer of "Monster House," thinks the resurrected 3D format could help resuscitate the industry.

"What is going to bring people into cinemas? I think people are feeling the 3D experience is one of the answers," he said.