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‘Madagascar 2’ Sales Swell DreamWorks’ Q1

29 Apr, 2009 By: Chris Tribbey

DreamWorks Animation SKG

Recession? What recession?

DreamWorks Animation SKG rode the theatrical success of Monsters vs. Aliens and the DVD success of Madagascar: Escape 2 Africa to its best first quarter ever, reporting profits of $62.3 million, compared to $26.1 million during the same three-month period (ended March 31) in 2008.

“Even in the face of the recession, our titles continue to perform very well in home video,” said CEO Jeffrey Katzenberg in a conference call with investors April 28. “Madagascar 2 was released on DVD and Blu-ray … and was one of the top two titles for the quarter in revenue and sales and rentals combined. Both Madagascar 2 and Kung Fu Panda are among the best-performing titles in the past 12 months.”

President and CFO Lew Coleman said Madagascar 2 has sold 6.7 million units so far, and including international box office receipts, contributed $147.5 million in revenue during the quarter. More than 14 million copies of Kung Fu Panda have been sold worldwide, and 2007’s Bee Movie has seen 9.1 million units sold through the first quarter.

“The remainder of the year’s earnings will be driven by Madagascar 2’s international home video, Monster vs. Aliens' worldwide home video and paid television from our 2008 films,” Coleman said.

COO Ann Daly said DreamWorks DVD content “seems to stand apart from the rest of the market,” and that premium versions of DreamWorks DVD are performing well.

“We believe that no other animated title in recent history has generated a higher percentage of its unit volume from premium priced SKUs than Madagascar 2, which demonstrates the strength of our titles and our brand particularly in this economic climate,” she said, adding that domestic DVD sales account for between 60% and 70% of total new release sales.

Katzenberg said DreamWorks’ strong home video sales prove that his company’s titles are sellthrough mainstays, and not big for the rental or digital distribution markets.

“People are not interested in renting our titles,” Katzenberg said. “They have never been interested. It is a very small part of our business. They either don’t want them or they want to own them.

“When you look at the percentage of our business in terms of rental and other downloads through Apple and Netflix … it is tiny compared to the rest of the industry because they know that if they want it, they want it in order to be able to run it 50 or 100 times and to be able to have portability.”

As for Monsters vs. Aliens on DVD and Blu-ray Disc, Katzenberg said DreamWorks has “a couple of fun ideas up [their] sleeve” when it comes to bringing the 3-D film into the home. Nearly 60% of the worldwide box office from Monsters vs. Aliens came from the 3-D version.

“Some have expressed concern that this higher quality theatrical experience will somehow adversely impact consumers’ desire to own the title, or that 3-D might make the DVD less attractive,” he said. “People who saw it in 3-D have the same level of interest in owning the DVD as those who saw it in traditional CG. Additionally, more than half of the consumers who have purchased our DVDs over the last three years have actually never seen the film in the theater to begin with.

“We do not have any reason to believe today that the introduction of 3-D will alter the dynamics of our home video business.”

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