Dreamworks often appears as though they are operating what many people would call a “money factory.” Not the case in Q2 of 2012, however.
In what appears to be one of an ongoing string of Q2 financial reports from large companies missing their financial targets, the earnings report for Dreamworks in May was somewhat disappointing for those who work on Wall Street. But, as any smart businessperson should, Jeffrey Katzenberg, Studio Chief at Dreamworks, had an ace in the hole in order to distract those who may be worried about the company’s future.
“With the consistent success of our films in international markets, the [DreamWorks Animation] brand has really begun to come into its own and has real value … strong identification in the consumer marketplace… That creates the opportunity to create a branded family channel.”
A Dreamworks television channel seems like a logical move – Disney have something similar, and despite Dreamworks being relatively new to the kid’s flick game in comparison to their long-running competitor, they have more than enough IP in between Shrek and Madagascar, among others, to get started.
Interesting, potentially profitable idea to the side, however, what’s the damage in terms of their May financials?
Their revenue and net income for May stands at $162.8m and $12.8m respectively. Compared to the previous quarter’s $218m and $34m, that’s a drop of just over 25% in revenue, and a decrease of just over 62% in net income. Those are seriously painful numbers to look at – even the drop in revenue is significant at a quarter of what they made last quarter.
Whether the television channel will do them any good (my money is on it taking their revenue past a loss point and well into the realm of smiley, happy faces on Wall Street) isn’t clear as yet, but if Dreamworks wishes to keep punting out endless Shrek sequels and spin-offs, it better figure out a better way of holding on to more of the cash coming its way, and soon.