DreamWorks Animation chief Jeffrey Katzenberg and his top lieutenants touted 3-D as a tonic for Hollywood during a three-hour pitch to Wall Street analysts Thursday.
Headlines were few, but attendees got a revealing tour of the company’s balance sheet as well as an early look at scenes from March release “Monsters vs. Aliens.”
Katzenberg announced another “Madagascar” installment is in the works, aiming for a 2012 release. He also said the hurdles to exhibs converting to digital and 3-D should be cleared by the end of the first quarter and conceded to some opening-night jitters ahead of Sunday’s bow for “Shrek the Musical.”
The recession and retail instability is hurting the company’s homevid numbers, chief operating officer Ann Daly affirmed. “Kung Fu Panda” will ship about 10 million units, which makes it a top earner overall but shy of earlier projections in the range of 12 million.
Homevid sell-through revenue industrywide will finish 2008 down 6%, Daly estimated, with once-booming new releases slumping 20%.
Theatrical fare is at an all-time high for the four-year-old company, with “Panda” and “Madagascar 2” taking in more than $1.2 billion worldwide.
Focus of the session at Gotham’s Ziegfeld Theater was on growth. Not only has DreamWorks made strides since its October 2004 start, execs said, but a projected $5 premium for 3-D ticket sales will greatly enhance profits.
“Because the costs (of 3-D) are fixed, there is substantial leverage and most of the extra revenue falls to the bottom line,” said prexy and chief financial officer Lew Coleman.
According to Coleman, had “Shrek the Third” been released in 3-D, assuming a $5 ticket premium and roughly $15 million in extra production and rendering costs, it would have booked $80 million of additional profit.
“Monsters” is the first of a wave of 3-D productions mounted by Hollywood. Initially, Katzenberg said, DreamWorks had hoped there would be 4,000-5,000 3-D screens worldwide by the pic’s March launch. Economic turmoil, especially in the credit markets, has held up conversions, though, and the number will reach only about 2,500. Even so, Katzenberg said the company is hoping 40% of admissions will be in 3-D.
On future releases such as the fourth “Shrek” in 2010, Katzenberg said he “would be disappointed if we didn’t have at least 70% of admissions in 3-D.”
Coleman ran some intriguing numbers on the “generic ultimates” used by the company, meaning a breakdown of all revenue streams for a typical release.
In 2005, a typical release made 55% of its revenue in homevid, 30% in worldwide theaters and the last 15% from TV and other venues. By 2008, that had shifted to 40% homevid, 40% theatrical and 20% TV/other.
Daly pointed to the company’s TV growth lately, with such TV specials as “Shrek the Halls” locked up by ABC for 13 years, two similar pic offshoots due in 2009 and 46 eps of “The Penguins of Madagascar” in the works at Nickelodeon.
Sunday’s opening of “Shrek” on Broadway reps a $24 million investment, to be amortized over three years, Daly said. No returns are expected until 2010, but if the show’s a hit, examples such as “Wicked” or “The Lion King” suggest annual revenue from tours and merchandise could be $100 million to $150 million. Profit would be $30 million to $50 million a year.