Film Production
DreamWorks Animation posts loss of $248 million as ‘Penguins’ flop
MUMBAI: DreamWorks Animation posted a massive loss of $247.7 million in the fourth quarter due to the company’s recent restructuring plans, the closure of its Northern California studio and changes in its film release strategy.
The company posted sales of $234.2 million for the quarter ended 31 December, 2014, which was up 14.7 per cent over the same period in 2013. The company’s adjusted operating loss came in at $37.6 million, while its net loss was $64.1 million.
The company’s adjusted financial results exclude a $210.1 million pre-tax charge associated with its restructuring plan announced on 22 January, 2015. The company’s results for the quarter ended 31 December, 2014 include impairment charges of $57.1 million, or a loss of approximately $0.63 per share, primarily related to the performance of The Penguins of Madagascar and Mr. Peabody and Sherman, as well as certain other titles and investments.
As part of the reorganisation, which resulted in over 500 layoffs, DreamWorks Animation also said that it is selling its Glendale, Calif., campus for $185 million and will lease back the space.
Including the impact of the restructuring plan, DreamWorks Animation reported net loss of $263.2 million for the quarter ended 31 December, 2014. Of the restructuring-related charges totaling $210.1 million, $54.6 million was related to employee termination costs and other contractual obligations and $155.5 million was primarily related to write-offs of capitalized production costs of unreleased projects, including B.O.O. and Monkeys of Mumbai, as well as other charges associated with changes in the film slate.
“Although 2014 was a challenging year for our company, I am confident that our recent announcement to restructure our feature film business will enable us to deliver great films and better box office results, while improving the overall financial performance of our business. And while 2015 will be a transitional year for us, I couldn’t be more confident for the future. We have a set of strategic imperatives in place designed to ensure sustainable and profitable growth over the long term,” said DreamWorks Animation CEO Jeffrey Katzenberg
For the full year, DreamWorks Animation’s 2014 revenues decreased 3.2 per cent to $684.6 million, while it posted an operating loss of $300 million. When adjusted, the loss was $90 million.
Fourth Quarter Review:
DreamWorks Animation’s fourth quarter revenues of $234.2 million increased 14.7 per cent due to increases in revenues across each of the company’s primary segments.
Feature Film Segment
Revenues for the quarter ended 31 December, 2014 from the Feature Film Segment increased to $131.3 million, while segment gross profit declined to $152.2 million, primarily due to the impact of film and other inventory write-offs of $153.8 million stemming from the company’s restructuring initiatives, as well as impairment charges of $39.7 million related to The Penguins of Madagascar and Mr. Peabody and Sherman:
The Penguins of Madagascar, which was released theatrically on 26 November, 2014, has reached $358 million at the worldwide box office to date. The film contributed feature film revenue of $6.9 million in the quarter, primarily from distribution outside of Fox territories. Fox did not report any revenue to DreamWorks Animation in the quarter for the film as they had not yet recouped their marketing and distribution costs.
How to Train Your Dragon 2 contributed feature film revenue of $66 million in the quarter, primarily from home entertainment. The film was released into the domestic home entertainment market on 11 November, 2014 and through the end of the fourth quarter reached an estimated 7.5 million home entertainment units sold worldwide, net of actual and estimated future returns.
Mr. Peabody & Sherman was released into the domestic home entertainment market on 14 October, 2014 and through the end of the fourth quarter, reached an estimated 3.4 million home entertainment units sold worldwide, net of actual and estimated future returns. Fox did not report any revenue to DreamWorks Animation in the quarter for Mr. Peabody and Sherman as they had not yet recouped their marketing and distribution costs.
Turbo contributed feature film revenue of $5.8 million in the quarter, primarily from home entertainment. The film was released into the domestic home entertainment market on 12 November, 2013 and through the end of the fourth quarter, reached an estimated 6.3 million home entertainment units sold worldwide, net of actual and estimated future returns.
The Croods contributed feature film revenue of $6.5 million in the quarter, primarily from home entertainment. The film was released into the domestic home entertainment market on 1 October, 2013 and through the end of the fourth quarter, reached an estimated nine million home entertainment units sold worldwide, net of actual and estimated future returns.
Library titles contributed feature film revenue of $46.1 million to the quarter.
Television Series and Specials Segment
Revenues for the quarter ended 31 December, 2014 from the Television Series and Specials Segment increased 7.7 per cent to $50.7 million. Segment gross profit declined from $7.3 million to $2.6 million, as the higher revenues were more than offset by write-downs of capitalized film costs totaling $13.3 million in the quarter, primarily due to revisions in estimated future revenues for certain television specials, as well as up front marketing costs related to the various television series that were delivered in the quarter.
Consumer Products Segment
Revenues from the Consumer Products Segment increased 77.5 per cent to $22.1 million, while segment gross profit increased to $6.1 million mostly due to increased sales in the company’s merchandise, location-based entertainment and retail development businesses.
New Media Segment
The company is now presenting a New Media Segment within its financials, which consists of revenues and expenses attributable to Awesomeness TV (ATV) and related businesses. Revenues and segment gross profit for the quarter ended 31 December, 2014 from the company’s New Media Segment increased to $24.9 million and $13.2 million, respectively. The New Media Segment benefitted from the production and delivery of original programming, sponsorships arrangements and content licensing fees.
Also during the quarter, DreamWorks Animation entered into a joint venture agreement with Hearst Corporation under which Hearst purchased a 25 per cent ownership interest in ATV for $81.25 million. The company also entered into an agreement with the former stockholders of ATV under which the Company paid $80 million in lieu of any amounts of earn-out consideration. As a result, DreamWorks Animation recorded a gain in the quarter of $6.8 million to reflect the change in fair value of the contingent consideration liability.
All Other Segments
Revenues for the quarter ended 31 December, 2014 from the All Other Segment declined to $5.2 million, primarily because the company is no longer self-producing any live performance productions. In the prior year period, the company earned revenues of $11 million attributable to the subscription video-on-demand (SVOD) release of the filmed version of Shrek the Musical. Segment gross profit decreased to $4 million, largely due to lower revenues and the write-off of capitalized costs in the amount of $5.4 million.
For the quarter ended 31 December, 2014, DreamWorks Animation posted an adjusted operating loss of $37.6 million. This was primarily driven by impairment write-downs on certain film assets and investments, as well as the impact of increased investment in support of brand and new business initiatives.
Film Production
Arka Mediaworks onboards 88 Pictures as animation studio partner on ‘The Eternal War – Part 1’
Arka Mediaworks announces that 88 Pictures, the acclaimed animation and visual storytelling studio known for its cutting-edge CGI and cinematic artistry, is on board as the animation partner for the highly anticipated Baahubali: The Eternal War, a groundbreaking two-part 3D animated feature film set in the globally beloved Baahubali universe.
Baahubali: The Eternal War represents a bold new chapter in the Baahubali saga envisioned for national and international audiences and crafted with the ambition of delivering one of India’s most ambitious and globally benchmarked animation projects to date.
88 Pictures will execute the animation production, bringing to life the film’s richly detailed worlds, epic battle sequences, and larger-than-life characters with its signature blend of artistic vision, performance-driven animation, and advanced production pipelines. Working closely with the film’s creative leadership and technical partners, the studio aims to set new benchmarks in animation quality, cinematic storytelling, and global scalability.
This animated epic follows the successful re-release of Baahubali: The Epic (the combined theatrical version of the original live-action films) on 31 October 2025 across India and the USA. During the film’s interval, legendary creator and director S.S. Rajamouli (Baahubali 1 & 2, RRR) stunned audiences with a surprise teaser for The Eternal War – Part 1. The video immediately went viral, garnering widespread national and international acclaim across LinkedIn, Instagram, and YouTube for its ambitious visual style and scale.
Produced by Arka Mediaworks and led by co-founder and CEO Shobu Yarlagadda – producer of the iconic Baahubali duology, The Eternal War brings together fantastic storytelling and cutting-edge animation.. The film is directed and written by acclaimed animation filmmaker Ishan Shukla (Schirkoa: In Lies We Trust, Star Wars: Visions – “The Bandits of Golak”) and screenplay by Scott Mosier (The Grinch). Mihira Visual Labs, the studio co-founded by Yarlagadda anchors the film’s animation, visual development, and execution.
The partnership with 88 Pictures brings significant pedigree to the project; the studio is well-regarded for its work on high-profile international titles including DreamWorks’ series Trollhunters, the HBO Max original series Gremlins: Secrets of the Mogwai, Disney’s animated short An Almost Christmas Story to name a few.
Yarlagadda shared, “We are happy to onboard 88 Pictures as the animation studio partner for our prestigious and most expensive animated film from India. We believe that their expertise and capabilities will allow us to produce a first-of-its-kind, world-class animated feature film from India.”
88 Pictures founder & CEO Milind D. Shinde said, “Baahubali changed the way cinema is perceived and became a defining milestone that turned the tide for Indian live-action filmmaking. Expanding the franchise into an entirely new universe—at a never-seen, never-done scale—through an animated feature created in India for a global audience is set to redefine how the world views Indian animation. We are truly thrilled to be part of this landmark project and to bring it to life under the visionary direction of Ishan Shukla, guided by the experience and leadership of acclaimed producer Shobu Yarlagadda.”
Shukla expressed, “Eternal War requires a level of visual and emotional precision that can only come from teams who truly understand both craft and intent. Working with 88 Pictures, alongside Mihira Visual Labs, has been a deeply collaborative experience. This association brings together technical excellence and creative sensitivity, enabling us to translate an ambitious vision into a compelling cinematic reality.”
Baahubali: The Eternal War – Part 1 is scheduled for release in 2027
