DreamWorks CEO Jeffrey Katzenberg. (Photo: drserg /Shutterstock.com) DreamWorks CEO Jeffrey Katzenberg. (Photo: drserg /Shutterstock.com)
Business

DreamWorks Animation Plans Major Layoffs

Major layoffs are coming up at DreamWorks Animation. Details aren’t known yet, but the number of people who will be given the slip could possibly exceed the 350 employees were were dismissed in 2013, according to a report in today’s LA Times.

The layoffs will affect every part of the company’s 2,000-plus employees from animators to production artists and non-creative personnel. The studio refused to comment on the layoffs saying it “does not comment on rumor and speculation.”

However, the Wall Street Journal contends that the layoffs are not a rumor since they began happening last week. At this point, it’s not a matter of if, but of how many people will be let go.

In recent years, DreamWorks has been struggling to diversify its business model after their success in the animated feature market dried up. Three of their last four films—Turbo, Mr. Peabody & Sherman and Penguins of Madagascar—have underperformed at the box office. The latter film is in danger of becoming the lowest-grossing DreamWorks CGI film ever released in the United States, which is especially shocking because the Madagacar universe was once considered among the studio’s most successful brands.

CEO Jeffrey Katzenberg had considered selling the studio, but his attempts to make a deal with companies like Hasbro and SoftBank came up short.

The studio recently replaced its feature animation president in an attempt to turn around its film division.

Never miss a story. Stay up-to-date with Cartoon Brew’s daily headlines by liking our Facebook page.

Photo: drserg /Shutterstock.com

  • Kirielson

    DAAAAAAAAAAANG! That’s bad man.

  • starss

    What did we predict?? What did we KNOW would happen once Penguins underperformed??

    • Anonymous

      I know a few people working on “Home” who swear that it’s also going to tank.

      • AmidAmidi

        You don’t need to be working on “Home” to know it’s going to tank. Just the trailers are hard to stomach.

        • fried

          You could say that about the old Madagascar and Shrek trailers and those films did well.

          It’s moreso that there’s so much competition and the standards have become so much higher for Dreamworks that they cannot compete in the feature film industry. They should seriously consider just re-tooling their studio to be TV-centric considering they’re making most of their franchises into tv shows anyway.

        • M.

          Well, personally I enjoyed “Almost Home”. I guess it has at least a “hint of wit or humor” because it this person’s vote.

        • Barrett

          The short ‘Almost Home” was actually rather amusing, though most of that was due to two factors;

          1: Timing and staging of the gags
          2: Steve Martin

          The trailers I have seen for the actual movie are somewhere between annoying and execrable. I have no doubt the movie, even if it does better than “Penguins” did, will still be a box office disappointment, because anything that doesn’t make at least as much as Big Hero 6 or the first three week total for Frozen is considered a “disappointment.” Dragons 2 was considered a disappointment, even though it made much more than anything else DWA has done recently (and with good reason, since it was a much better film than anything else they’ve done in the past 3 or so years.)

          DWA will either be “reinvented” by someone other than Jeffrey, or it will essentially die (if not entirely, it will become a moribund studio with almost no employees and put out only shorts and TV shows that are offshoots of things like Shrek, Dragons, or Kung Fu Panda.)

          My condolences to all the creative (and non-creative) employees who will bear the brunt of the bad decisions from up top.

      • Alex Dudley

        If they know it’s going to tank, why didn’t they do something about it?!

  • ShouldBeWorkin’

    Great photo. Looks as though Jeffery Katzenberg is anticipating to say a bad word.

  • Sairs1111

    Nooooooooo

  • Alex Dudley

    So, I assume now more of the animation’s going to be done overseas?

    • James VanDam

      Most likely -___-…..

  • ThatGuy

    Why are we surprised. They’re opening that mega-complex in China. Did you really think our jobs WOULDN’T go there? Wake up everyone. This is just the start.

    • Kirielson

      So then the question is how do animators retain jobs in the US, because it sure is heck not going to be from protectionist laws.e

    • Todd DuBois

      You know, Oriental Dreamworks was founded in 2012, prior to the 2013 layoffs that occurred in the wake of the write-down on Rise of the Guardians. It was also 2012 when the NY Times reported on the plan for DreamWorks’ “Dream Center” in Shanghai. As near as I can tell the backbone of Oriental DreamWorks was & is the acquired studio 37 Entertainment and its 175 employees, it hasn’t grown in proportion to the cuts at DWA, and it was billed as a separate entity from DWA at the time.

      Are you really trying to say not only that there’s explicit and direct outsourcing going on, but that it was set in stone and that it and these cuts would have happened even in an alternate scenario where Rise of the Guardians didn’t disappoint expectations?

      There’s certainly blame to be laid down for the studio’s trouble, but scapegoating China isn’t hitting the mark.

  • cookedart

    Can anyone please explain to me the math behind how Dreamworks is apparently underperforming so much?

    Turbo’s cost is $135m, Worldwide gross is $282m.

    Peabody’s cost is $145m, Worldwide gross is $272m.

    Penguin’s cost is $132m. Worldwide gross is $287m.

    (Source is BoxOfficeMojo.Com)

    In all of these cases, even factoring in the adage of ‘doubling your production budget for distribution and advertising costs’ – each and every one of these films would have pulled in a modest profit. Not blowing the doors off, obviously, but far from bleeding cash at the rate of financial ruin.

    Yet we have a $13.5 million write-down on Turbo, a $57 million write-down on Peabody, and who knows what on Penguins.

    What am I missing here?

    • A

      The theaters keep half…

      • cookedart

        If the theaters only kept half, all there of those movies would still have had a profit. This is before home video which I assume has a high profitability.

        • Fried

          If you spent $100 to make a cartoon short, used $50 to advertise it, it made $200 and the theater kept half, you just got back the $100 you originally spent to make the film in the first place.

          Which means you made no profit. In fact, you might have lost some because you didn’t get back the $50 you spent on advertising.

          That’s why studios need to make at least three or four times their budget back. Had your film made $400, and the theater kept half, you would have gained at least $50 from the whole venture.

          • cookedart

            But what I’m seeing here is, they spent $100 to make it, got $200, and no ones quite sure how much they spent to market and release it. And even if they did spend $200 total and broke even, it doesn’t add up to needing to take a write down on the films.

            I don’t question that their films need more profitability in their theater run. I’m questioning the transparency of their accounting, because the reports don’t add up. A $57 million write down is a significant loss. And the workers are taking a hit for these numbers. Its worth questioning how DreamWorks is arriving at these figures. Things could be a lot worse than they are claiming.

  • Anonymous

    As someone who got laid off 2 years ago from DreamWorks there’s not much work out there. Now there’s more competition for not that much.

  • Jackson5

    I don’t understand how this is so hard. They keep bombing because they are not making anything worthwhile. The last couple years they have made nothing that will make people do a double take. A triple take even. There has been no envelope pushing. They need to keep track of what’s going on with all films in the industry. (not just animation). Domestic and International alike. Animation cannot just be in it’s own bubble. It always needs to be aware of all movies around it. They need to just make movies. Not just animated kids cartoons, but movies that can go head to head with the likes of heavyweight hitters in live action film making. Push storytelling. Be precise. Be dramatic. Why does an animated film always have to be the same genre? Get out of the comedy genre for a while. Get out of the kid’s box for a while. Really push something. Hell, experiment, and try to make something of quality under a certain budget. Studios in the 90’s seemed to manage that just fine. Sometimes a studio just needs to wake up, smell the roses and make some gosh darn movies, and stop worrying so much how to fit their characters into pop culture. The public will take care of that if the movie is good and worthwhile

    • Todd DuBois

      DreamWorks has had successes, the problem is that for every one of those they make they also churn out multiple mediocre films. Their rivals, on the other hand, go for less but don’t settle for less, taking the time and effort to cultivate and polish each individual piece work with varying degrees of creative and financial success. The results of the contrasting approaches are plain to see.

    • M.

      It is vitally important for artists and studios to endeavor to make the best work they can. And yes, DreamWorks has made mistakes with their stories at times. However, making a film that is bold, artistic, and unique is not a guaranteer of financial success or public praise. Making a film that panders to audiences’ sensibilities isn’t either. Art is not known for always being a precise science. “Inception” was an interesting, well-exectuted concept that was overlooked at the Oscars, while “The King’s Speech” — a good yet arguably safe choice — took the prize home. “Frozen” wasn’t expected to be the hit that it was. “How to Train Your Dragon 2” was well acclaimed and yet underperformed in the domestic box office. There are steps DreamWorks (and all studios) can take to improve their films; but I don’t think it’s an easy task as is stated above.

    • Jonathan Lyons

      Phrases like “push storytelling. Be precise. Be dramatic” or “wake up, smell the roses, and make some gosh darn movies” are completely empty. You think it’s easy to create a successful animated feature film, but you can’t put one concrete suggestion into a blog comment.

      • Jason

        Don’t make movies like Turbo for one.

  • Adzl33t

    Home is not gonna help, the company need to take risk and do something more substantial like HTTYD and Kung Fu Panda. Movies like Home is just like any other lesser animated film

  • Groundhog

    I think we should all take a moment to think about what this means, not only to the hundreds about to be unemployed, but to the greater industry that a major player is struggling. These are sad times.

  • cookedart

    So you’re still saying that with loans for budgets (which I’m not 100% certain that every movie at a big studio needs to take out loans to finance 100% of every movie, especially at a large studio) – we’re talking costs of 3x total of the production budget. If what you say is true about home video (up to 3x the worldwide gross), Dreamworks is still clearing into the black on every film.

    One inconsistency in your post – you mention ‘marketing and distribution’ costs as much as film budget – but later you claim ‘And the promoted budgets don’t include prints and advertising, which can add up considerably – especially for the larger studios. Conservatively, I would lop off 7%’ – marketing, prints and advertising are the same thing.

    I’ve yet to see a consistent, clear, understandable balance sheet on how Dreamworks is arriving at these write-down numbers. If the numbers they are reporting are true I come to a net amount. I’m not saying they need to explain every dollar. But they ought to explain for their shareholder’s sakes how these numbers are arrived at.

    In fact, I think it’s even fair to question why distribution and advertising numbers are a coefficent of the production budget at all. Does Cars 2 or Toy Story 3, with a 200m production budget, feel like it got twice the amount of theaters and advertising as the Return of the King?

    It all feels like funny Hollywood accounting, something similar to this:

    http://deadline.com/2010/07/studio-shame-even-harry-potter-pic-loses-money-because-of-warner-bros-phony-baloney-accounting-51886/

  • I’m not surprised, though I admit I thought this was going to happen after Home, not before.

    And… in this week’s predictions for the 2018 Animation job market, Dreamworks has been taken off the American menu! Good luck to that graduating class finding a job in the oversaturated job market!

  • Alex Dudley

    With broadcasting rights, streaming rights, DVD and digital download sales , I always wonder why companies get so worried over a film bombing when they’re films make the money back eventually. I guess most companies (like most people) would rather have money now, then later.

  • Carnie

    10 years ago WDAS was in the basement and everyone was wondering if they were going to close their doors and Dreamworks could make a damp rag on film a hit. Now WDAS is flying high and Dreamworks is low. The point being… This business is a roller coaster. And there will be ups and there will be downs. Unfortunately the constant is that the creative people seem to be the ones who take the brunt. Best of luck to all involved.

  • I’ve said it before but I’ll say it again: Dreamworks desperately needs a new business plan & CEO.

  • Sarah

    I believe in DreamWorks!! The next movie Home may or may not be spectacular, but the one movie everyone wants to see is Kung fu panda 3!!! After almost 5 years of waiting! As for me I’ll see it opening day!!!! Stay strong DreamWorks!!!!!

  • Alf

    I’ve got news for you: the story crew couldn’t do anything about it either. It was entirely the director’s call on Home. His show all the way.

    • Barrett

      Same thing happened with “Brave.” Everyone I knew inside of Pixar was warning me not to get my hopes up, that this movie was NOT going to be the bold visual and storytelling breakthrough “Bear & The Bow” suggested it might have been. Buzz/scuttlebutt from people working on a project is usually a pretty good indicator of things, especially if the film is 2/3rd or more finished. Earlier than that, a lot can be up in the air and most people aren’t talking anyway.

  • OtherDan

    Blizzard is also looking for animators (also short term-4mo)

  • GrizzledVet

    If only they’d planned ahead and colluded to cap salaries, they wouldn’t be in this m– oh.

    I’m sure there are endless explanations for Dreamworks’ failure. It partly comes down to Franchise Fatigue. Do we need endless Madagascar spinoff movies, and TV series that deliver more of the same? Why shell out moviegoing premiums to see characters you can watch on Netflix, with production values that will be indistinguishable to most viewers?

    The studio seems uninspired. Pity.

    • Jeffrey

      There’s some truth to your over-saturation argument. That’s what happened to Disney Feature in the late 90s when they did too many direct-to-video, less-than, spin-offs. They got greedy. That practice diminished the very franchises they were trying to exploit. The public didn’t value them either because the quality was spotty at best. The scheme nowadays is to try and forcefully create ‘franchise properties’ that can be exploited-rather than milking proven existing properties. I don’t think you can streamline these things, and that’s the impression Dreamworks always had to me: trying to force blockbusters-not acknowledging or valuing inherent qualities that make characters and stories resonate and transcend the ordinary.

      • The Dream is over.

        And what’s the common denominator between the 90’s Disney over-saturation, and now Dreamworks flooding the market with generic, uninspired, money-grabbing content? Ann Daly.

  • ThatGuy

    Whenever someone uses the word scapegoat they’re generally hurling poorly disguised uses of the word racism and or bigotry whether they realize it or not.Deal.

  • Kusanagi

    When is the last time any movie has shown a net profit?
    According to the link provided by “cookedart” even the Harry Potter movies, which have earned over a billion dollars, are still considered money losers by Hollywood accounting methods.

    I’m surprised that any Hollywood studio actually has to pay any sort of income tax to any level of government when they cook their books to show every movie as losing money on a net profit basis. Of course, I’m not really that familiar with the ins and outs of movie financing, so maybe it works a lot different than the way I perceive that it does; however, it does appear that film studios care more about gross profit than they do about net profit, because everything seems to be calculated on and everybody takes their cut of the gross, except unaware creatives who get suckered into signing bad deals by studios.

    I mean isn’t the main reason why the author of Forrest Gump wouldn’t sell movie rights to any of his successive Gump novels due to him being suckered into a deal giving him a share of the “net profits” from the first film? From what I have read he never saw a dime from that film, even though it was massive hit both critically and financially.

  • Barrett

    No, but having creatives on the payroll is a drain in an already sinking ship if you aren’t going to take any of their creative input on story direction, character, etc. Other than KFP and HTTYD, Dreamworks has mostly put out mediocre-or-worse films over the past decade. Even their early “failures” like “Road to El Dorado” or “Shark Tale” look good by comparison. (OK, that’s an exaggeration, NOTHING could make “Shark Tale” look good by comparison.)

  • The Dream is over.

    How do you think those poor, starving Middle and Upper Management folks are going to survive? BMW’s aren’t just going to buy themselves you know. Sheez.

  • Alf

    Very Creative Industry Accounting. While it’s true that the films cited lost money-as in they didn’t turn as big a profit as needed/expected-the supposed “budgets” simply aren’t reflected onscreen or in real life. But DW charges EVERY bit of studio overhead to EVERY production, as they see fit. It’s screwy for sure.

  • wgan

    whatever happens, i wish them the best, Kung fu Panda is still my favorite cg animation to this day!

  • Barrett

    The comment is probably in reference to the widely-held belief that any “net” numbers in Hollywoodland are about as fact-based as the Piltdown Man, the Iraq “yellowcake” report, and Milli Vanilli combined.

    As Freakzoid once said, when tutoring a naive dupe on what to ask for in a Hollywood contract; “Always ask for a piece of the gross, NOT the net, the net is fantasy.”

  • Barrett

    Tarzan and Treasure Planet especially were considered to have bloated final costs. Tarzan did alright even with the initial cost, Treasure Planet, not so much. Tangled had an insane final budget because they practically made the film twice; there was all kinds of expense for the development of new animation software, hardware, and training of old animators how to use it, and of new animators how to then animate like an old animator, once the old animator was up to speed! Glen Keane literally had a heart attack from working too hard on that show.

    For the others, inflation is a big part of it, anything from the 1990s needs to have its figures plugged into the ol’ inflation calculator to get any kind of useful comparison to films made in the past 5 years. Your inclusion of direct-to-video films like Jungle Book 2, which were done mainly overseas, is an apples-an-oranges comparison if we’re talking film budgets.

    No major feature animated film is going to cost under $50 million these days, unless it is something “boutique” like Song of the Sea, which I would argue isn’t really a “major” feature, but an indie art-house type film. Book of Life barely kept to $50 million, and that is (allegedly) due to a lot of unpaid overtime on the part of many of the artists.

    Animated features, even ones on a budget, need to bring in at least $150-$200 million to be profitable. Laika keeps going because of the nearly endless Nike cookie jar, and god bless Travis and Phil for it, because there is no way what they are doing could be profitable in the current feature film marketplace. Laika is like a subsidized art collective, and I’m hoping they stick around a while more and keep putting out innovative and entertaining art films!

  • Barrett

    I would say, at this point in time, Disney is more reliably hitting all the marks. Even films that may have left some of us film geeks annoyed (Frozen) clearly “work” for a mass audience, as it’s the biggest thing box-office-wise to come out of Disney since The Lion King.

    Pixar has been better creatively and economically than Dreamworks recently, but on the creative side, they are running a bit flat. They made better sequels to their existing properties than DWA did, but that’s like being the world’s tallest midget if we’re talking “creative originality.” Their original productions “Brave” and “The Good Dinosaur” have been riven by creative fights and internal strife. That doesn’t mean “Good Dino” can’t be a great film, “Ratatouille” was similarly troubled, but the fix-it man on that job was one Brad Bird, so I see it as exceptional.

    Long story short, Pixar is in a better place than Dreamworks, but that doesn’t mean it’s the example to follow.

  • Matt

    I was there when he gave that speech and most all of the crew were 2d artists. Facilities couldnt wait for us to leave and with that speech the mood on the campus became grim. My last week there guys would come around and measure our cubes and interrupt our work and when I asked why I was told they were taking measurements for computer desks and they seemed giddy about it all. This could of been avoided if Katzenberg did not say crazy things like 3 films a year or even two. Make one and make sure it works. Another thing Jeffrey, stop turning every show into a spinoff on Nickelodeon or netflix you over saturate your product and people become less interested. You go for the quick cash grab but in the end you lose it all. I really dont know where all those artists who are being laid off are going to go.

  • Bobby Bickert

    Over the Hedge was based on a comic strip.

  • James Madison

    This is sad for all of the workers. Especially those with young family members.

    Question for Amid and anyone else who would know –

    Why don’t these companies create and stick to smaller budgets that would not jeopardize people’s livelihood? Manage a budget that if the movie does not perform well initially, at least the financial burden will not trickle down and effect the workers, or anybody for that matter?

  • Lord Pigeon

    Yeah… ’cause it’s not like an adaptation of Rapunzel has been done a million times before… right?

  • Mario Bros

    He never figured it out, that’s the thing.

    You have to watch the Waking Sleeping Beauty documentary.
    Nobody wanted him at Disney, he didn’t understand nor cared about animation. Most of the time he was only there to inflate his ego and promote himself as the “face” of Disney along with that other asshole MIchael Eisner.

    • I actually have that documentary of Waking Sleeping Beauty (a great documentary by the way). Yes, Jeffrey was pushy and different for the animators there to deal with. However, he was one of the main leads of the animation department that forced the artists to turn around what was going on at Disney at the time, as the documentary has mentioned between Jeffrey and the directors there for the films.

      There was a clip that was cut out from the documentary where the animators held a party for Jeffrey, and they gave him their regards and appreciation for what he did. Not saying they all loved him and adored him, but they appreciated for what he did.

      Lastly, Michael Eisner brought Katzenberg in as they worked together in the past and Eisner knew what Katzenberg could do to help turn Disney around..it was as the studio started to be really successful in all avenues (live action, theme parks, AND animation) is where Katzenberg, Eisner, and even Roy Disney were butting heads…all the way to Katzenberg’s departure.

      My final post is that, Katzenberg did love animation, even before finally letting go of hand drawn animation at DreamWorks in favor for cgi (stated in the book “The Men Who Would Be King” – great book about DreamWorks’ beginning and their struggles as a studio). Remember that Peter Schneider (I believe, or someone else who narrated this) spoke of Jeffrey finally finding his calling, something of his own, and where he didn’t have to answer to Michael anymore…and I feel that’s where Jeffrey’s arrogance probably grew more, upsetting Roy Disney.

      Thanks for responding, and I hope that you are enjoying this conversation as I am.

  • Khuzang

    I remembered the Snuggly Duckling sequence and the frying pan.

    That’s about it…

  • Khuzang

    By all means, enjoy it.

  • Justin Dike

    If you’re reading this and you’ve gotten laid off from Dreamworks, contact Justin over at CartoonSmart.com , I’d love to have some great animators or illustrator come teach for us. Serious offer.

  • Kisai

    I’m not going to pretend I know any better.

    Let me rattle off a list of why I don’t/haven’t seen Dreamworks animation in the theater, and haven’t considered them for purchase:
    – They cut too many corners. Often stopping the action just to have talking-head scenes. Compare Tangled or Frozen with Kung Fu Panda and Shrek. The Disney movies come out as more polished, better stories, while the DWA animation relies on slapsticky comedy for a lot of the action scenes.
    – Disney stories are more kid-friendly, but they are still powerful dramatic presentations. DWA seems like they only have 3 story beats to hit, and have to backfill the rest of the adventure with irrelevant comedy.

    Things like Antz, Bee Movie and Turbo… hold no interest to me. Neither does Cars or Airplanes. Yet which actually was worth seeing?

    Mr.Peabody and Sherman was actually a decent crack at recycling an old property without being nonstop-comedy. Monsters vs Aliens, and The Croods were also decent storyline films. But you see the same problem with every film, there’s just not enough story, and it’s too much talking-heads cracking jokes.

  • Khuzang

    Turbo = Cars 2.

    Let that sink.