DreamWorks Animation revenue drops 7%; video games provides boost


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As March release ‘Monsters vs Aliens’ proves a solid peformer, but nowhere near as big as last year’s ‘Kung Fu Panda,’ DreamWorks Animation revenue and net income fell 7% in the second quarter to $132 million and $25.6 million, respectively.

The company got a $24 million benefit in the quarter from a change in its video game licensing deal with Activision that provided extra payments for games based on several previous films, including ‘Monsters vs Aliens.’ Without that amended deal, DreamWorks’ revenue would have been $108 million, down 24%, and net income would have fallen by a third to about $17.1 million.


‘Monsters vs Aliens’ has sold $198 million worth of tickets in the U.S. and Canada and $179 million overseas, making it the first DreamWorks Animation picture to earn less internationally than domestically. The film’s $377 million worldwide gross isn’t enough for DreamWorks to recognize any revenue from distributor Paramount, which gets to keep an 8% distribution fee and recoup all of its spending on marketing.

DreamWorks’ second quarter revenue instead came almost entirely from older films. Last summer’s ‘Kung Fu Panda’ brought in $32.7 million, primarily from domestic pay television; last November’s ‘Madagascar: Escape 2 Africa’ contributed $26.1 million, most of it through international DVD sales. ‘Shrek: the Musical,’ the company’s first Broadway show, brought in $10.1 million.

Due to a scheduling shake-up, DreamWorks Animation is releasing only one film this year, meaning most of its revenue for the rest of 2009 will come from the home video launch of ‘Monsters vs. Aliens’ in September. Next year it will release three movies, starting a schedule of five every two years.

CEO Jeffrey Katzenberg and president Lew Coleman were scheduled to speak on a conference call with analysts shortly after earnings were released.

Update (5:30 P.M.): In a conference call with Wall Street analysts and follow-up interview with The Times, Katzenberg said that DreamWorks is planning to take advantage of the recent success of the Nickelodeon series “The Penguins of Madagascar,” based on its “Madagascar” films, with a licensing program and DVD releases starting next winter.

DreamWorks doesn’t receive any money from the series’ TV run, but splits all revenue for licensing and DVDs 50/50 with Nickelodeon.


It already has two new series based on “Kung Fu Panda” and “Monsters vs. Aliens” in development at Nickelodeon. In addition, it will release two holiday themed specials this fall and two next fall on NBC.

DreamWorks is also starting negotiations soon for a new video game licensing deal that will take effect in 2011, Katzenberg said. The company’s current agreement with Activision expires next summer, and it has a one-off deal with THQ to make a game based on next fall’s “Oobermind.”

-- Ben Fritz