‘The Incredibles 2’ and ‘Cars’ Sequel Will Lead Disney to Animation Domination

Disney's CEO recently revealed that sequels to "The Incredibles" and "Cars" are on the way. Here's why these latest projects signal an ongoing era of Disney dominance over rivals like DreamWorks Animation.

Mar 19, 2014 at 12:13PM

Disney (NYSE:DIS) has already established itself as the king of superhero movies. Its incredibly successful Avengers racked up approximately $1.5 billion at the global box office and currently stands as the third highest grossing movie of all time. The company had already found success with superheroes prior to its acquisition of Marvel, however. Pixar's The Incredibles stands as one of the studios most beloved and commercially successful creations.

For years, fans and investors alike wondered aloud why Disney had not kicked a sequel into production. In a recent call with shareholders, CEO Bob Iger revealed that the much asked for Incredibles follow up is finally moving ahead. The return of the super-family is another sign that Disney will continue its dominance in the realm of superheroes and animation.

The return of an incredible property

The Incredibles released in 2004 to rave reviews and great results at the box office. By the time the film had left screens, it had tallied up approximately $631 million in global take, an incredible figure considering that international film markets had yet to experience their tremendous growth. What's more, the property offered great opportunities for merchandising.

With the Incredibles family being proven winners and the "Toy Story," "Cars," and "Monsters" series receiving sequels within the last 10 years, it's somewhat surprising that it took so long for news of a follow up to the 2004 hit to materialize. That said, it's looking like the timing could wind up working out for Disney.

A super time for heroes

Superhero films have never been hotter, and if any company is going to keep the trend alive it looks to be Disney. An Incredibles sequel could tap into the public's love for superpowers and keep the massive returns flowing in what would likely be a non-Avengers year. As opposed to the "Cars" series," which is primarily aimed at younger demographics, "The Incredibles" has the potential to appeal to a wider audience. What's more, many of the fans that adored the movie upon its reception never halted in their calls for a sequel. The property's big-screen hiatus could actually contribute to its draw.

Cars does another lap

Speaking of "Cars," Iger also revealed that a third movie in the series is in the works. While Cars 2 saw a poor critical reception and shrinking domestic box office take, the 2011 film managed to surpass its predecessor's total thanks to improved overseas performance. The biggest strength of the "Cars" property rests in merchandising. The anthropomorphic automobiles have a global appeal and a third entry in the series is certain to rev up another multi-billion round of merchandising.

DreamWorks hopes to soar with dragons and aliens

But don't count out DreamWorks Animation (NASDAQ:DWA). The studio will be looking to capitalize on the success that its How to Train Your Dragon achieved with a follow up that aims to conquer the box office and the toy store. "How to Train Your Dragon" is the company's most successful property since "Shrek" and may wind up being more lucrative when it comes to merchandising thanks to a broader range of cute and toy-ready characters. How to Train Your Dragon 2 should enjoy substantial growth over its predecessor's almost $500 million global take , with ticket sales that could wind up nearing the billion dollar mark thanks to the incredibly positive word of mouth enjoyed by the first film.

DreamWorks Animation's other big 2014 merchandising and box office opportunity is Home. Featuring the voice talents of Steve Martin, Rihanna, Jennifer Lopez, and Jim Parsons, the film has a cast of alien creatures well-suited for the transition to toy shelves. It will be distributed by Twenty-First Century Fox.

DreamWorks needs big hits in 2014 to serve as a rebuttal to the incredible success of Disney's billion-dollar earner Frozen. This is especially true after the less than spectacular debut of Mr. Peabody & Sherman. How to Train Your Dragon 2 should deliver, but the mixed history of animated alien pics make Home a much shakier bet.

Disney's portfolio is stacked

The announcement of "Incredibles" and "Cars" sequels coming on the heals of what Disney achieved with Frozen is a good sign that the company is in great position to continue its dominance in the animated picture business. The company holds many of the most valuable properties in entertainment, but it has also shown that it can tap into cultural trends, mix in a little of its old-time magic, and create the next big thing. For these reasons, Disney looks to dominate the box office for the foreseeable future. 

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Keith Noonan has no position in any stocks mentioned. The Motley Fool recommends DreamWorks Animation and Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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