'Shrek' stages bid to become a giant hit on Broadway - with a little help from Sam Mendes

Shrek was always so much more than a big, green, smelly ogre, happy to while away his days on a diet of forest critters alone in his swamp.

For its producer, Jeffrey Katzenberg, it was a way to settle scores, both personal and professional, with his old bosses at Disney. For its animators it set new standards in hi-tech movie making. While its phenomenal box office takings sealed DreamWorks' success as the first new Hollywood studio since Charlie Chaplin and Douglas Fairbanks formed United Artists more than 60 years ago.

Now in what must be the biggest challenge of his career, the Oscar-winning British director Sam Mendes is to turn Shrek into a Broadway musical. It could be a tough order for a film that employed not only the latest in production techniques, but which enjoyed the talents of an all-star cast including Mike Myers as Shrek, and Eddie Murphy and Cameron Diaz.

Mendes, who was artistic director of London's Donmar Warehouse theatre from 1992 to 2002, will work as creative head of the project, leaving the direction to Jason Moore. It is expected to open in 2006.

"I am particularly thrilled that the ship is being steered by someone as gifted as Jason Moore," Mendes said in a statement. "I know ... [he] ... will come up with something that is intensely theatrical, yet retains all the warmth, imagination and comic invention of the movies." The musical is being backed by DreamWorks, which made the original Oscar-winning film Shrek, one of the most successful animated films of all time. It tells the story of an ogre who falls in love with a princess.

While at the Donmar, Mendes oversaw more than 70 productions and took several of his award-winning plays to Broadway, including The Blue Room, starring Nicole Kidman. He won a Tony award in 1998 for his revival of Cabaret.

But he has struggled to live up to the promise of his earlier work with criticism of his film The Road to Perdition and the closure of the play Fuddy Meers after just a fortnight in London. The director told The New York Times that those behind Shrek were determined not to rush production.

"There isn't the sort of corporate pressure being exerted that this has to be done for a set pre-release date," he said.

DreamWorks will be hoping to match the success enjoyed by Disney with its musical versions of Beauty and the Beast and The Lion King. In a statement released by DreamWorks, Moore said: "There's a supreme challenge in bringing an animated world to the stage and making it theatrical. But what's so wonderful about Shrek is that anarchic attitude placed in a fairy-tale world that I think will thrive onstage." Reports from the entertainment industry suggest that the plot for the musical is likely to blend elements from both Shrek and its follow-up, Shrek 2. Shrek earned almost $480m (£266m) in worldwide ticket sales. Shrek 2 almost doubled that, earning $880m.

The behind-the-scenes story of Shrek is one of the great fairytales of Hollywood. In 1994, Jeffrey Katzenberg was removed from his job as the head of production at Disney, after being widely credited with helping the company rediscover its popular touch. His response was to join forces with Steven Spielberg, who had just made Schindler's List, and the entertainment tycoon David Geffen to set up DreamWorks.

The trio raised £2bn in capital to fund their dream, enjoying major investment from Microsoft's Paul Allen. In its first decade they enjoyed some smash hits, Spielberg's Saving Private Ryan, Mendes' American Beauty and Ridley Scott's epic Gladiator.

But there were flops too.Sinbad: Legend of the Seven Seas sank without trace. But Shrek was the vehicle that transformed the fortunes of DreamWorks. It also offered sweet revenge for Katzenberg, the company's chief executive. The face of his old Disney foe, Michael Eisner, was used as the model for the ogre himself.

The film was a critical success - Katzenberg said he had turned Disney's old maxim of appealing to the child within the adult on its head. Shrek, with its blend of sarcasm and camp, was aimed at the adult within the child. While Spielberg has been loosening his artistic ties with DreamWorks of late, the company remains a lucrative proposition.

This month, five senior executives at DreamWorks Animation will float part of the studio group they built in a $650m deal, which will ensure them a windfall of almost $45m (£25m).

Katzenberg will collect stock-based compensation of $20.5m.

Much of the success stems from Shrek 2, which has been the third-highest grossing film of all time in the United States. The film broke the single-day box office sales record by grossing $44.8m. This helped return DreamWorks to profitability in the first six months of the year, notching up net income of $119.4m for the first time since 2001. With two more Shreks in the pipeline, it looks like the happy ending for this tale of princesses, ogres and movie moguls is set to continue.

Another reflection of the achievements of the creators of Shrek is the attraction of an eclectic but resolutely star-studded selection of actors from both sides of the Atlantic for voice-overs. From Dame Julie Andrews and John Cleese to Cameron Diaz and Antonio Banderas, a string of familiar voices on both Shrek films have provided the ultimate celebrity endorsement.