DreamWorks Animation SKG is launching its franchise characters into new lines of business, giving the Glendale studio a chance to grow steadily and consistently even during a recession that already is slowing its DVD sales.
In their first investor conference since 2005, studio executives Thursday outlined a series of new business ventures to lessen DreamWorks' dependence on production of only two animated movies a year, which often has led to big swings in its earnings and stock price.
DreamWorks will feature the studio's popular characters in TV specials for NBC, for instance, as well as in theme park attractions in Dubai and Singapore.
"Shrek the Musical," which will debut on Broadway this Sunday, could be the first in several DreamWorks-inspired shows. The company hopes to match the kind of success arch-rival Walt Disney Co. had with its musical based on the classic animated movie "The Lion King."
"We wanted to step back and show investors how this company has grown," Jeffrey Katzenberg, chief executive of DreamWorks Animation, said after the three-hour conference. "We have eight new initiatives we're investing in."
The company expects to generate as much as $60 million in revenue from various TV projects, including a series that will air on Nickelodeon in March featuring the penguin characters from "Madagascar," Chief Operating Officer Ann Daly said.
"The ongoing presence of our characters will help keep the franchises fresh," she said.
Even as they touted new business ventures, however, DreamWorks executives acknowledged that the recession was having an effect on the home video business. Daly said the studio expected to sell more than 10 million DVD units for the hit film "Kung Fu Panda" in the fourth quarter. That falls short of what Wall Street anticipated.
Most analysts had forecast quarterly sales of at least 12 million units for "Kung Fu Panda," which was released on home video Nov. 9. The movie, starring Jack Black, has generated more than $630 million worldwide in box-office ticket sales, making it one of the company's most successful animated movies.
"The home video market is maturing and has recently been hurt by the economic downturn," Daly said. "The current recession and lack of consumer spending domestically [are] having a dramatic impact."
The studio, for instance, expects to ship about 500,000 fewer DVDs because two customers -- Circuit City Stores Inc. and Woolworths Group in Britain -- have filed for bankruptcy, she said.
