It was a tough 2014 for Dreamworks, and now the nightmare continues, this time for employees as management plans to eliminate nearly a quarter of its jobs. Even as Dreamworks Animation won a Golden Globe award and an Oscar nomination for How to Train Your Dragon 2, this wasn’t enough to stem the tide of economic decline after a few flops like Penguins of Madagascar for which the studio had to take an $80 million writedown. Mr. Peabody and Sherman also received a tepid response and cost the studio money.
Dreaworks CEO Jeffrey Katzenberg told CNBC that it was probably a mistake to rev up production of films from two a year to three in 2010. Now the company will narrow its goals to two films a year. “I don’t think we ever retained the creative capacity to maintain the highest level of quality while we went for quantity, ” he said.
Dreamworks received some attention as a takeover target last year from Softbank and Hasbro, but the two companies ultimately decided not to buy the studio. Katzenberg says, “I remain 1, 000 percent committed to DWA… my efforts in the last couple have years have been spent on expanding the company. It’s now time to turn my attention back to our core business.”
One of the casualties of this narrowed focus is Dreamworks Redwood studio, which will be closed. Variety calls this move, “the end of an era” since the studio, Pacific Data Images, was an innovator in computer graphics animation and worked on films such as Batman Forever, Terminator 2 and Toys. PDI first collaborated with Dreamworks in 1998’s Antz, along with the hugely popular Shrek. Dreamworks had a 40% stake in the company, and despite its past successes, PDI is facing layoffs for half its workforce.
>Read an earlier version of this story: DreamWorks Animation to Make Fewer Movies