It’s a big week for DreamWorks Animation. The company is hoping that “Puss in Boots,” which bows Friday, will offset the sluggish third-quarter results unveiled Tuesday — while the company for the first time is addressing its plans after the distribution deal with Paramount Pictures winds down in 2012.
A key strategic move was Tuesday’s announcement that Disney distribution vet Chuck Viane will serve as a consultant to the company as it weighs options, which were first detailed in Daily Variety Oct. 11 .
In a conference call, Jeffrey Katzenberg acknowledged the high price of self-distribution, and said he considers the “real issues” to be the marketing, homevideo and international elements — all potentially pricey propositions.
Viane’s involvement with DWA’s future was the first strategic move Katzenberg has mentioned in a conference call when it comes to the company’s Par deal in many a quarter; until now, Katzenberg has said the company doesn’t have to discuss any plans until next year.
Katzenberg was quick to praise Par: “Paramount has done and continues to do an excellent job” re leasing DWA’s films, he said. But he added that there is a “strategic opportunity” to consider new options, given “the size and value of our business today.”
DWA wants to have its new distribution plans in place by summer 2012, given that the first release outside the Par pact will be “The Croods,” out in March 2013. DWA has three pics on the release sked that year.
“We believe if we have our distribution arrangements by summer of next year, that will be more than enough time to make sure we can take care of the product well,” said DWA chief Jeffrey Katzenberg in a call with analysts to discuss the company’s third quarter results.
“There are very complex challenges and issues to self distribution,” Katzenberg added. But “there is not an aspect to it where our eyes aren’t wide open and where the facts are apparent to us.”
That includes the physical mechanics of getting films into theaters, that Katzenberg said are “relatively easy … and not overly expensive.”
Overseas, DWA dubs movies into 46 different languages and releases films in more than 100 countries.
DWA has generated $5.5 billion in B.O. revenue from 11 movies since 2006, the exec said, while that grows to $10 billion, once homevid revenue, pay TV sales and other revenue sources are factored in.
Over the life of its seven-year deal with Paramount, DWA will have paid the studio $700 million in distribution fees, Katzenberg said.
“We represent a valuable business … and will explore all opportunities starting in spring 2012,” Katzenberg said. For now, Viane will spend time becoming acquainted with DWA’s assets.
“Chuck is one of the smartest, most experienced and respected leaders in the industry, and I don’t know of anyone with a deeper understanding of the movie landscape, its trends and its future,” Katzenberg said. “At this strategic moment in time for DreamWorks Animation, I am confident that he will serve as an invaluable resource.”
Viane retired from the Walt Disney Co. after 25 years. He left as president of global distribution for Walt Disney Studio Motion Pictures.
“I’ve known Jeffrey Katzenberg for 26 years, and he was a close colleague of mine during our time together at Disney,” Viane said. “Under his leadership, I believe that DreamWorks Animation has truly become a studio for the 21st century, and I look forward to helping shape their future distribution strategy.”
As opposed to other studio slates that are loaded with projects based on well-known properties, DWA has been eager to launch new franchises in order to sequelize them and monetize them across a variety of platforms.
For example, the release of “Kung Fu Panda 2” on DVD and Blu-ray will get a boost from an additional animated special and the launch of the franchise’s first TV show.
“We’re very excited about our release schedule and it’s a very healthy mix of original movies, as well as some very powerful franchise films,” Katzenberg said. “We’re about to go into a period where we have a pretty good run of original movies,” he added. That includes three non-sequels in 2013.
One spin-off is “Puss in Boots,” out Friday in most territories, although it won’t bow in Japan, Korea, Hong Kong and the Nordic countries until early next year.
The toon will have the family market to itself for four weeks before Warner Bros.’ “Happy Feet 2” and Summit’s next “Twilight” installment hits theaters. It will also play on Imax screens for three weeks, rather than the typical two.
DWA has a lot riding on “Puss ‘ ” shoulders: The toon studio, which has been without a major release in theaters since “Kung Fu Panda 2” in May, is hoping the “Shrek” spinoff can make up for a sluggish third quarter, during which profits fell 50% to $19.7 million and revenue dipped 15% to $160.8 million.
DWA is hoping “Puss” will top the current $33.6 million opening weekend record for Halloween.
“Anything beyond that goes into the win column,” Katzenberg said.
“Kung Fu Panda 2,” which was released on May 26, generated $39.4 million in revenue during the quarter, which ended Sept. 30. Film is the top animated pic at the worldwide B.O. so far this year with $664 million. “Megamind” contributed $25.8 million in revenue during the quarter, driven primarily by domestic pay TV sales. It’s sold 4.6 million homevid units through the end of the third quarter.
The rest of the coin was earned from international pay TV and homevid sales on “Shrek Forever After” ($15 million) and “How to Train Your Dragon” ($9.2 million). Each film has moved 9 million homevid units.
Library and other items brought in revenue of $71.4 million during the quarter, including $18.8 million from nonfilm businesses, such as TV shows and stage shows, like the “Shrek” production in London.
First of DWA’s TV projects, the company’s animated Halloween specials tied to “Shrek” and “Monsters vs. Aliens,” became available on Netflix today as part of its deal with the streaming service after ankling HBO, where it had a seven-year deal.
“DreamWorks Animation’s financial results tend to fluctuate due to, among other factors, the timing of our feature-film releases and the number of our films in any given year,” said DWA president and chief financial officer Lew Coleman.