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I can’t remember a time when I’ve heard DreamWorks Animation CEO Jeff Katzenberg sound so down on an earnings call — and it’s mostly due to the red ink for Rise Of The Guardians. Even when an analyst congratulated him for the Oscar he just picked up for his charitable work he said that “we have good days and bad days.” This apparently was one of the latter ones. Guardians “was the first movie of ours in 17 in a row that didn’t work,” he told analysts. “And when that happens it makes you rethink everything.….We’ve done a reset and we’ve done it across the board.” It led to the decision to make substantial layoffs – 350 during the year, Deputy CFO Richard Sullivan said — in which “many valuable members of the DreamWorks family will be leaving”, Katzenberg said. But using the trendy corporatespeak, he says this will “right-size the whole enterprise.” DreamWorks Animation will look to new technology to help make movies “faster and cheaper” putting the company on a long-term “successful path going forward….Would these things have happened without the failure of Guardians? I don’t know.”
Related: DWA Q4 Write-Downs Include $87M For ‘Rise Of The Guardians’
President Lou Coleman says that the costs for the movie won’t be recouped until the second half of this year and it’s “not expected to have a material impact on earnings going forward.”
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“…new technology to make the movies ‘faster and cheaper’…”
What is Dreamworks Animation doing to make their movies…BETTER?
Good point. Their story quality is hit-and-miss whereas Pixar is all about story-story-story first. Katzenberg is smart – they can do this if they place a premium on it, but you’re right — it feels like the thinking at the top is product oriented, not GOOD product oriented. Faster flame-out in any industry.
That’s what blows my mind. “Rise of the Guardians” WAS pretty great, just too old for the younger crowd.
Agree that the movie was quite good. My 6 year-old loved the film (but she was certainly afraid at certain points, which is fine).
The sad part is that ONE under-performing movie sends DWA into a tailspin. That’s bad business.
DWA – sell sell sell. It’s clear the stock has to hit some kind of low before a buyer emerges. What’s stopping Rupert Murdoch from buying this company? A preposterously inflated stock price for what is essentially a one-executive show. And the fact that one film (with a negative cost of, what, $225m? Sonly loses that much every MONTH) can destabalize a company like this is a reminder that Jeffrey has not run things well. When was tge last time you saw a kid playing with a DWA-derived toy or videogame. Jeffrey needs to hire the best licensing people on earth to help him monetize (and frankly, pick) his movies or this will end very badly.
They’re starting to sound like all the other studios in town. If the leadership fails they fix it by firing some of the workers.
It’s pretty simple: DWA has made some wonderful films. This wasn’t one of them.
It appears their corporate thinking has changed from “Create quality and profit will follow” to “Create profit.” JK has reason to be sad.
“was the first movie of ours in 17 in a row that didn’t work”
I know he’s probably talking box office but ahem.. Shark Tale, Bee Movie, Monsters vs Aliens, Shrek the Third…Dreamworks Animation has had plenty worse movies of theirs that didn’t work.
He was talking financial, not creative. The ones you mentioned were profitable. ROTG was not.
Monsters vs. Aliens was a great film, and made a good profit for DWA.
Guardians wasn’t, and didn’t.
Shut your mouth. Monsters vs Aliens was a terrible, unfunny movie.
This is why Pixar is still on top of their game. Quality first.
Pixar’s motto is “sequels before quality”, FYI.
It’s more like “profit before quality.”
Pixar, DreamWorks, and Disney want movies that give them the ability to sell merchandise. This is essentially what all production companies that produce “In House” animation films want. This restricts the imagination of writers which has a negative effect on the quality of the film.
But when films like “Cars” brings in over 8 BILLION DOLLARS in global merchandise sales, production companies salivate at the chance to create a movie that’s really nothing more than an hour and a half long toy commercial. Which is what “Rise of the Guardians” felt like to me.
i am not a very smart man but i do have kids and when they were out of school for the Holiday in December, they had absolutely no interest in Rise of The Guardians. Do the studios focus group their target demo before going into production?
ROTG was actually a lovely little film. Just cost too much. I took six 11 year old girls and they loved it, much preferred it to Wreck it Ralph. I have a feeling it may have legs in ancillary.
Are your 11 year old girls gamers, by any chance? My ten year old is, loves classic games (pretty much all she plays on our iPad on the airplane and road trips) and she drug us to the theater to see Ralph 4 times. She has three Calhoun (the blonde soldier lady) action figures, and a Venelope Von Schweetz RC car.
Guardians she saw with her friend, and she said it was boring and Santa Claus was obnoxious with his tattoos and Russian mafia voice. Because of this, I can’t help but laugh when people comment on just how “intelligent” Guardians is, and that it did poorly because it was skewed to older audiences. My kiddo is smarter than half the people I work with in this industry, and her review was decidedly negative.
You sound full of yourself.
Man, it’s kinda stupid and ignorant to criticize movie, which you didn’t even saw. I sure your kiddo is adorable and all, but…
I saw the movie with my boy (11 years old). He absolutely loved it and I think that it was one of the most visually compelling animated films from recent years, or though, with little to obvious story.
Still, it was way better than, say, “”Brave”"
I too thought that ROTG was WAY WAY better than Wreck It Ralph. Although I had no idea that Santa Claus was actually Santa Claus till midway through the flick. Katzenberg & DWA should have put him in his jolly white suit & snow white beard up front in the design and advertising.
They should have given him a non-Russian accent (as Russia is actually one of the only countries in the region that DOESN’T have a Santa Claus myth, so making him Russian was just dumb) and left off the ridiculous mafia tattoos.
I can only assume they were trying to make this more for the international market, where it indeed performed much better than domestically.
In hindsight, stupid move, Katz.
Say what you want. This movie was absolutely amazing. The script was top notch and the animation was wonderful. What really sucked was the marketing, hell…even I really didn’t want to watch it because it seemed like a cheap and lazy sell. Sadly, it sounds to me that many of the layoffs will come on the production side. Let’s hope they will truly revamp the marketing side as well, because from insiders I’ve heard (and not surprisingly), that they behave like if they were running elections…..in high school.
The first out of 17 features? The SHREK films are embarrassing (profitable, yes, but insipid and poorly designed), SPIRIT: STALLION OF THE CIMMARON didn’t make a penny, and ROAD TO EL DORADO frankly sucks.
They shouldn’t have to. That’s paramount ‘s job. DWA’S job is to make a quality movie–that’s it
16-1 is a darn good bating average for what is basicily an independent animation studio!
DISNEY NEVER did 16-1 (with or without Pixar!)
It was an epic marketing fail, not a failure as a film. #1 – the title. I can’t tell you the number of people who thought it was another movie based on the owls! #2 – hardly anyone I know KNEW about the movie until it was gone from the theater!
It was an excellent movie and hopefully they will promote it better for the DVD release. Word of mouth will help, but it’s not enough.
Agreed the title was a mistake. If it doesn’t remind you of the owls movie, then it sounds like something from Marvel or George Lucas.
“Rise of the who? Guardians of what? Huh?”
No, it was a movie failure as well as a marketing misstep.
The storytellers at Pixer know how to read and write. DWA only has Jeffrey.
I just don’t know how Katzenberg & co. thought this was film was going to be a success. We’re talking about a team of very smart execs and creatives, yet they took a wonderfully comical concept and approached it like an epic drama.
And let’s not forget the repugnant character designs and hit-and-miss voice cast.
I’ve been saying all along Katzenberg has to go.after every meeting with him or Geffen I wanted to take a bath in bleach.
Would that have helped with the name dropping?
Someone has to help me understand this. I’m not a major movie $$$ person, but this “little” movie made $302 million dollars (worldwide) on a production budget of $145 million dollars. They had to take a write-down of $87 million dollars on the movie? So, they spend nearly $244 million dollars in advertising/tie ins/etc? WHAT?!
It made $302 million worldwide but a lot of that money remained with the theatres as their part of the split. God forbid the studios report film rental rather than gross ticket sales.
Well without delving into the nightmare that is studio accounting practices, I’ll give you the short and simple version:
There are many costs to account for when it comes to movie making. One is P&A (print and advertising) which I’m not sure how much DWA spent on Guardians, but the similarly budgeted and advertised MegaMind racked up around 65 million for posters and billboards, TV and movie theater commercials, and print ads in magazines and newspapers. So that brings total cost up to just north of 200 million for DWA. After that, you have to ask how much of that profit that actually got, versus how much the movie theaters kept. The very best big studio deals usually result in a 70/30 split, 70 for studios and 30 for theaters. Personally I’m guessing Guardian had closer to a 60/40 split, as DWA isn’t exactly a powerhouse and tracking for Guardians wasn’t pretty weak frankly, especially for a Holiday-themed film released during the height of the holiday season. So of that 300 million, DWA only received six cents of every dime brought in.
The long and the short of it is, after you figure in advertising and production budget, plus discount the portion that the movie theaters keep, studios end up with between 50-55% of total box office take, which in this case would be between 150-165 million. DWA just barely broke even on a film that by all rights should have been a slam dunk. While not as big of an embarrassment as “Hugo” the year before it, it was certainly not a check for the win box either.
Thanks for that NervisRex. Now that makes sense.
Thanks for taking the time to explain.
RotG seemed more like Coraline than a Christmas film. The main character is the soul of a dead child. The silent, looming moon made the film’s world seem cold and empty. Santa with swords? A silent Sandman? A thuggish Easter Bunny? Dolt elves? — too uncanny-valley to love, not funny enough to be Minions.
PUH-LEASE…this is “Hollywood 101″ and another major studio hits a speed bump. So what? Literally EVERY MAJOR STUDIO has come to the edge and some have even gone BK. Jeff Katzenberg will survive this like all the other Major Players have and his publicly-held company’s investors will ride this out. 350 employees out of 1,500 is now such a bad pill to swallow – it could have been a lot worse.
And unless you personally lost a lot of money from this one failed movie, breathe through your nose and mind YOUR OWN BUSINESS. JK will mind his and continue to do well – with or without your opinions. And you know what opinions are like…everyone has one!
I can’t believe you snarked Monsters vs. Aliens. Great movie! I hope the Colbert nation treats your digital corpse with dignity!
I know its a coproduction with aardman but in the 17 films in a row going back to shrek 2, flushed away lost even more money than guardians. Why the disrepency?
Lovely, brilliant movie. I should have known that because it appealed to me as an adult and made me feel like a child again, filled with wonder, that it would be a failure with today’s children.
“Faster and cheaper”??? Wtf?? Somewhere up in Sonoma, Lasseter is laughing maniacally (and drinking wine out of a platinum goblet).
The greatest comment EVER. You made my day.
If ROTG was such a great movie why has it only grossed 100m in 14 weeks when at the same time Dragons was at 215m. Both did not open to expectations, but Dragons had legs because it caught on with the public at large. Seems like ROTG at the end of the day was not for everyone. This is commerce not art! Lesson learned, make movies people want to see and research it before you greenlight it. Why is common sense so hard to find in Hollywood.