Paramount Pictures Launching New, In-House Animation Division

Paramount Pictures is launching a new, in-house animation division, the studio announced Wednesday. It is aiming to release its first title in 2014.

Rango, the animated Western directed by Gore Verbinski wthat was released in March, was the studio’s first full-owned CGI animated movie, and it grossed more than $240 million worldwide.

To date, however, Paramount, a unit of Viacom, has largely relied on Jeffrey Katzenberg’s Dreamworks Animation, with which it has a distribution deal, to fill the animation slots on its release schedule. DWA’s deal with Paramount expires at the end of 2012.

Sources say Paramount has offered Jeffrey Katzberg a one-year extension at the same terms. Beyond that, the studio wants to renegotiate the deal so as to make the terms better for Paramount. Katzenberg has yet to agree to the extension.

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In announcing the new division, Paramount chairman & CEO Brad Grey said the initiative was part of the studio’s long-term strategy for growth and that the new division, Paramount Animation, will focus on high quality animation with budgets of up to $100 million per picture.

It will develop a broad range of family CGI animated films, with some titles released under the Nickelodeon label.

The studio already has at least one project in development: It is currently developing an adaptation of the 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.

The division will be part of the Paramount Motion Picture Group, reporting to the group’s president, Adam Goodman, and will initially target one release per year. Vice chair Rob Moore, COO Frederick Huntsberry and Goodman are now conducting a search for the leader of the division.

“The marketplace has never offered as many opportunities to create wonderfully imaginative pictures at very appealing budget levels, so we feel this is a perfect moment to launch this effort. We are now eager to expand in animation with appropriate and prudent overhead and production budgets in a way that will allow us to be nimble, creative and innovative,” Grey said.