The company is broadening its strategy to avoid an over-reliance on box office
When “Turbo” grossed a middling $31 million during its opening weekend in July, it was immediately branded a misfire and had some analysts projecting DreamWorks Animation would lose money on the movie.
DreamWorks Animation CEO Jeffrey Katzenberg expressed his disappointment with its performance on the company's subsequent earnings call, blaming a crowded summer of animation.
Yet Katzenberg assured investors the film would still be profitable, thanks to the overseas box office.
Three months later, Katzenberg and his colleagues are sticking by that projection after a strong run overseas, and this time they are adding in new reasons for its success – DVDs, consumer products and TV.
“We believe ‘Turbo’ is a profitable film,” CFO Lew Coleman said on the company's earnings call Tuesday. “That assumes a successful performance in home video and consumer products.”
When pressed by an analyst, Katzenberg said the movie should come out ahead because of lower costs of production, consumer products revenues, the company's deal with Netflix for a “Turbo” TV show and the timing of its DVD release during the holiday gift-buying season.
When “Turbo” arrived in theaters, DreamWorks Animation already had a mobile game, toys and a TV show in stores or in the works. And if that was enough to turn a profit despite a disappointing domestic box office run, that could bode well for the company's future releases.
The company has intentionally broadened it's strategy to avoid being overly dependent on the box office fortunes of its films. DreamWorks Animation announced Tuesday that its financial reports will now fall into four categories – film, consumer products, TV and other.
While still in the early stages of making TV, that change indicates the growing importance of TV to DreamWorks Animation's future.
Here are two more things we learned about the company on Tuesday:
Home Entertainment Revenue Is Up Under Fox
Fox has released its movies electronically two weeks before the DVDs hit stores for a year now, and that strategy has benefited DreamWorks Animation in its first DVD release with its new distributor – “The Croods.”
Paramount previously distributed DreamWorks Animation title hon home entertainment.
DreamWorks said on Tuesday that “The Croods” generated 15 percent more revenue from digital sales than its last two titles and more than any of its other titles at this time in its release.
Expect a Lot More Toys
DreamWorks Animation hired Michael Francis to handle branding and consumer products late last year, and Katzenberg said on Tuesday the company would have a major consumer products campaign for one release every year.
“That's a change,” Katzenberg said. “If you look at the category, it's a growing and a much more important part of DreamWorks.”
There will be all sorts of toys and games with “How to Train Your Dragon 2” next year and the same goes for “B.O.O.” the year after. Come 2016, DreamWorks Animation could mount major campaigns for two movies – another “Dragon” and their “Trolls” movie, which is already based on a toyline.
Get ready for a lot of stuffed animals and plastic dragons.