Yesterday, DreamWorks Animation reported that profits were down a little bit:
For the three months ended March 31, 2011, our revenue was $108.0 million, a decrease of $54.1 million, or 33.4%, as compared to $162.1 million for the three months ended March 31, 2010. The lack of a theatrical release in the first quarter of 2011 led to lower revenues in the first quarter of 2011 when compared to the same period of the prior year, which benefited from revenues resulting from our first quarter 2010 release, How to Train Your Dragon. ...
The L.A. Times has its own ideas of causes for the decline:
... "Megamind," which was released in November and misfired at the box office, contributed $18.1 million in the quarter, mostly from home video sales. ...
I've got my own thoughts on the subject. When you're a stand-alone company, it's not enough to have two hit animated features during a twelve-month. You need to hammer all three out of the park. I found Megamind enjoyable, but I don't think that stylized super hero comedies in American settings travel well outside U.S. borders these days. (Truth to tell, this one under-performed stateside.)
Regardless, when a picture doesn't fully connect with audiences, there's not much you can do about it except ride the thin theatrical grosses to the next theatrical presentation. Mr. Katzenberg says the feature will end in profits, even as he wonders aloud about others.
... Katzenberg remarked that some animated movies released this year have performed poorly, even though their studios' publicity departments would have you believe otherwise. He particularly referred to Paramount's Rango, which has so far earned $237 million worldwide. ...
I understand that there's gamesmanship going on here, since DreamWorks Animation also releases through Paramount, and the company's contract with Viacom is up in a couple of years, and jockeying for advantage by pointing out an oppenent's weakness is a long-time -- and honored -- Hollywood custom.
As I've noted before, smaller, stand-alone entertainment companies thrive by having hits. A couple of clunkers and you're on life-support. Pixar never faced the problem of making a bomb, and now that the Emeryville studio is part of the Mouse's Mother ship, the question of survival is off the table. DreamWorks Animation is the only larger animation house that is not part of one of our fine, entertainment conglomerates. It faces threats not only from under-performers at the world box office, but declining DVD sales and revenues. On the bright side, DWA sits atop a valuable and growing library of successful films, but it will need to keep turning out the hits and expanding its markets if it wants to stay clear of Time-Warner, Viacom, or some other voracious multi-national*.
* I think that DreamWorks Animation would be just fine with the right kind of buyout, but that's the classical cynic in me talking. Jeffrey K. says he wants to stay independent, and I take him at his word.
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6 comments:
I don't know anything about business, so pardon my ignorance. But, how does Dreamworks stay afloat by paying their employee's well, great benefits, spending so much on making and marketing these films, when they only bring in so little money in s three month period? And what is the reason why Jeffery wants to stay independent? Is it because he doesn't want to have to put up with anybody else when it comes to making decisions?
But, how does Dreamworks stay afloat by paying their employee's well, great benefits, spending so much on making and marketing these films, when they only bring in so little money in s three month period?
If I remember correctly, Dreamworks does not directly pay for its artists' benefits. They contribute to the MPIPHP along with other studios, and the MPIPHP handles the artists' benefits.
Read this book:
http://www.amazon.com/Hollywood-Economist-Hidden-Financial-Reality/dp/1933633840/ref=sr_1_2?s=books&ie=UTF8&qid=1303960324&sr=1-2
Lots of foreign financing, expensive films to make (VERY expensive), and lack of ancillary merchandise (you don't see many DW toys out there), and first dollar gross participants of big named stars (giant paychecks AND percentages of the movie and dvd--3 major stars alone for the shrek cartoons that eat into up to 20% of the profits).
Thanks for the link to the book.
Any stand alone company deals with the same stuff. From my view, DreamWorks remains in business, produces a decent product and keeps their artists employed. That alone is one helluva big deal. Jeffrey has already managed to confound the naysayers who said he wouldn’t last five years.
We should do as well.
It is amazing when you think about how much it costs Dreamworks to just operate every week.
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