Why DreamWorks Should Steer Clear of the Comic Book Business

DreamWorks Animation's (NASDAQ: DWA  ) new publishing division might want to avoid creating and selling comic books, Fool contributor Tim Beyers says in the following video.

Sound crazy? It might, especially when you consider the vibrancy of the comic book business and consumers' appetites for pop-culture fare. And yet, there are at least two reasons for the company not to cash in directly: IDW and APE Entertainment. DreamWorks has licenses with both publishers.

IDW is publishing books based on DreamWorks' adaptations of the various Jay Ward characters (i.e., Rocky and Bullwinkle, Mr. Peabody and Sherman, etc.), while APE has licenses for Kung-Fu Panda and Penguins of Madagascar, and has published a four-issue Megamind miniseries. Trade magazine ICv2 has confirmed that DreamWorks intends to keep honoring both agreements.

Smart move, Tim says. Comics publishing is getting riskier; as more titles flood the market, readers may cut back in response. ICv2 reports that in December, only three of the top 300 books sold 100,000 or more copies to stores. Only one eclipsed that threshold in January.

In licensing to IDW and APE, DreamWorks mitigates the risk of entering the comic book business at the wrong time while still cashing in on some of the brand equity of its intellectual property. A prudent mix investors should appreciate, Tim says.

Now it's your turn to weigh in. Have you read any of DreamWorks' licensed titles? Or would you rather see DreamWorks cashing in directly, as Time Warner and Walt Disney have? Please watch the video to get Tim's full take on the state of the comic book business, and then leave a comment to let us know where you stand.

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  • Report this Comment On February 21, 2014, at 2:09 PM, esxokm wrote:

    Tim,

    As always, another great, fun article/video from you. Thanks.

    I must disagree with your conclusion that DreamWorks Animation should not get into the comics business. (I own shares of DWA.)

    DreamWorks Animation's goal is simple: create franchises. How does one create a franchise? Usually by making a movie. That, however, is not an obligatory starting point.

    Case in point: Marvel. Marvel began as a comics-based business. It became a studio.

    DreamWorks Animation started out as a studio. Why would the business model of comics-to-studio be unidirectional?

    Also, when you think about it, it would be a simple trick for DreamWorks Animation to make comics. Considering that the company deals with animation and advanced software platforms dedicated to art, then all the company needs to do is leverage its artists and writers and assign them the tasks of creating comics. The entire organization can contribute ideas, scripts, etc., to the projects at hand. And they could do it as simply part of their job -- no need to hire outside expensive talent that would take control of cash flows if something turned out to be a hit.

    Right now, all media companies should be in the business of searching for the next big comic-book hit. It doesn't have to be just kid-stuff, either. You mention that DreamWorks Animation already licenses its properties to concerns such as IDW (and thanks, by the way, for that excellent explanation about the comic-book business, I was unaware of some of that); I agree, those licenses could stay active and in-place.

    What would prevent, however, DreamWorks Animation from trying to find the next "The Walking Dead?" Why couldn't a DreamWorks Animation employee come up with, say, "The Bloodsucking Dead" -- just like "The Walking Dead," only with vampires. That could start as a comic book and then evolve into an HBO-quality series. After that, it might become a series of movies, both live-action and CGI-cartoon. It might become a merchandising phenomenon.

    Or it might not. It's all about risk.

    Think, though, why you loved the Marvel business model. Remember the economical R&D metaphor of the comics-based division, how that could incubate ideas to be ported over the filmed-production and licensing models? We all have to start somewhere, and DreamWorks Animation is no different.

    I wouldn't mind DreamWorks Animation making comic books. They could try so many different things with them. Love those old "Tales From the Crypt" books? DreamWorks Animation could come up with a horror-themed comic exclusive to Target every year around Halloween, maybe geared towards a younger demo, in the same vein of the "The Simpsons: Treehouse of Horror" from Bongo comics; maybe it could produce another horror-themed comic geared towards an adult audience and give that to independent comic book stores. Then the company could produce a Halloween anthology film, or series of films, both animated and live-action. Maybe it could start an anthology series on AMC, on Cartoon Network, etc.

    Over time, DreamWorks Animation could become a big media company. Or it may not; the future is impossible to predict. One thing that is certain: big things can only come into existence from big ideas. DreamWorks Animation should decide to get into the comic book business, and run with it.

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