Strong DVD sales boosts earnings for studio

Despite having only one release on its schedule this year, DreamWorks Animation scared up better-than-expected results during the third quarter thanks to “Monsters vs. Aliens.”

Strong DVD sales of more than 4.6 million copies for the pic, which didn’t hit retailers until late last month, helped the company to a profit of $19.6 million from revenue of $135 million during the three-month period.

While the numbers are positive, profits fell 48% on an 11% dip in revenue. But it could have been far worse given the comparison with the year-earlier quarter, when DreamWorks was drawing coin generated by “Madagascar: Escape 2 Africa” and “Kung Fu Panda.”

Even with a 14% drop in DVD sales for the homevid biz last quarter, DreamWorks Animation has benefited from the appeal of family fare during the recession: The company’s stock has gained 85% since hitting an all-time low in February. It sold 2.2 million copies of the “Monsters vs. Aliens” DVD in its first week of release, generating $38 million.

“As we have been noting for the last year, our movies are performing uniquely and differently from the rest of the industry as a whole,” DreamWorks Animation chief Jeffrey Katzenberg told Daily Variety, noting that 40% of customers have opted for the higher-priced Blu-ray or double-pack DVD set of the pic, which includes the 3-D toon “B.O.B.’s Big Break,” not shown in theaters. Moviegoers “seem to really want to own our movies and own the premium versions” when they buy them, Katzenberg said.

In the third quarter, “Monster vs. Aliens” earned revenue of $33.4 million from the worldwide box office and DVD sales. Worldwide B.O. is $380 million.

The “Madagascar” sequel and “Kung Fu Panda” took $35.4 million and $21.9 million, respectively, during the quarter.

Katzenberg, who has been one of Hollywood’s biggest cheerleaders for the rollout of 3D in theaters, said producing pics in the format doesn’t hurt DVD sales.

While the “Monsters vs. Aliens” DVD was sold with 3D glasses, they are not required to view the film.

The format hasn’t “helped” or “hurt” DVD sales, Katzenberg said.

“People understand that going to the movie theater is a unique experience, and coming home is another experience,” he said, adding that most people saw the 2D version of the film around the world. “These things convert beautifully to 2D.”

This year was an anomaly for the company. During the summer, DreamWorks said it would produce five movies every two years, adding an additional film every other year to its regular release sked of two pics a year.

Next year, it has “How to Train Your Dragon” bowing in March, followed by “Shrek Forever After” in May and “Oobermind” in November. All are distribbed by Paramount and produced in the 3D format.

“Puss in Boots” and a sequel to “Kung Fu Panda” bow in 2011, with “The Croods,” a third “Madagascar” pic and “The Guardians” unspooling in 2012.

While 3D will help the studio mint more money at the megaplex, DreamWorks Animation also has two holiday TV specials, “Monsters vs. Aliens: Mutant Pumpkins From Outer Space” and “Merry Madagascar,” that will air on NBC and contribute to the company’s bottom line during the fourth quarter.

It will also generate revenue from “Shrek: The Musical,” which ends its run on Broadway in January and goes on tour in July.

“Last year we said we’d expand our franchises to other business opportunities, and now we’re starting to see the results of that creatively and financially,” Katzenberg said.

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