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DreamWorks Animation SKG Inc. branched off from the Viacom family in 2004 and became its own publically traded company though it retains close ties with Paramount a subsidiary of Viacom who DWA relies solely on to distribute its motion pictures and home entertainment. In 2012, Katzenbergs total compensation was $3,999,998. $1 of which was earned in salary, and $3,999,997 earned in stock equity for DWA. Katzenberg received no compensation based off of a bonus system.
Period Ending
Total Revenue Cost of Revenue Gross Profit Operating Expenses Research Development Selling General and Administrative Non Recurring Others
4,891 131,242 -
2,864 112,554 -
3,183 108,342 -
(64,963)
109,858
166,844
Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income Before Tax Income Tax Expense Minority Interest 11,326 (53,637) (53,637) (17,215) 13,315 123,173 123,173 36,372 (280,346) (113,502) (113,502) (284,141) -
(36,422)
86,801
170,639
Non-recurring Events Discontinued Operations Extraordinary Items Effect Of Accounting Changes Other Items -
(36,422) -
86,801 -
170,639 -
(36,422)
86,801
170,639
Current Market Share and Trends: DWA stock price as of April 19, 2012: $19.65
As displayed in the table above computed by Wolfram Alpha, though there was a significant peak during 2010 overall trends show stock DWA stock price to be at a fairly consistent decrease from 2010-2012. However things appear to be leveling out and becoming more stable from mid-2011-present meandering right around the $19.00 mark. Finding relevant information about DWAs current market share proved exceptionally challenging because DreamWorks Animation SKG, Inc. is a publically traded company while all of the companys direct competitors are private animation studios who do not disclose crucial information need to calculate proper market share. However, using the table below that gives revenue information for DreamWorks Animation and the animation industry overall we were able to compute a rough estimated market share.
Direct Competitor Comparison DWA Market Cap: Employees: Qtrly Rev Growth (yoy): Revenue (ttm): Gross Margin (ttm): EBITDA (ttm): Operating Margin (ttm): Net Income (ttm): EPS (ttm): P/E (ttm): PEG (5 yr expected): P/S (ttm): 1.67B 2,400 0.21 749.84M 0.30 105.48M 0.13 -36.42M -0.43 N/A 1.92 2.16 PVT1 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A PVT2 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A PVT3 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Industry 3.28B 6.57K 0.38 2.47B 0.38 546.58M 0.16 N/A 1.47 19.68 1.36 1.33
Pvt1 = Blue Sky Studios, Inc. (privately held) Pvt2 = Pixar Animation Studios Inc. (privately held) Pvt3 = Walt Disney Animation Studios (privately held) Industry = Animated Movie Production, Theaters
Calculated Market Share: 749.84M/2.47B= 30.357% The Market Share of 30.357% represents the share of market in the animated movie production industry only and does not reflect the movie industry as a whole. When compared directly to the entire motion picture production industry and the large, publically traded, motion picture studios; The Walt Disney Company, Time Warner, or Viacom, market share is dramatically reduced to a small fraction of the market, only 2.4%. Market share in this industry
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depends greatly on public opinion regarding the productions being released. A string of unpopular movies has the potential to disrupt and displace significant numbers of market share because consumers view the products produced by these companies to be highly elastic and substitutable. Over the course of the past three years DreamWorks Animations market share has seen a steady decrease coming off the high of box office hits like KungFu Panda 2 in 2011, to a complete box office flop in 2012 with Rise of the Guardians.
Box office sales at movie theaters have dropped significantly since 2009 reflecting high numbers of unemployment and lower disposable incomes. Instead of going out to see a movie in theater, many people are willing to sacrifice waiting to see a movie once it is released on film, or available through rental programs like Netflix and Redbox, instead of paying high box office prices. Many people have also used the readily available technology to pirate illegal copies of box office films. Controlling piracy is extremely difficult because it is being done online by such a large number of people through dozens of various sites. Piracy is a very serious issue that dramatically reduces a studios revenues and continues to deter people from visiting movie theaters. Revenue generated through box office sales traditionally makes up about 13% of the studios revenue on a given film but it cannot sustain these numbers if box office sales continue to decrease and piracy continues to increase. There is however a light at the end of the tunnel. Since the downturn of the economy in 2009 disposable income has been very low and many people have not put buying movies or going out to see movies at the top of their priority lists. This however is forecasted to change as over the next five years IBIS World predicts disposable income to increase 2.4% stimulating consumer spending, resulting in a 2.5% yearly gain of revenue in the industry through 2018.
Competitive Analysis
In the movie production industry, DreamWorks Animation (DWA) has many strong competitors. Larger companies have proven to have success in this industry due to their available finances to sponsor the high risks that is involved in motion picture production. Most of these large companies produce a diverse portfolio of movies that cater to a wider variety of potential
viewers which is a likely culprit to their success.1 Smaller companies, like DreamWorks Animation, tend to focus work into a niche markets, with a much more specific target audience. There are clear advantages and disadvantages to taking a niche approach. The primary disadvantage being that DreamWorks is limiting its potential market share and creating a very distinct brand association with a certain type of motion picture, that if they want to expand and branch out into other types of movies later, will be difficult to alter consumer perceptions. Advantages however include saving a great deal of money by having a narrow focus and clear company vision of high quality computer animated family friendly films and not having to waste labor on branching out from that vision.
Company The Walt Disney Co. (DIS) Time Warner Inc. (TWX) News Corporation(NWSA) Viacom Inc. (VIA) NBC Universal (NBCU) DreamWorks Animation SKG Inc. (DWA) Revenue( $ Million) 5,8722 4,658 4,438 3,906 5,614 749.8
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As shown below in the table, it is apparent that DWAs competitors are much larger companies: The Walt Disney Company, Time Warner Inc., News Corporation, Viacom Inc., all of which have many more resources at their disposal, and all of which that do not specify in one particular type of movie as DreamWorks does. There are however a few companies that do strictly animation type films are a part and sub-brand of larger firms such as: Pixar in the Walt Disney Company, Blue Sky in News Corporation, and Universal Pictures in NBC Universal.
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Because these sub-brands specialize in animation, they are a more representative a true competitive threat to DreamWorks. However, due to the fact that most of these sub brands are private and not traded publically, acquiring complete share data on the smaller subdivisions of the large corporation is much more difficult to find and much less complete than the data available for the parent brands. The Walt Disney Company is an obvious market leader in the industry raking in revenue reaching $5,872 million in 2012 and employing 166,000 people, nearly seventy times the number of employees DreamWorks Animation SKG currently employs. Other key market players include NBC Universal with $5,614 million in revenue and Time Warner Inc., $4,658 million. Working as a small company in a sea of giants has proved difficult for DWA. The motion picture industry is highly saturated with many names that have been around for a substantially longer time than DreamWorks and have a large and loyal market share and positive brand association.
Company The Walt Disney Co. (DIS) NBC Universal (NBCU) News Corporation DreamWorks Animation (DWA)
The above table shows the top three market leaders compared to DreamWorks Animation. It is obvious when looking at the spread of the market that DreamWorks has a long way to go to be able to compete with the top companies in the industry, though DWAs market
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share might be skewed by the several major productions that DWA has coproduced with Paramount Studios, a part of Viacom that holds a respectable 12.8% of the market share.
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Works Cited "DREAMWORKS ANIMATION SKG, INC. SWOT Analysis." DreamWorks Animation SKG, Inc. SWOT Analysis (2012): 1-8. Business Source Complete. Web. 18 Apr. 2013. Kaczanowska, Agata. "IBISWorld Industry Report 51211a: Movie & Video Production in the United States." 2013. IBISWorld. Web. 16 April 2013. Local Market Audience Analyst. SRDS Media Solutions, n.d. Web. <http://www.claritas.com/SRDS/home?user_id=1366394523100373683&auth_token=IjE FwV7c1e2KBS2%2B%2BohtlfWyDLo%3D>. Mergent, Inc. DreamWorks Animation SKG Inc data report. (2005). Mergent Online database. Western Washington University, Bellingham, WA. 16 April, 2013. Roberts, Johnnie L. "Working The Dream." Newsweek 145.20 (2005): 46-47. Business Source Complete. Web. 19 Apr. 2013. Seeing Red. Hollywood Reporter 411.9 (2009): 27. Business Source Complete. Web. 18 Apr. 2013 Walfram Alpha. N.p., 18 Apr. 2013. Web. 18 Apr. 2013. https://courses.wwu.edu/webapps/portal/frameset.jsp?tab_tab_group_id=_2_1&url=%2F webapps%2Fblackboard%2Fexecute%2Flauncher%3Ftype%3DCourse%26id%3D_3127 1_1%26url%3D Yahoo Finance. Edgar Online, n.d. Web. 18 Apr. 2013. http://finance.yahoo.com/q/is?s=DWA+Income+Statement&annual
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"2013 Market Share and Box Office Results by Movie Studio." 2013 Market Share and Box Office Results by Movie Studio. N.p., 2013. Web. 18 Apr. 2013.
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