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'Over the Hedge' Scores DreamWorks a Strong Q1

2 May, 2007 By: Jessica Wolf

DreamWorks Animation's Over the Hedge overperformed in the first three months of 2007, making a quiet quarter in terms of new product a healthy one for the company.

DreamWorks reported net income of $15.4 million from $93 million in revenue for the quarter ended March 31. That's up from $60.1 million in revenue and $12.3 million in net income for the prior year.

Over the Hedge added $33.1 million in revenue for the quarter, mostly from continued DVD sales. The animated animal adventure has shipped 12.6 million units since its release on DVD in October of 2006.

Other DreamWorks titles in the DVD pipeline continue to perform well, including box office disappointment Flushed Away, which clocked in 3.2 million units shipped since its February 2007 DVD release.

DreamWorks still is not jumping on either the digital-distribution or high-definition disc bandwagon, company CEO Jeffrey Katzenberg told investors in an earnings call this week.

While DreamWorks Animation's distributor Paramount is part of the Comcast video-on-demand test, the company's product will not be included in those day-and-date trials, he said.

“Our product is very unique,” Katzenberg said. “We release titles that are valued most for their multiple plays, so we tend to fall in a slightly different profile than everyone else out there.”

DreamWorks Animation is watching the digital market carefully, and the high-definition one, but neither are big enough at this point to support DreamWorks' product, he said.

“We are a mass market product in the greatest definition of the word, so when you start to talk about a niche market, which is what HD DVD and Blu-ray is right now, it's a little like the tail wagging the dog right now,” Katzenberg said.

Katzenberg did reaffirm DreamWorks Animation's commitment to the burgeoning 3-D theatrical market.

Starting in 2009, every DreamWorks Animation title will be produced and distributed in 3-D, which will add about $10 million to every project. But, Katzenberg said the increased costs are likely to be mitigated by premium ticket prices.

Under the umbrella of its distributor Paramount Pictures, DreamWorks is part of the consortium of studios contributing to the necessary upgrades to theaters for digital distribution, which is required for 3-D films, Katzenberg said.

The way that works is studios are taking the costs they would normally spend on film prints and filtering it into a fund that will go toward upgrading theaters to digital, he said.

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