It seems as though for some second-tier movie studios, all it takes is one ‘flop’ and their world comes crashing down regardless of previous success, as demonstrated by Dreamworks Animation, who last week announced their plans to lay off 350 employees after posting an $82.7m loss in Q4 2012.
Responsible for this demise was the poorly-received film Rise of the Guardians (based on a team of holiday and mythical figures teaming up to protect the world), which took $303m box office, the third-lowest in the studio’s independent history. This development, coupled with charges of $165m (including a $54m cost to temporarily suspend the production of planned 2014 movie Me and My Shadow), has resulted in layoffs already beginning, with the end of the year set to have seen % of their current 2,200 employees departing.
DWA’s CEO Jeffrey Katzenberg said of the ‘corporate restructuring’, which he insists will not affect the company’s status or operations (retaining all production in-house): “These things are very, very difficult to do. I would say it’s the hardest thing I’ve had to do since we started DreamWorks. We’ve never had to lay anybody off. It was against our culture. But it’s the right thing for us today, and it makes DWA strong going forward. It’s been very hard. We had 17 hits in a row, and this [Rise of the Guardians] is the first one that didn’t work for us.
“So it makes you go back and rethink everything, not just the fact that it didn’t work – certainly we spent a lot of time reflecting on that – but more importantly saying, ‘Let’s look at everything and say, ‘What could we be doing better, smarter, more effectively to really position the company in the best possible way gong forward?” And that’s what we’ve done, and that’s what restructuring is all about.
“This is really about right-sizing the enterprise here for the productions that we’re doing, so a combination of resetting the scale of what we’re doing coupled with our next-generation animation tools, which are much more efficient and faster and higher quality, is allowing us to scale down the enterprise and maintain the quality. That’s always been the fantastic way we have compensated the talent in our deals, which is, if we succeed they succeed. So they work mostly on contingent compensation. [For Me and My Shadow] we’ve scaled it back down in order to get it on a development track, so it will be sometime beyond 2014. But no dates.”
While the company behind the Shrek and Kung Fu Panda franchises have The Croods and Turbo to roll out around the world in 2013 (along with an original Netflix-exclusive children’s series for the latter franchise based around talking snails), could any box office takings for the new films (the first of a new distrubition deal with 20th Century Fox, taking over from Paramount) actually have to do the unthinkable and save DWA from extinction, or do they have enough of a brand presence to survive regardless?