DWA: Light ... and Dark

It's late. But let me leave you with this:

... 'Turbo,' a $100 million movie for us, not considered a success," [Jeffrey] Katzenberg says. "In the real world it's a $300 million hit and a brand. For Netflix, it's a smash hit and their second-most popular kids program behind 'Spongebob.'" ...

"If we made a good movie and it played well we opened to $40-60 million and we got a four multiple on that. And, by the way, 16 for 16 [movies in terms of that success]. I don't know if anyone has ever done that before. And the average box office for those 16 was $520 million. I don't know if anyone has ever done that before. What worked for us was just make a really, really good movie. Storytelling is what matters." ...

But also this:

... DWA has learned the hard way that past hits are no guarantee of future success. Since its spin-off in 2004, the company's revenues, profits, and stock price have been in decline. ...

In 2004, DWA was riding high. Shrek 2 was one of the top-grossing animated films of all time, and the company earned a fantastic return on invested capital (ROIC) of 37%. ... After-tax profit (NOPAT) and ROIC for DWA have been in a steady decline for the past decade, except for 2007. Over this same time, NOPAT has declined by 17% compounded annually, and ROIC has fallen to 4%. ...

I want DreamWorks Animation to succeed. It's making the right moves in diversifying, but have the moves to broaden the corporation's cartoon base come too late in the day? The company had sixteen hits in a row, but it needs another sixteen to climb to the next level, and this needs to happen sooner instead of later.

Dragons 2 will almost certainly be a hit. Penguins of Madagascar will likely do robust business as well, which is why the picture was moved up: animated comedies that are part of a successful franchise have always been winners for DWA and the company is betting it will happen again.

Pretty good bet. But then, DreamWorks could use two blockbusters in a row.