I haven't seen Shrek. I have no interest in seeing it and don't know much about the animated mythos, aside from the fact that it has something to do with fairy tales, has a green monster running around in it, and the like. I did, however, read a very funny satire in Time Warner's (NYSE:TWX) Mad Magazine entitled "Star Shrek." I am well aware of its phenomenon status, and I am absolutely not ignorant of the fact that Shrek 2 is now capturing a castle-sized trove of riches for DreamWorks SKG.
How well Shrek 2 performs will have an eventual impact on Pixar (NASDAQ:PIXR). The studio that gave us a tale about toys and a fish named Nemo is perceived right now as the heir apparent to the whole computer animation industry (and maybe even the entire field of animation as well, if one wants to get metaphorically hyperbolic). Traditional animation is developing a reputation as an archaic medium where disenchantment has unfortunately triumphed over spectacle, so movies such as Toy Story and Shrek and Fox's (NYSE:FOX) Ice Age may become more ubiquitous.
If the DreamWorks sequel disappoints, then Steve Jobs and his army of animators can gloat and once again claim exclusive rights to the incipient form. But, if lightning strikes for the proverbial second time, then maybe Jeffrey Katzenberg and his team of creative techies will gain the confidence needed to propel their animation unit to new heights. And I can tell you this: Disney's (NYSE:DIS) Michael Eisner is in a bind because although he'd like to see some thunder stolen from Pixar, that'll mean his old nemesis, Katzenberg -- whom Eisner was reported to have called a midget behind his back -- will be guffawing once again at the chief Mouseketeer.
There is speculation that DreamWorks will either go public later this year or create a stock currency representing just its animation house. Such an IPO would be very glamorous, although nowhere near the scale of the upcoming Google float. I think it's only a matter of time before the private studio eventually decides to finance its future growth with capital from the market at large, and this could be an opportune moment given the money-making potential of the ogre.
A plethora of promotional programs abound to fulfill the franchise's prophesied destiny, from images placed on PepsiCo (NYSE:PEP) products to merchandise handed out by Burger King joints (it's a good bet McDonald's (NYSE:MCD) hates that example). And then there are the video games based on the film from Activision (NASDAQ:ATVI) available on PCs and all dedicated machines. With the recent price cut of the Sony (NYSE:SNE) PlayStation 2 in response to Microsoft's (NASDAQ:MSFT) devaluation of the Xbox, Activision should benefit from a wider universe of prospective Shrek gamers.
I can't wait to see how the ugly fella does (then again, I shouldn't talk -- I'm not exactly Prince Charming myself). And you can bet Steven Spielberg, Katzenberg, and David Geffen will be watching even closer than I will -- any putative IPO scheme will depend on Shrek 2's opening week.
Pixar, Activision, and Time Warner are all Motley Fool Stock Advisor recommendations. You can check it out by signing up for six months without risk.
Fool contributor Steven Mallas owns shares of Disney, which means he's not inclined to become a Shrek sycophant.
