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The One Thing That Could Save DreamWorks Animation: China

At least one DreamWorks animated film has lost money for the past three years in a row: Rise of the Guardians in 2012 had an $87 million writedown; Turbo in 2013 resulted in a $13.5 million writedown; and this year’s Mr. Peabody & Sherman caused a $57 million writedown. This is rather obviously not a sustainable trend from a business standpoint, and investors are beginning to worry about the studio’s long-term prospects. According to the business website Motley Fool, China is the studio’s best hope for survival:

DreamWorks is making a big bet on its growth in China, and if it goes well, this could be a major boost for the struggling company. The vast Chinese film and media industry continues to explode. PricewaterhouseCoopers projects a value for the industry of $6.49 billion in 2017, more than double its $3.26 billion value in 2012.

Enter Oriental DreamWorks, a “Chinese content company.” Dreamworks has made a huge investment in China by partnering with Shanghai Media Group and three other local entertainment investment companies in a joint venture that includes production studios and attractions in Shanghai, a venture in which DreamWorks Animation holds a 45% stake. The new company will not only focus on animated TV production, it will also make live-action films, live-action TV, and mobile and Internet content. DreamWorks CEO Katzenberg is optimistic about this market and said that “China in three or four years will be the No. 1 movie market in the world… I just look at it as a place of opportunity.”

Oriental DreamWorks already has multiple projects in the works which are keeping it busy. An exciting current project is Kung Fu Panda 3, the third of the Kung Fu Panda series which has been very successful for the company. If this film release in late 2015 goes well, it could be the start of a very lucrative partnership for the Chinese venture.

The other option for survival, of course, is to simply produce better films, but who wants to waste their time doing that?

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