Dreamworks Animation: What Went Wrong?

[Goffe]

why Dreamworks films cost so much and look really bad? Mr. Peabody & Sherman looked like a 70m movie 

Edited November 15, 2014 by Goffe R Swanson

[Melvin Frohike]

I think all CEOS of companies like this has huge egos, it comes with the territory.

True, but some can still face reality and get reasonable deals done while others cannot.

 

I do think DWA is unaffordable to buyers at the moment but once the stock price is lower enough and Katzenberg realises he needs to step aside it'll be swooped up pretty quickly.

That's right, if/when DWA is on the verge of collapse, then maybe it'll finally sink in. In the meantime, Katzenberg will firmly believe that he and DWA have a lot more cachet, clout, and leverage than they actually, realistically do. Driving a hard bargain is one thing, but being delusional and impossible to work with is another.

[Sir Tiki]

Global software major Infosys has entered into a strategic partnership with DreamWorks Animation SKG to develop new engineering solutions.

 

"The tie-up envisages developing next generation technologies with our global talent pool in cloud, big data, Java and open source platforms for DreamWorks," the IT bellwether said in a statement in Bengaluru on Saturday.

 

The US-based digital studio creates animated feature films, television programmes and online virtual worlds.

 

Infosys chief executive Vishal Sikka said the company had a market-leading record of delivering critical engineering services to innovative tech firms like DreamWorks.

 

"Combination of our expertise in delivering engineering services and technologies has huge potential for wider use in the world around us," Sikka said on the occasion.

 

Lauding the tie-up between two major firms, DreamWorks chief executive Jeffrey Katzenberg said as a world leader in enterprise solutions, Infosys was the right partner to develop new technology on a large scale.

 

The two-decade-old studio co-founded by Katzenberg with renowned Hollywood film maker Steven Spielberg, has rolled out 29 feature films in animation, which generated $12 billion revenue worldwide till August 2014.

 

http://businesstoday.intoday.in/story/infosys-dreamworks-animation-steven-spielberg-java/1/212388.html

[Godzilla]

How To Train Your Dragon 2 breaks records for Fox in Home Video sales.

 

http://variety.com/2014/film/news/how-to-train-your-dragon-2-breaks-homevideo-sales-records-for-fox-dreamworks-animation-1201358466/

 

Yay!

 

 

 

 

[Sir Tiki]

Some more behind-the-scenes info in regards to the DreamWorks-Hasbro merger, back when it was still on:

 

Does anybody want to see a movie about Furbies? That is essentially what’s driving acquisition talks between toymaker Hasbro (HAS) and DreamWorks Animation (DWA), the movie production company behind such blockbuster franchises as Shrek and Madagascar.

 

The business thesis is clear enough. Hasbro will be able to make more toys out of movies, while DreamWorks will make more movies out of toys. The puzzling thing is that both of those things already happen just fine. Thanks to licensing fees, there’s a very liquid market between cartoons and plastic figurines. Hasbro’s Transformers are in theaters all the time. And there is no shortage of Shrek at the local Toys “R” Us.

 

So why bother with all the M&A bankers and a formal merger? It’s not about the hits—it’s about the misses, something both companies know all about. At DreamWorks, for every Shrek is a Turbo, the snail-racing movie that opened to a dismal $21 million in U.S. box office revenue last year. Hasbro, meanwhile, has a sad assembly line cranking out Care Bears somewhere, while its My Little Ponies are flying off of shelves.

 

Full article here:

 

http://www.businessweek.com/articles/2014-11-13/behind-hasbro-dreamworks-merger-talks-a-closet-full-of-misfit-toys

[tupek]

How To Train Your Dragon 2 breaks records for Fox in Home Video sales.

http://variety.com/2014/film/news/how-to-train-your-dragon-2-breaks-homevideo-sales-records-for-fox-dreamworks-animation-1201358466/

Yay!

A record for Fox. But those are poor sales

[dudalb]

A record for Fox. But those are poor sales

And the average profit per video is less then the average profit per ticket sold. Video sales will not be enugh to take it out of the underperforming category.

[Jonwo]

I think the reason Dreamworks Animation has been struggling is that Jeffrey Katzenberg has building it up as the next Disney and he forgets that Disney started diversifying from animated films with films like Song of the South, Treasure Island etc I think had Disney had stuck with animation, they wouldn't have survived as long as it has. 

[Melvin Frohike]

I think the reason Dreamworks Animation has been struggling is that Jeffrey Katzenberg has building it up as the next Disney and he forgets that Disney started diversifying from animated films with films like Song of the South, Treasure Island etc I think had Disney had stuck with animation, they wouldn't have survived as long as it has.

Well, Katzenberg has been trying to diversify DWA with theme park and Internet-based acquisitions and projects. Disney, too, struggled for some stretches in its history, but the difference is that Walt was willing to bet the whole company on things that many were convinced would fail, and then succeeded with them big-time. Animated features were one example, and DWA in analogy took off when CGI movies became a big success, but Walt was then able to follow up some years later with Disneyland, for which he personally took out a second mortgage on his house to help fund (Disney couldn't afford the steam trains and steamboat initially, so Walt funded them himself and sold them to Disney later, undoubtedly for a profit ). Of course, it was easier to find new things to do back then, and few today would take such bold risks. I mean, if Snow White and the Seven Dwarfs or Disneyland had failed, then that would likely have been the end of Disney.

[Jonwo]

Well, Katzenberg has been trying to diversify DWA with theme park and Internet-based acquisitions and projects. Disney, too, struggled for some stretches in its history, but the difference is that Walt was willing to bet the whole company on things that many were convinced would fail, and then succeeded with them big-time. Animated features were one example, and DWA in analogy took off when CGI movies became a big success, but Walt was then able to follow up some years later with Disneyland, for which he personally took out a second mortgage on his house to help fund (Disney couldn't afford the steam trains and steamboat initially, so Walt funded them himself and sold them to Disney later, undoubtedly for a profit ). Of course, it was easier to find new things to do back then, and few today would take such bold risks. I mean, if Snow White and the Seven Dwarfs or Disneyland had failed, then that would likely have been the end of Disney.

 

I'm not convinced a Dreamworks theme park could be successful considering Disney and Universal Studios have the stronghold on theme parks in the US and overseas. IMO DWA needs to evolve and perhaps broadening their slate from just animated films and TV series to live action films and TV but it may be too late for that. 

[iEye]

Interesting!

 

http://www.hollywoodreporter.com/news/dreamworks-animation-deal-talks-sabotaged-750094

[Sir Tiki]

Interesting!

 

http://www.hollywoodreporter.com/news/dreamworks-animation-deal-talks-sabotaged-750094

 

That is interesting. Makes sense, both leaks seemed to happen right as DreamWorks and SoftBank/Hasbro were about to seal the deal.

 

So there's someone within DWA, specifically someone higher-up who would be privy to such information, who's purposefully leaking this info to the press for some unknown reason.

[Jonwo]

That is interesting. Makes sense, both leaks seemed to happen right as DreamWorks and SoftBank/Hasbro were about to seal the deal.

 

So there's someone within DWA, specifically someone higher-up who would be privy to such information, who's purposefully leaking this info to the press for some unknown reason.

 

Someone at DWA must be pretty pissed at Katzenberg for them to leak the info about any potential buyout. Maybe it's someone who wants to unsurp  him as leader.

[dudalb]

And now Dreamworks has pulled B.O.O, which they meant to be their 2015 Summer Tentpole movie,from it's June 2015 date.

The bad news just does not stop for Dreamworks.

[Melvin Frohike]

I'm not convinced a Dreamworks theme park could be successful considering Disney and Universal Studios have the stronghold on theme parks in the US and overseas.

That's what I meant about it being harder to do new things--they've been done before and there are big, strong competitors. The same goes for feature animation these days, too--DWA was once very strong, but obviously they've been struggling of late.

Continuing the parallel with Disney back when they were a small, independent animation studio, Disney needed a mega-hit every so often themselves in order to stay financially healthy and fund growth, and fortunately that's what they got, but DWA hasn't gotten theirs in a while. If, for example, DWA risked everything to build a different kind of theme park (or something we haven't seen before or thought of) that was so compelling that it became a huge success in the face of all of the doubters, like Disney did, then everything would be great for them, but what are the chances of that happening? It should be clear now why Katzenberg practically pleaded (to the public, to the wind, to God, to whoever or whatever would listen) for HTTYD 2 to be a billion-dollar mega-hit (nobody says this in public unless they're desperate)--DWA really, really needed this, and nothing else on their slate seemed nearly as likely to accomplish it. But it didn't happen, so out went the pink slips and in came the prospect of a sale (which, too, hasn't happened, at least yet).

 

IMO DWA needs to evolve and perhaps broadening their slate from just animated films and TV series to live action films and TV but it may be too late for that.

Well, they used to have a live-action studio attached to their hip, of course. But that ship has sailed, and now they're kind of stuck. Disney has been there before, too, but they had Walt, all the talent that he attracted, his brother Roy who somehow put together the crazy financing that was needed (people didn't trust Walt, but they trusted Roy), and the ability to make something truly new and compelling every so often. In addition, the risks that Walt took were considered suicidal even back in the day, let alone this day and age. Frankly, Jeffrey Katzenberg is no Walt Disney (no matter what he thinks), and DWA is no modern-day equivalent of the old independent Disney studio (which nevertheless could have gone under on a number of occasions, but was fortunate enough to survive and eventually thrive).

 

 

That is interesting. Makes sense, both leaks seemed to happen right as DreamWorks and SoftBank/Hasbro were about to seal the deal.

Maybe there's a rat working for the mouse, as it were.

[Jonwo]

That's what I meant about it being harder to do new things--they've been done before and there are big, strong competitors. The same goes for feature animation these days, too--DWA was once very strong, but obviously they've been struggling of late.

Continuing the parallel with Disney back when they were a small, independent animation studio, Disney needed a mega-hit every so often themselves in order to stay financially healthy and fund growth, and fortunately that's what they got, but DWA hasn't gotten theirs in a while. If, for example, DWA risked everything to build a different kind of theme park (or something we haven't seen before or thought of) that was so compelling that it became a huge success in the face of all of the doubters, like Disney did, then everything would be great for them, but what are the chances of that happening? It should be clear now why Katzenberg practically pleaded (to the public, to the wind, to God, to whoever or whatever would listen) for HTTYD 2 to be a billion-dollar mega-hit (nobody says this in public unless they're desperate)--DWA really, really needed this, and nothing else on their slate seemed nearly as likely to accomplish it. But it didn't happen, so out went the pink slips and in came the prospect of a sale (which, too, hasn't happened, at least yet).

Well, they used to have a live-action studio attached to their hip, of course. But that ship has sailed, and now they're kind of stuck. Disney has been there before, too, but they had Walt, all the talent that he attracted, his brother Roy who somehow put together the crazy financing that was needed (people didn't trust Walt, but they trusted Roy), and the ability to make something truly new and compelling every so often. In addition, the risks that Walt took were considered suicidal even back in the day, let alone this day and age. Frankly, Jeffrey Katzenberg is no Walt Disney (no matter what he thinks), and DWA is no modern-day equivalent of the old independent Disney studio (which nevertheless could have gone under on a number of occasions, but was fortunate enough to survive and eventually thrive).

 

The difference is that Disney was the only game in town when it came to animated films and a film that didn't do so hot was rereleased every few years. It was a surprise that neither none of the other studios considered releasing animated films at the time. The reason DWA is struggling is because they got greedy and thinking they could release more animated films and screw the competition rather and the competition has been able to craft their own identity and have a success. 

 

Dreamworks Animation may be struggling but that's nothing compared to Dreamworks SKG which only has had three big hits since they're relaunched and one of them was co-financed by Fox so they didn't reap all the benefit. SKG is in a worse position because their film library before 2008 belongs to Paramount. 

Edited November 20, 2014 by Jonwo

[Sir Tiki]

Here we go:

 

Strategy of DreamWorks Animation CEO Jeffrey Katzenberg is Questioned

 

It has been a rough month for Jeffrey Katzenberg.

 

In the space of a few weeks, the mogul and co-founder of DreamWorks Animation SKG Inc. has been rebuffed by three high-profile potential buyers: Japanese telecommunications giant SoftBank Corp., Rupert Murdoch's 21st Century Fox and Hasbro Inc.

 

Katzenberg, known for driving a hard bargain, may have overplayed his hand. The studio executive was said to be pursuing a deal worth about $3 billion — about $1 billion above the company's current market value. In the case of Hasbro, investors also balked at the idea of getting into the volatile movie business and the company risked alienating its main licensing partner, Walt Disney Co.

 

The collapse of deal talks left some Wall Street analysts wondering what Katzenberg's strategy is.

 

"It does look desperate," said Eric Wold, a media analyst with B. Riley & Co. "I'm sure [Katzenberg] can find something if he keeps looking around, but I don't think these actions are going to help the valuations."

 

The succession of failed deals undermined DreamWorks Animation's stock price, sending it on a roller coaster ride since late September. Investors sent shares up 26% when SoftBank appeared poised to make an acquisition, before the stock came crashing back down again.

 

The biggest volatility came Monday after Hasbro backed out. Shares plunged 14% in the biggest one-day drop since the studio went public in 2004. The stock closed Wednesday at $22.70.

 

But, even before Wall Street began speculating about a new buyer for DreamWorks Animation, the stock had already been suffering. Shares have fallen 36% this year as the company's financials have been squeezed by box-office misfires.

 

"This is a company that is facing major operational challenges," said Vasily Karasyov, an analyst with Sterne Agee.

 

The failed talks mark a rare and humbling moment for Katzenberg, a legendary figure in Hollywood.

 

Full article here:

 

http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-dreamworks-ceo-katzenberg-future-20141120-story.html#page=1

Edited November 20, 2014 by Sir Tiki

[Melvin Frohike]

The difference is that Disney was the only game in town when it came to animated films and a film that didn't do so hot was rereleased every few years.

Yes, the "landscape" of the business was certainly different in a number of ways (what I meant by less competition earlier), but I still don't see Katzenberg as being equivalent to Walt and DWA as being equivalent to Disney back in the day, so I wanted to emphasize that. They're analogous at best, and that's largely a result of Katzenberg trying to walk in Walt's footsteps.

 

It was a surprise that neither none of the other studios considered releasing animated films at the time.

They got burned trying early on (specifically Fleischer Studios and their distributor Paramount), and saw how even Disney often struggled to survive later on, so they stuck with what they knew and were comfortable with. There were a number of subsequent attempts, but none of them took off, and even Disney was eventually forced to reduce costs. The Disney Renaissance era then told the same story with one studio after another trying to replicate WDAS' success and failing miserably until Toy Story came along. Then DWA tried with limited success until Shrek pretty much changed the whole market.

 

The reason DWA is struggling is because they got greedy and thinking they could release more animated films and screw the competition rather and the competition has been able to craft their own identity and have a success.

The way I look at it is that DWA tried to grow by making animated features at a faster pace (with a bigger staff), but unfortunately for them their reach exceeded their grasp--Katzenberg might have been overconfident in the filmmakers they had (they have some very good ones, but not enough), the public's continued interest in the types of movies they were making, and his own choices in which projects to give the green light. When he finally realized this, at least in some way, he suddenly announced in public that movies were not a growth business (just a source of IP, I guess), and redoubled his efforts to diversify, which many would argue was late in coming.

To be fair, I can sort of see why he fancies himself the second-coming of Walt Disney. After all, he presided over the Disney Renaissance (although the directors of The Little Mermaid struggled to get him to green-light this project and then later to allow them to keep "Part of Your World" in the movie), as well as supported the innovative (in terms of medium) Toy Story (although Pixar had to battle against him, too, to get the movie done the way they wanted). One major problem, however, is that he's still not really Walt Disney, of course, and strangely he's not really the Jeffrey Katzenberg who helped build Disney into a global media conglomerate from the mid-1980s to the mid-1990s, either. He seems more overconfident, much less devoted to building a positive brand and identity by focusing on quality, and slower to respond to what's happening around him.

[dudalb]

I am beginning to see why Spileberg decided to wash his hands of Katzenberg  a long ago.

Fact is Katzenberg has made a lot of mistakes. One biggie was his attempts to have Dreamworks distribute their own films,,an expensive failure. He should have known how expensive film distribution can be.. Now ironically enough, DWA distributes through the Disney distribution company.....

[Melvin Frohike]

I am beginning to see why Spileberg decided to wash his hands of Katzenberg  a long ago.

Fact is Katzenberg has made a lot of mistakes.

That pretty much boils it down. And I think part of this is that for whatever reasons he's become even more obstinate and delusional over time, which is a potent combination. The thing about truth and reality, though, is that they can be pretty stubborn, too, and he'd better wake up sooner rather than later for DWA's sake as well as his own.

 

Now ironically enough, DWA distributes through the Disney distribution company.....

Isn't it the separate live-action DreamWorks that distributes through Disney? DWA currently has a distribution deal with Fox, and I seriously doubt that Katzenberg would want to deal with Disney and vice versa (bad blood and all)--the only way that DWA would distribute through Disney is if Disney bought DWA, and I seriously doubt that this would happen, either.

Edited November 20, 2014 by Melvin Frohike