Back when Dreamworks SKG was struggling to stay in the black they did have one ray of sunshine. Their animation division, run by Disney veteran Jeffrey Katzenberg had enjoyed some success with the computer animated blockbuster Shrek, which turned the company's fortunes around after some major flops in traditional animation.
In 2004 Dreamworks Animation was spun off as its own publicly traded company with Katzenberg at the head, and the other DW partners Stephen Spielberg and David Geffen as investors and board members. Now there's a report that Japanese investment fund Softbank is interested in buying Dreamworks Animation for about $3.4 billion, and it's making Dreamworks Animation stock do a happy dance.
Is Dreamworks Animation a good buy?
Well, let's think about it.
DWA has had its share of successes and failures, but even their successes come with a certain set of caveats.
One of the things that separated DWA from its biggest rival Pixar/Disney was that DWA was the "hip" one larding its films with timely pop culture references and catchphrases to make them look much more "with it."
The problem with being "with it" is that hipness has a best-before date. Try looking at the first Shrek movie and it looks incredibly dated. That's going to affect its viewership with future generations on television and home video.
Also, they flogged Shrek to death, putting out sequels long after the franchise ran out of steam.
Pixar, their arch-rival, aims for a certain amount of timelessness in their stories. Watch a Pixar classic like the Toy Story movies, or Up, and for the most part you really can't place them in any particular time period, and on a narrative level can be enjoyed well into the future without looking like the animated equivalent of a cameo by Sonny and Cher.
However, that franchise management philosophy is not written in stone and can be changed.
Another thing that has to change is the simple fact that the computer animated features that are their bread and butter cost so damn much. They've had films making $200-$300+ million at the box office that still write-offs after production, prints, and marketing were calculated in.
That ain't healthy.
For an animation studio to survive they need television, and lots of it. DWA has some TV productions, but they're much thinner on the ground than their rivals, Disney-Pixar-Marvel, Paramount-Nickelodeon, and Warner Bros-Cartoon Network-DC.
That's because unlike their rivals, they don't have much depth in their line up. They have TV versions of their feature film characters, and not much else. Disney has their own roster of characters as well as Pixar's and Marvel's rosters, WB-Cartoon Network-DC has characters from the golden age like Bugs Bunny, to DC superheroes, Hannah Barbara, and the franchises they built from scratch. The closest comparison is Paramount-Nickelodeon, who built a large roster of characters and franchises from scratch, but who had an advantage that DWA lacks, which is their own TV channel that's directly invested in the success of those new franchises.
Which still makes me wonder if DWA is a good buy, and I'm no closer to an answer.