Saturday, May 10, 2014

DWA's Future

There will be ups ... and downs.

... Since its inception two decades ago, the Glendale company has evolved from a fledgling studio into a $700-million-a-year multimedia powerhouse with a distinct culture and expanding global footprint.

But Katzenberg is now under pressure. DreamWorks Animation is facing rising competition and restless investors after a string of box-office misfires.

The company recently reported a $43-million loss in the first quarter after taking a $57-million write-down for "Mr. Peabody & Sherman," marking the third write-down in less than two years for the studio. ...

DreamWorks has watched as a more crowded field of competitors has muscled in on the lucrative animation business. Universal Pictures and Warner Bros. have scored some surprise box-office hits with the "Despicable Me" films and "The Lego Movie." And DreamWorks' next-door neighbor and arch rival, Walt Disney Studios, is on a roll in the wake of "Frozen." ...

"Before it wasn't difficult to a make a lot of money in the animated field," said Doug Creutz, a senior analyst with Cowen and Co. "Now, the competition is hugely intensive.... In a way [Katzenberg] was a victim of his own success. People saw how much money he was making and said. 'Hey, we can do that.'" ...

It's really more basic than that.

Having a business model that says "Every big-budget feature shall be a HIT" isn't sustainable. But saying Katzenberg is the "victim of his own success" is flapdoodle. Lots of companies make pictures that don't perform. Just ask the producers of Igor, Space Chimps, Legends of Oz and Quest For Camelot.

DreamWorks Animation had sixteen money-spinners in a row, but the chance was always there that it would hit some box office wind turbulence. In 2013 and 2014, it finally did. Happily, DWA is now expanding its reach into amusement parks, hybrid features, and television.

It was a move that was bound to come. Relying exclusively on theatrical features for sustenance and growth was paying smaller and smaller dividends.


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