Please Feed the Animals

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While most companies will be taking it easy over the long holiday weekend, don't be surprised to find DreamWorks Animation (NYSE: DWA) tossing and turning at night. That's because a lot is riding on today's theatrical release of Madagascar.

After disappointing investors earlier this month with a weaker-than-expected quarter, it's time to turn our attention to the company's latest computer-animated feature film.

It certainly won't challenge Revenge of the Sith for the top spot in this weekend's box office. A more realistic target may be the $46.7 million that the company's last flick -- Shark Tale -- generated in ticket sales during its opening weekend back in October.

Come Tuesday, Steven Mallas will examine how the new film panned out at the multiplex. For now, let's get into why DreamWorks needs this movie to be a hit. When the company reported that it had been overly aggressive in shipments of its Shrek 2 blockbuster on video and DVD, March-quarter financials took a hit. The company received way too many retailer returns of its ogre-ific sequel; DreamWorks suffered despite consumers' healthy appetite for Shark Tale in its home video release.

While Shrek 3 is already in the works and Shark Tale definitely has some expansion possibilities, having Madagascar become another potent franchise would really help raise the company's visibility, viability, and share price. The last film DreamWorks' chieftain Jeffrey Katzenberg made starring land-based animals was The Lion King. That's still Disney's (NYSE: DIS) highest-grossing in-house traditionally animated film of all time.

Like most summers, there's crowded slate of theatrical releases. They aren't all going to be hits. That's why Madagascar has to make sure that it starts off well and keeps cinema operators interested in screening the flick for as long as possible. With schools getting out for the summer, it's great timing on DreamWorks' part, but it's not alone. Katzenberg has shown a knack for understanding animated animal magnetism, just as rival Pixar (Nasdaq: PIXR) has proved itself over time with a string of hits. But this weekend will go a long way toward validating DreamWorks Animation. If Madagascar is a hit, it will be the company's third consecutive success. Wall Street won't ignore that kind of performance.

Some recent DreamWorks articles worth reading over and ogre:

• DreamWorks disappointed investors earlier this month.
• That's a shame, because the animation studio's last fiscal year was great
• Still, the market may have become too crowded for its own good.

Longtime Fool contributor Rick Munarriz loves the art of animated filmmaking. Yes, he owns shares of Pixar and Disney. The Fool has a disclosure policy. He is also part of the Motley Fool Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.