In any case, now Paramount is ramping up its own in-house animation division, Paramount Animation, with its first film set to open in 2014. Studio chairman Brad Grey isn't messing around here; he's targeting one animated film a year to start. If Katzenberg won't adjust his deal terms to the studio' benefit--he's actually trying to improve his deal--then Paramount will make its own animated films. Since 2006, DreamWorks Animation has given distributor Paramount an 8 percent cut of its revenues. Paramount offered Katzenberg a one-year extension on the same terms which he has not accepted.
Rango is a case in point: ILM's John Knoll spearheaded a new approach to animation from a VFX perspective, which was gorgeous and fresh but costly; the well-reviewed movie starring Johnny Depp was geared more toward adults than kids and scored a modest $240 million worldwide, given its reported $135 million budget, plus global marketing costs. But what it proved to Paramount was that you don't have to build a costly animation studio and own the technology and infrastructure to make these movies anymore. "If Rango had cost $80 million," said one Paramount exec, "it would have been wildly profitable." With Verbinski focused on his live action career, a Rango sequel seems unlikely, unless the budget comes down.
Animation is still primarily a family-oriented sphere. Some Paramount Animation pictures will go through Viacom’s Nickelodeon label, as well as taking advantage of synergistic merchandising opportunities. “Paramount also has the distinct advantage of being part of the Viacom family," said Grey, "giving us the ability to leverage its portfolio of powerful and youthful brands to create and market great films and consumer products.”
THR reports that the studio is already adapting Penny Arcade web comic New Kid:
"about a lone earthling who is a new kid in a school full of intergalactic aliens. Gary Whitta is writing the screenplay for producer Mary Parent and Cale Boyter."