Why 'Happy Feet 2' Was Frozen Out at the Box Office

This story originally appeared in the Dec. 9 issue of The Hollywood Reporter.

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Penguins aren't an endangered species, but Warner Bros.' Happy Feet Two is heading for the endangered movie list. After its first 10 days, the Antarctic-set toon had grossed just $43.8 million -- a little more than the $42 million that the Oscar-winning Happy Feet tap-danced to during its first three days in 2006. Unless business picks up overseas, where it has yet to open in most territories, director George Miller's $135 million production -- Warners split the cost with Village Roadshow -- is headed for the big chill. The question is why.

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Feet Two set out to replicate the success of the first movie by opening on the same weekend before Thanksgiving -- the first film narrowly edged Casino Royale five years ago and hung on to dominate the holiday. But Feet Two arrived amid a crush of animated, 3D and/or family movies; Puss in Boots, which moved to an earlier date to get ahead of the pack, preceded it by two weeks. In its second weekend, Feet Two, on a mix of 2D and 3D screens, had to fend off The Muppets, Hugo and Arthur Christmas. "There are just too many 3D family movies, and they cost too much," complains one exhibitor. "You're seeing the law of diminishing returns." Lots of families chose Muppets, a more affordable option because it wasn't in 3D. Warners also might have underestimated Twilight: Breaking Dawn Part 1, to which many moms brought their daughters.

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Further, while the first Feet was a happy novelty, it didn't leave behind a character as memorable as a Sheriff Woody or a Shrek. The sequel told how one little penguin rallies his colony trapped by shifting ice due to climate change. The trailers, says one observer, looked like "just more of the same," instead of something compelling and new.

Finally, Miller -- whose Babe: Pig in the City flopped for Universal in 1998 after Babe was a big hit three years earlier -- has a reputation for being extremely hands-on and meticulous. That slowed progress, so Warners sent animation head Chris deFaria and postproduction chief Mark Solomon to Australia to oversee the final month's work. "Everything had to pass through a very specific, narrow pipeline, and it caught up with us," admits deFaria. "But that happens on more movies than you think -- not just animated ones." Nevertheless, at the movie's L.A. premiere Nov. 13, Miller said it was the first time he'd seen the completed movie.

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Top Warners execs say they are baffled by the lack of audience interest but acknowledge that given the competition, the penguins likely have been frozen out. 

"I think the story is terrific," says deFaria. "[But] it's hard for a movie to last in this marketplace without a big opening weekend."

-- Kim Masters contributed to this report.

ANIMATED SEQUELS OF 2011: Not every follow-up improves on the business of its predecessor, but the most successful franchises have a way of adding up the dollars.

Cars (Pixar)

• Cars (2006): 4462 million
• Cars 2 (2011): $552 million
• Difference: +19%

Hoodwinked (Weinstein Co.)

• Hoodwinked (2005): $110 million
• Hoodwinked 2 (2011): $17 million
• Difference: -85%

Kung Fu Panda (DreamWorks Animation)

• Kung Fu Panda (2008): $632 million
• Kung Fu Panda 2 (2011): $663 million
• Difference: +5%

Source: Box Office Mojo; worldwide grosses