UPDATE 4/29/14 – DreamWorks Animation lost $42.9 million in the first quarter of 2014, and took a $57 million impairment charge all because of the performance of Mr. Peabody & Sherman.
Stop me if you’ve heard this one before – a DreamWorks Animation film that cost dang near $150 million to produce disappoints at the domestic box office, causing general pants-shitting at DreamWorks as their stock dips on Wall Street. It has happened to them with their last 3 movies – Rise of the Guardians (2012), The Croods (2013), and Turbo (2013). Now, it may be happening again with Mr. Peabody & Sherman (2014).
Adapted from a regular segment (Peabody’s Improbable History) of the 1960s Rocky & Bullwinkle Show, Mr. Peabody & Sherman opened with $32 million in the United States/Canada this past weekend, and after 33 days of worldwide release it is sitting at $100 million in total gross. The problem is it cost $140 million to produce, and as of right now it only has 15 more countries awaiting its release, only one of which is a major market for film – Japan, and they’re not getting it until November. According to THR, an analyst for Wall Street brokerage firm Stern Agee is now predicting Peabody will top out at $310 million worldwide, “which would translate to an $84 million write-down.”
What the heck does that mean? If investopedia.com is to be trusted it basically means that on paper and at least for the current fiscal quarter DreamWorks Animation will be worth $84 million less than they were before Mr. Peabody & Sherman came out. To put that in context, for 2013 DreamWorks Animation reported a “total revenue of $706.9 million.” However, the Stern Agee analyst estimates DWA’s last four films — Rise of the Guardians, The Croods, Turbo and Peabody — have lost a combined $159 million.
His analysis likely points to his access to more information as well as the general errors in the popular rule of thumb that in order for a movie “to make money it must first at least double its production budget in worldwide gross.” Following that rule, DWA’s recent box office figures paint a picture of a studio which just barely broke even on two films (Turbo, Rise of the Guardians) while hitting big internationally with another (The Croods):
- Turbo ($135 million budget) – $83 million domestic/$282 million worldwide
- The Croods ($135 million budget) – $187 million domestic/$587 million worldwide
- Rise of the Guardians ($145 million budget) – $103 million domestic/$306 million worldwide
The “double your budget” rule is predicated on the believe that studios split box office gross 50/50 with theaters. However, THR indicates in some cases theaters can take as much as 60% of the gross. Plus, the splits are even worse overseas where studios can take as little as 25-35% of the gross due to the vagaries of currency conversion and foreign government policies.
Perhaps we’re starting to get a little too inside baseball, though. The point is DreamWorks, the house that Shrek built, has had a bad run as of late. Ever since the first Shrek came out in 2001, DWA has been the clear #2 in the feature length film animation town, forever trailing Pixar. As of late, not even Pixar has been immune to that which has hit DreamWorks hard – competition.
Universal is riding high with their Despicable Me franchise, Disney Animation Studios is resurgent after Wreck It Ralph and Frozen – which audiences just won’t let go of even after 4 months of release, and Sony Pictures Animation has enjoyed a healthy run with Hotel Transylvania and the two Cloudy with a Chance of Meatballs films, partially because they manage to keep their budgets at or below $100 million. Heck, WB just hit bigger than they were supposed to with LEGO Movie.
The sad thing, or at least sad if you’re a lover of original films, is that DreamWorks’ recent skid has come during a stretch of either entirely original (Turbo, The Croods) or non-sequels adapted from somewhat lesser-known intellectual properties (Rise of the Guardians, Mr. Peabody & Sherman). Their upcoming films are all updates of known franchises, “starting with How to Train Your Dragon 2 in June, then Penguins of Madagascar next March and Kung Fu Panda 3 in December 2015.”
Time will tell if audience faith in the DWA brand has been tarnished, or if they were simply waiting around for a sequel to a DWA title they already knew they liked. Either way, with all the doom and gloom lately (the international business for The Croods excluded) it’s no wonder that DWA CEO Jeffrey Katzenberg let it be known last month that they may yet make another Shrek film, even though the last one (Shrek Forever After) was the lowest grossing in franchise history.