December 11, 2008 / 10:34 PM / 9 years ago

Dreamworks says films delivering profitability

3 Min Read

<p>Panda characters stand on the red carpet at the DVD release of "Kung Fu Panda" at the Grauman's Chinese theatre in Hollywood, California November 9, 2008.Mario Anzuoni</p>

LOS ANGELES (Reuters) - DreamWorks Animation SKG Inc Chief Executive Jeffrey Katzenberg said on Thursday the company's films were delivering a level of profitability despite the current U.S. recession, which is dramatically slowing the home video market.

Speaking via webcast from his company's analyst day in New York, Katzenberg said his company's two films "Kung Fu Panda" and "Madagascar: Escape 2 Africa" are on their way to becoming two of 2008's highest grossing films.

He also said the company would produce another "Madagascar" sequel in 2012.

Looking ahead, Katzenberg said he remained upbeat about the company's upcoming 3-D release, "Monsters vs. Aliens" in March 2009, saying he believed that as many as 2,500 screens would be 3-D ready when the films comes out.

The Glendale, California-based company plans to make all future films available for 3-D.

Hollywood overall has a lot riding on 3-D, with more than a dozen 3-D films slated to be released next year by various studios, including DreamWorks' "Monsters vs. Aliens."

Including IMAX screens, there are about 1,500 screens in the United States and Canada that have the added equipment necessary for 3-D and plans are in place for up 1,000 additional screens to be installed by March 2009, a DreamWorks spokeswoman said.

Katzenberg said he believes there will be as many as 7,500 3-D screens in the marketplace in 18 months.

DreamWorks chief operating officer Ann Daly said the U.S. recession was having a dramatic effect on industrywide home video sales.

Citing information from the company's distributor -- Viacom Inc's Paramount -- and other sources, industrywide overall DVD sales and rentals have declined from last year by about 6 percent, Daly said via webcast from the company's analyst day in New York.

She said higher margins per unit were helping to offset some of the declines in sell-through volumes for DreamWorks, she said.

She also said "Kung Fu Panda" fourth-quarter sales were on their way to exceeding 10 million units on a worldwide basis.

Company officials said that as the DVD market continues to mature, DreamWorks was moving to diversify its revenue streams by focusing on television, Broadway and the advent of 3-D in theaters.

Reporting by Sue Zeidler, editing by Gerald E. McCormick, Gary Hill

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