DreamWorks Animation (DWA) isn't happy just being the creator of hit films like Shrek and Kung Fu Panda. The company has a much bigger dream in mind. It wants to be more like Disney (DIS -0.55%).
That's clear enough from its corporate communications. In yesterday's earnings release, CEO Jeffrey Katzenberg said that DreamWorks continues to "diversify and evolve into a branded family entertainment company." That sounds more than a bit like Disney, which defines itself as "a diversified worldwide entertainment company" that pulls revenue from its studio business while also profiting from consumer products, television, and theme parks.
Not just movies
Investors could see evidence of the diversity that DreamWorks is after in its latest quarterly results. Yes, it still got the vast majority of revenue from theatrical releases, with The Croods standing out as a hit and bringing in $72 million of DreamWorks' $213 million in sales. But the company also booked significant revenue from a licensing deal with Netflix, and from its Classic Media television property that it purchased last year.
DreamWorks also announced a major push into the consumer products business. It made a deal with Hasbro to release toys and games around its theatrical releases for 2015 and 2016. DreamWorks expanded its properties into theme parks, too, licensing new entertainment venues at SeaWorld in San Diego and at Busch Gardens in Tampa, Fla., this past quarter. The company even got deeper into the cruise business by expanding its deal with Royal Caribbean to include two of Royal's newest ships.
But not just yet
Despite the push into merchandising, theme parks, and television revenue, DreamWorks won't be able to call itself a truly diversified entertainment company anytime soon. Remember that it was just last year that a single box office flop torpedoed its business results. And as for next quarter, DreamWorks expects results to be driven by the TV performance of just two older feature films, Rise of the Guardians and Kung Fu Panda 2.
However, as its new income streams start to add up -- and with major non-theatrical content deals coming online starting next year -- DreamWorks should look like a very different business in 2018. It might even remind some investors of another company that got its start making popular animated films.
