Falling DVD sales and the lack of a new pay-TV offering were reasons that DreamWorks Animation SKG Inc. cited Thursday for a 59% drop in first-quarter profit.
Net income declined to $8.79 million (10 cents a share) from $21.7 million (24 cents) the previous year, the Glendale, California-based studio behind the Shrek movies said in a statement.
Sales dropped 33% to $108 million from $162 million in the same quarter last year, just behind the $109 million average of 12 analysts’ estimates collected by Bloomberg.
A decline in DVD sales through out the industry has hurt DWA, Michael Pachter, a Los Angeles-based analyst for Wedbush Securities Inc., said in an interview before the results were announced. “The DVD market’s pretty much flooded,” he said, adding that “the studios have trained consumers to wait” until prices are lower or rental services make films available.
DreamWorks is releasing How To Train Your Dragon through pay TV this quarter, several months later than expected, Pachter said. Released theatrically on March 26, 2010, the movie contributed $8.7 million of revenue in the first quarter this year.
Released in theaters last November 5, Megamind brought in $18.1 million of revenue in the quarter, mostly from domestic home video. The film was released into the home entertainment market on February 25.
Shrek Forever After, released on May 21, 2010, accounted for $19.9 million of revenue in the quarter, mostly from home entertainment, where it was released on December 7.
Meanwhile, DWA plans two theatrical releases this year, Kung Fu Panda 2 on May 26 and Puss In Boots on November 4. The company said it anticipates that Kung Fu Panda 2 will help drive its second-quarter and full-year results.
The company said that TV revenue for Madagascar 2, How to Train Your Dragon and Shrek Forever After should also contribute to second-quarter results.
“We now look forward to kick-starting the summer moviegoing season with Kung Fu Panda 2 on May 26, as family entertainment — and CG animation in particular — has performed at the top of the box office charts so far this year,” said DreamWorks Animation CEO Jeffrey Katzenberg.
Shares in DreamWorks Animation fell 12 cents to $26.73 in Nasdaq Stock Market trading at 4 p.m. New York time Thursday. Prices remained unchanged in after-hours trading.
The shares traded at between $25.17 and $43.58 over the past year. They have dropped by 9.3% so far this year.