Wallace and Gromit split with Hollywood partner

Nick Park's company, Aardman Animation, is severing ties with its Hollywood partner, DreamWorks Animation, following the box-office disappointment of their last two joint ventures, The Curse of the Were-Rabbit and Flushed Away.

The split had been widely anticipated, since DreamWorks Animation is now more interested in computer-generated features than in Park's trademark stop-motion techniques.

DreamWorks, run by the former Walt Disney studio chief Jeffrey Katzenberg and quoted publicly on the New York Stock Exchange, is also in a considerable cash crunch in the run-up to the much-anticipated release of Shrek 3 in the summer.

Aardman, best known for its Wallace and Gromit productions, is now expected to set up a new deal with another Hollywood studio. The fate of a film it had been working on with DreamWorks over the past couple of years, Crood Awakening, based on a script by John Cleese, was not immediately clear.

"Today, DreamWorks Animation is focused on producing two computer animated movies per year, with a full film slate laid out into 2010," Mr Katzenberg said in a statement.

"While I will always be a fan and an admirer of Aardman's work, our different business goals no longer support each other."

A spokesman for Aardman echoed the same line: "It [DreamWorks] is now dedicated to making two CG movies a year and we want to and will continue to make 3D model movies."

The two companies were originally committed to making five full-length features together but will now part ways having completed just three.

Tensions between the two began with the box-office performance of the first full-length Wallace and Gromit feature, Curse of the Were-Rabbit. The film was warmly received and won last year's Oscar for best animated feature, but failed to recoup the considerable investment DreamWorks made in it, leading to a plunge in profits for the fourth quarter of 2005. The damage was compounded by Flushed Away, a computer-generated production about a pampered rat that plunged unexpectedly into the sewers, which cost DreamWorks more than $140m (£72m) but recouped only one-third of that at the box office.

Aardman and DreamWorks first joined forces in 1999, and scored a bona fide hit with their first joint effort, Chicken Run. That, though, was before DreamWorks Animation was spun off and the rest of DreamWorks effectively wound up as a fully functioning studio in 2004. Mr Katzenberg took the animation division public, largely on the strength of the monster success of the Shrek franchise, but like many animation executives has experienced major highs and lows.

Mr Katzenberg's decision to focus on CGI, or computer-generated, productions has caused considerable tensions with Aardman. A claymation project called The Tortoise and The Hare was notoriously bogged down, ostensibly over script disagreements.

Aardman is likely to take that production, and others, to whatever new home it can find in Hollywood.

"We've enjoyed a hugely successful and creative relationship with Jeffrey and DreamWorks Animation," Aardman's co-owners, Peter Lord and David Sproxton, said in a statement. "But both companies are aware that our ambitions have moved apart, and it feels like the right time to move on. Aardman has an ambitious slate of feature film projects in development and we will announce our future production and distribution plans shortly."