As happens from time to time, the top-kick for DreamWorks Animation (one Jeffrey Katzenberg) briefs stock analysts and financial writers what's going on with the twenty-year-old company. Here's his report for the three months just gone by:
Jeffrey K.: In January we announced a strategic plan designed to ensure DreamWorks Animation was in the best possible position to succeed over the long term, not only from a creative standpoint, but also in terms of the company's overall financial performance.
On the creative side, we appointed new leadership in our feature animation business and committed to a series of changes in our creative process including resizing the business to focus our talent and resources on producing two feature films per year instead of three. Nine months later, we're seeing higher levels of creativity, collaboration, team work, and cost efficiencies. ...
The highlight of the quarter was Home's strong performance in the home entertainment market, particularly across digital platforms. In fact Home has sold the highest number of digital sell-through transactions worldwide of any DWA title. It is also the second highest selling family film in the domestic home entertainment market released to date this year. ...
The watchword here is optimism dosed with caution. To wit:
Looking ahead to our 2016 feature film slate, Kung Fu Panda 3 will be released on January 29, both domestically and here in China. Early previews have been successful and well received by audiences. ... I do want to highlight that we have a non-traditional release window for an animated film in the U.S. market and currency headwinds from a strong dollar will continue to weigh on international performance. ...
Jeffrey doesn't want to crank expectations up too high. (Who would?) He goes on:
Turning now to our Television segment where Common Sense Media recently named our original series Dragons: Race to the Edge and Dinotrux among the best shows on TV for families with kids ages 2 to 17 years. This distinction continues to highlight the high quality of our television programming and strength of our brand. ... Consumer Products [is] where several initiatives around location-based entertainment continue to reinforce the strength and value of our brands globally, this quarter we extended the terms of our license with regional theme parks, Beto Carrero World in Brazil and Dreamworld in Australia. ...
In our New Media segment, the team at AwesomenessTV continues its success in producing and monetizing quality program across multiple delivery platforms, screens, and mediums. The ATV team is off to a solid start delivering content for Verizon's go90. Only 20 days into the platform's launch and without any advertising and promotional activity around the go90 product, Verizon highlighted ATV's Top Five Live and Betch as two exclusive pieces of content that are gaining early traction with millennials and generating encouraging revisits to their platform. ...
So the diversification thing appears to be paying off, and if the latest Kung Fu Panda performs well, coupled with the musical Trolls near the end of next year, DWA should be on firmer footing.
Add On: Seeking Alpha explains why they are optimistic about DWA's forward-looking prospects>
* DreamWorks Animation had a very rocky 2014 due to the cyclical nature of the film business, but it has shown signs of recovering its financial footing.
* The company has implemented a restructuring plan that diversifies the company's revenue streams and de-emphasizes the importance of hit-or-miss feature films.
* With several major new projects scheduled to add to the company's revenues over the next two years, DreamWorks Animation is regaining its financial health.
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