DreamWorks Animation, the digital transformation

Article  by  Arnaud MIQUEL  •  Published 06.06.2013  •  Updated 06.06.2013
Turbo Racing
 [NEWS] To escape the vagaries of the international box office, DreamWorks Animation is diversifying its activities, banking on digital technologies with the purchase of YouTube channel AwesomenessTV and the production of an animated series for Netflix.
2013 looked to be the end of an era for DreamWorks Animation. With an 82.7 million dollar loss and 350 layoffs closing its fourth quarter in 2012, the company saw nine consecutive years of success in the theatres and in terms of profits come to an end. This poor result was directly linked to the commercial failure of animated feature Rise of the Guardians, directed by Peter Ramsey. Despite earning a total of 303 million dollars at the international box office, the film didn’t manage to reimburse marketing and innovation costs incurred by the production.
While financial analysts predicted further losses for the first quarter of 2013, DreamWorks ended up reporting profits, thanks to various successes – the most unexpected being the commercialization of Rise of the Guardians in digital, DVD and Blu-Ray formats. With 9.6 million dollars in profits, 3.2 million discs (Blu-Ray and DVD combined) and digital copies of the film found buyers in March 2013 – more than doubling the expectations of distributor Paramount, which, with this contract, is ending its exclusivity agreement with the company founded by Steven Spielberg. Meanwhile, DreamWorks’s most recent title, The Croods, directed by Chris Sanders and Kirk DeMicco and distributed by 20th Century Fox, has proved to be a hit worldwide. After eight weeks in the theatres, the movie has earned more than 550 million dollars at the box office. With renewed confidence, the group is now hoping to turn this into a licensing goldmine with an array of spinoffs and merchandizing possibilities. An animated television series is already said to be in the works. No other movie since the success of Kung Fu Panda in 2009 has managed to impose itself so strongly or raise hopes so high.
 Too dependent on the success of its film productions, DreamWorks Animation is seeking to develop television programs and digital content production.  This series of performances, both negative and positive, confirms the need for the group to diversify its revenue sources. Too dependent on the success of its film productions at the international box office up until now, DreamWorks Animation is seeking to develop television programs and digital content production. For several months now, the studio has displayed interest in the creation of a channel devoted to its own programs, notably via the acquisition of Media Classic in July 2012. With this 155 million dollar transaction, DreamWorks gains access to a catalogue of assets including Casper the Friendly Ghost and Lassie. Perspectives and opportunities for DreamWorks to reposition itself are multiplying, both in terms of program broadcasting and series merchandizing and spinoffs. This diversification strategy is now a reality, as seen in another series of announcements by the group.
On May 1, 2013, driven by its positive fiscal results, DreamWorks Animation announced its purchase of YouTube channel AwesomenessTV for 33 million dollars. Considered as a reference for teenagers, at the time of the contract signing, the channel claimed 525,000 subscribers, more than 105 million homepage views, and 14 million subscribers and nearly one billion views for the whole of its network. According to Jeffrey Katzenberg, cofounder and CEO of DreamWorks Animation, “Awesomeness TV is one of the fastest growing content channels on the Internet today and our acquisition of this groundbreaking venture will bring incredible momentum to our digital strategy”. Brian Robbins, the current head of AwesomenessTV, is set to continue to produce content for the channel while developing a new family-oriented offer consisting of programs based on the DreamWorks universe. Now more than ever, the animation studio is pursuing its ambition to be the distributor of its own original creations, thus gaining access to new perspectives for promoting and earning profits from its digital content around the world.
Presentation video for Turbo Racing League
In February 2013, DreamWorks had already joined forces with distributor Netflix to develop an animated series. Based on forthcoming DreamWorks feature Turbo by Paul Soren[+] NoteTo be released on October 16, 2013.X [1], the series Turbo: F.A.S.T. is the group’s first foray into SVoD[+] Notesubscription video on demandX [2] for children’s programs. For Netflix, which counts 36 million subscribers in more than 40 countries worldwide, this announcement was a response to Amazon Studios, which, one month beforehand, had ordered the production of five series pilots for children. The struggle is growing between the two streaming platforms, and directly concerns producers of original works.
Lastly, the studio’s new digital strategy also appears to encompass video games. In anticipation of the release of Turbo, on May 16, 2013, DreamWorks launched Turbo Racing League, a promotional game based on the movie. Available as free-to-play (F2P)[+] NoteThis designates games that users can play for free and/or make micro-payments to improve the gaming experience (levels, bonuses, etc.). X [3] on all iOS, Android and Windows Phone devices, the game is being accompanied by a major marketing campaign as well as a contest shelling out one million dollars to the winners of a race that will last eight weeks. The dismal last quarter of 2012 and its consequences appear to be well behind DreamWorks Animation.
 Translated from French by Sara Heft
Photo Credit:
Screenshot from the presentation video for Turbo Racing League / YouTube
  • 1. To be released on October 16, 2013.
  • 2. subscription video on demand
  • 3. This designates games that users can play for free and/or make micro-payments to improve the gaming experience (levels, bonuses, etc.).
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