DreamWorks’ Daly: Studio is Surviving the Recession11 Dec, 2008 By: Chris Tribbey
DreamWorks Animation SKG COO Ann Daly, speaking at the company’s analyst and investor day Dec. 11, called the decline in home entertainment “dramatic,” but stressed that her company is weathering the recession better than others.
“We are less reliant on post-theatrical [revenue] than usual,” she said. “The current recession and the lack of consumer spending is having an effect. [Internet video and VOD have] offset some of the decline in sellthrough this holiday season.”
DreamWorks’ internal numbers have DVD sales down 6% thus far in 2008, with new theatrical release revenue down a staggering 20% since the start of the year, Daly said. November’s release of Kung Fu Panda (more than 10 million units worldwide) and higher SRPs for new releases compared to the industry average ($21 vs. $16) has kept the company in good shape, she added.
Of all DreamWorks home entertainment sellthrough revenue this year, 25% has come from premium product, such as Blu-ray Disc and titles with multiple DVDs.
Daly also shared that Secrets of the Furious Five — the DVD bonus title that came with the Kung Fu Panda release — would be released as its own for DVD before Easter, and will see a broadcast run starting Feb. 26. DreamWorks is pegging 2009 revenue from new broadcast ventures to rest between $40 million and $60 million.
Shrek the Halls (Nov. 4) should hit 1.5 million worldwide units shipped by the end of the year, and revenue from the title is being split evenly with ABC, Daly said.
Addressing a question regarding the litigation by Redbox against Universal Studios Home Entertainment over its proposed rental terms for kiosk operators, Daly said DreamWorks’ films are purchased more often than rented, making rental operators in general less of a concern for the company.
On the 3-D side, CEO Jeffrey Katzenberg said it costs about 85 cents per pair of glasses when DreamWorks Animation uses RealD for theatrical 3-D releases. He predicted 3-D in the home would be led by TV broadcasts at first.
“People are driven away [from theaters] by the exceptional experience you can get inside the home,” he said. “[Theatrical 3-D] is a chance to bring them back.”
DreamWorks Animation announced in October a 21% drop in third-quarter profits compared to the same period last year, down to $37.4 million. In late trading Dec. 11, shares of DreamWorks stock were down about 4%, to $23.