DreamWorks Animation had some bad news today, saying that it was cutting jobs and production. The decision comes after two separate sets of talks to take over the company last year led to nothing. The whole management structure will also be lightened with the changes.
Investors heard today that 500 jobs would be axed from the company. DreamWorks Animation would also reduce the number of movies it makes to just two per year. There will be one original and one sequel movie created each year, starting from 2016. The company originally shared three movies a year.
Jeffrey Katzenberg, chief executive of the company, announced that the creative side of the company had fallen short. It was “too ambitious” to expect the company to produce three movies a year with that in mind, so two would have to be the maximum. That does mean less income, and means a change to the employees.
In the 500 job losses, three of those will be Katzenberg’s deputies. Vice Chairman Lewis Coleman, Chief Marketing Officer Dawn Taubin and Chief Operating Officer Mark Zoradi will all say goodbye to their positions. He refused to discuss the acquisition talks last year, both of which failed. He originally spoke to SoftBank Corp, a Japanese telecommunications company, and later Hasbro Inc.
Despite the news that DreamWorks Animation is cutting jobs and production, there is still some positive news. The main news is that Katzenberg is focusing on areas that the public would like. He wants to expand into online video, television and consumer products, believing this is where the money is. He will also refocus energy into the feature-film division of the company, which struggled last year.
The news of job losses and production cuts usually leads to drops in shares. However, the news saw DreamWorks Animation shares increase by around two percent.
There are already plans for animation movies over the next three years. This year, there will be one movie, Home, released on March 27. Next year will see the release of Trolls and Kung Fu Panda 3, and 2017 has Captain Underpants confirmed so far. The 2017 movie is being outsourced in parts to overseas vendors, presumably to lower costs.
The DreamWorks Animation job cuts will take over the next year to complete, and will mean about a fifth in the current workplace reduced. All departments will be affected by the job cuts, although the majority will be from the production personnel. The northern California operations will close, but some employees will be given the option to relocate to the headquarters in Los Angeles.
Over the last few years, the company has released a number of poor movies. Rise of the Guardians and Turbo have been two of the most recent, and Penguins of Madagascar did not do was well as expected. The job cuts are needed and will reportedly save around $30 million this year alone. By 2017, the savings are expected to reach $60 million before tax. It is disappointing news for employees as they learn about the job cuts and production decrease, but it is something DreamWorks Animation feels the need is necessary.
By Alexandria Ingham