Everybody Loves Shrek

DreamWorks Animation (NYSE: DWA  ) has another hit in the Shrek franchise. Shrek the Third opened in a big way over the weekend, ringing up $122 million in domestic ticket sales over the weekend. The box office take shatters the old mark for theatrical animation, which was set three years ago when the company's Shrek 2 took in $108 million in ticket sales.

The film's multiplex popularity was enough to knock Sony's (NYSE: SNE  ) Spider-Man 3 off the perch, but that was expected. Newer films always have a fresh advantage, just as Disney's (NYSE: DIS  ) Pirates of the Caribbean: At World's End should knock the green ogre off his movie house throne when it opens later this week.

What matters now to DreamWorks Animation is how the film holds up in subsequent weekends. Despite the huge opening, few expect the computer-animated flick to top the $920.7 million worth of tickets that Shrek 2 sold globally. Yes, inflation makes it possible to top old records by selling fewer tickets, but there are just so many "can't miss" summer blockbusters coming out over the next few weeks, that it will be a challenge for a dated release not to grow stale.

That's just how it goes. Sony and Marvel (NYSE: MVL  ) shareholders cheered the record-breaking $151 million in proceeds that Spider-Man 3 spun when it opened three weekends ago. Then the film's take fell by 62% when it sold just $58 million in tickets the following weekend. Shrek the Third should hold up better than that. Even with Jack Sparrow and his gang of swashbucklers raiding the party, the extended Memorial Day holiday weekend should help offset some of the natural decline.

Shrek 2 opened a week before Memorial Day back in 2004, suffering a more modest 33% dip in ticket sales the following weekend.

At the very least, we know that DreamWorks Animation has a juggernaut that it can tap for a sequel every three years. That has been the plan at the studio, whose aim is to have two animated releases annually. At least one will be an original property. The other will be eventually be a sequel, once DreamWorks Animation puts a third winner into the rotation (Shrek and Madagascar are the first two that are projected to have a new entry every three years).

Successful sequels are important, because they typically cost more to make. Voice talent celebrities demand higher salaries as successful franchises grow. The kicker is that it doesn't take much to educate the audience to buy into the characters that they already find endearing. The key is to make sure that each new installment is compelling enough to keep the ogre oglers ogling.

That's how it seems, anyway. For one weekend at least, everybody loves Shrek.

DreamWorks Animation, Marvel, and Disney are all Motley Fool Stock Advisor newsletter recommendations. You can screen that service over the next 30 days with a free trial subscription.

Longtime Fool contributor Rick Munarriz is a sucker for quality animation. Yes, he owns shares of Disney and DreamWorks Animation. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy


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