DreamWorks Animation Posts Q1 Profit30 Apr, 2013 By: Chris Tribbey
The home entertainment performance of Rise of the Guardians helped DreamWorks Animation post a first-quarter profit of $5.6 million, the studio reported April 30.
Just a few months after the studio reported a fourth-quarter loss of $82.7 million (including a $87 million write-down of film costs for Guardians, which earned $304 million at the worldwide box office), executives credited the studio’s first-quarter rebound to better-than-expected disc and digital sales.
“Guardians’ performance is another positive indication that the overall home entertainment market — particularly for animated and family content — continues to show signs of strength,” said Ann Daly, chief operating officer of DreamWorks Animation, during a conference call with investors.
Guardians contributed $9.6 million in revenue for the quarter (ended March 31), with 3.2 million home entertainment units sold worldwide. Released on disc March 12, Rise of the Guardians was a top seller during its first week in the home entertainment market, Daly said, and it’s already tracking as one of the most profitable home entertainment releases for the studio since Madagascar: Escape 2 Africa in early 2009.
DreamWorks Animation and distributor Paramount offered Guardians via digital outlets Feb. 26, weeks before the disc release, and “we saw a positive overall result in both transactions and margin as a result of that,” Daly said. Via Paramount, DreamWorks Animation offered four SKUs for the title (DVD, Blu-ray Disc combo pack, 3D Blu-ray combo pack and a limited edition Easter gift pack).
“… We are seeing [a] move to higher value [prodct], both in the form of Blu-ray and some of the premium products that we are putting in place,” Daly said. “That definitely contributed. The percentage of Blu-ray sales were higher than we’ve seen in the past, as well as the percentage of premium product configurations that we put in the market on Guardians.”
Daly added that electronic sell-through (EST) transactions for Guardians “saw more sell-through transactions in this time frame than any other DreamWorks Animation film.”
Daly said Guardians was “a much better film than what the box office indicated” and “consumers had heard a lot about the film but had not seen it.” Solid retail support for the home entertainment release, combined with a good marketing plan by Paramount, helped make the home entertainment release successful, she added.
“New titles released into the marketplace are converting at a better ratio compared to their box office [performance],” Daly said. “Even with the emergence of the digital format, we're seeing that consumers are not walking away from physical, even as they participate in the emerging digital space.
“ … In general, we're seeing some improvement in purchasing of DVDs, as well as in electronic sell-through,” Daly said. “[With] Guardians, we're seeing a continuation of our digital transactions, experiencing growth compared to what we've seen on [similar] box office titles.”
Overall, DreamWorks Animation’s revenue for the first quarter of 2013 was down to $134.6 million, compared with $136.1 million during the first quarter of 2012.
The studio’s latest release — The Croods — brought in nearly $480 million at the worldwide box office, but only accounted for $4 million in revenue to the quarter. It was home entertainment that helped push DreamWorks Animation into the black, with Madagascar 3: Europe's Most Wanted contributing $22.8 million (7.2 million home entertainment units sold), Puss In Boots contributing $7.5 million (6.8 million units sold) and library titles contributing $41.4 million, according to the studio.
TV series and live theatrical properties chipped in $20.9 million of revenue for the quarter.
“This year is off to an outstanding start for DreamWorks Animation,” said DreamWorks Animation CEO Jeffrey Katzenberg. “The Croods has reached a blockbuster level of nearly $480 million at the worldwide box office and is well on its way to becoming the No. 1 movie released during the first four months of 2013.”