DreamWorks SKG was founded in 1994 by three entertainment aficionados, Steven Spielberg, Jeffrey Katzenberg, and David Geffen (The Cornell Daily Sunlight). The SKG appended to the name is representative of the first letter of each with their last labels. DreamWorks SKG is involved in a number of entertainment sections such as film, music, and tv set. At the time of its creation, all three individuals were involved with film development. Jeffrey Katzenberg have been recently fired as a studio room chairman in the Walt Disney Company, Steven Spielberg had temporarily suspended his lucrative directing career, and David Geffen was involved in film creation as well as the record industry. Each one of the individuals possessed something to provide, Spielberg along with his experience to make live-action movies, Katzenberg's animation movies, and Geffen along with his music backdrop (Guide for Business).
Financially, the business started with two billion us dollars, supplemented with various high-tech partnerships. Some of the initial money, $500 million, was added by a very interested Paul Allen, co-founder of Microsoft. Spielberg, Katzenberg, and Geffen also contributed around $33 million to the initial funds (Guide for Business).
During the first couple of years in business, DreamWorks success was like a roller coaster. Its first film, The Peacemaker, premiered in 1997, and only come to $12 million on starting weekend. In the years to check out, DreamWorks released several more lucrative motion pictures such as Mouse button Hunt, Deep Impact, and Antz. So that they can delve into other entertainment sections, DreamWorks released two television set shows High Event and Champs, which were failures. However, in 1996 DreamWorks released Spin City for ABC, which ended up being quite successful (Guide for Business).
By the late 90's and early 2000's, DreamWorks was pumping out very successful movies, many earning multiple awards such as North american Beauty, which received "Best Picture" at the Oscars in 1999. In 2000, DreamWorks created a fresh department called DreamWorks Animation, which produced animated feature motion pictures. With all the release of Shrek in 2001, DreamWorks started out rivalling head-to-head with Disney's animated movies. In 2004, DreamWorks Animation became its publicly traded company (Reference point for Business).
COMPETITIVE STRATEGY
The revenue generated by the film industry is significant, with hardly any players in charge of the full total. In 2008, the U. S. field office generated practically ten billion us dollars (Ars Technica). The eight major film companies responsible for almost all of the gross earnings include DreamWorks SKG, Fox Entertainment Group, MGM Holdings Inc. , NBC Universal, Paramount Motion Pictures Group, Sony Pictures Entertainment, Time Warner, and Walt Disney Motion Pictures Group (Motion Picture Access). A lot of the previously mentioned film companies get excited about a variety of film production methods including live action, digital animation, animation/live action, side animation, and stop-motion animation. Live action films account for the majority of the gross revenue made domestically, at $8. 6 billion with a little over 87% of the show. Digital animation accounted for $1 billion and organised over 10% of the talk about. The other film development methods accounted for the rest of the 2. 4% (The Quantities). Lots of the eight major film companies have a subsidiary that produces animated videos. The firms include Fox Entertainment Group with Blue Sky Studios, Sony Pictures Entertainment with Sony Pictures Animation, Time Warner with Warner Bros. Animation, MGM Holdings Inc. with MGM Animation, and Walt Disney MOVIES Group with Walt Disney Pictures (Motion Picture Access).
DreamWorks Animation, on the other hand, is its publicly traded company, purely dedicated to animated film production (DreamWorks Animation SKG). With this advantage, DreamWorks Animation is wanting to outperform a few of the broadly-oriented rivals for the reason that section. DreamWorks Animation has achieved this by partnering with various high-tech companies such as Pacific Data Images (PDI) (Research for Business). These partnerships allowed DreamWorks Animation usage of advanced imaging technology without the expenses of recreating the technology in-house. Furthermore, DreamWorks Animation runs on the unique system to build its animations that allows for lower costs (Linux. com). Last but not least, DreamWorks Animation can better provide the animation market due to its primary focus on animation. Therefore, DreamWorks Animation is by using a Focus Differentiation strategy to permeate the film production market.
STRATEGY EXECUTION
In order to be successful in the animated film portion, DreamWorks Animation has made several proper actions. To begin with, in 1995, DreamWorks SKG purchased a portion of Pacific Data Images, and collectively both companies created the movie Antz, that was released in 1998. Along with the success of the movie, in 2000, DreamWorks SKG purchased almost all of PDI. The partnership with PDI created competitive benefits for DreamWorks; as a result of cutting-edge technology that they had designed for use. DreamWorks has extended to make use of this partnership, and the conglomerate is often referred to as PDI/DreamWorks (Reference for Business).
Several years later DreamWorks Animation was spun-off from DreamWorks SKG to become distinct company with the only real reason for creating animated videos (Guide for Business). This step was to give attention to a segment where the other, greater, film companies only had subsidiaries. By making a entirely split publicly traded company, DreamWorks Animation has a distinctive advantage for the reason that it can focus on what it can best, animated films. Within the film industry, the mark market for animated movies varies greatly from that of live-action. This creates a host where DreamWorks Animation can avoid being trampled by larger companies and focus on a smaller market. DreamWorks Animation has exploited this area of interest to become a leading player in film animation.
DreamWorks Animation has spend less by creating a distinctive system for making its animations. After analyzing requirements, the company decided which it needed something that was easily upgradeable, reliable, and had advanced capabilities. To do this, it selected to use a Linux based program, which can be an alternative Microsoft House windows or Apple pc OSX operating systems. Because computer generated animation is such a demanding process, it could be quite time consuming to develop. This, subsequently, creates huge costs for producers as a result of time necessary to make small changes. With DreamWorks' improvements, it could decrease the time essential to create one world, from three hours to real-time. Therefore, when changes to the animation were required, they may be made almost instantaneously (Linux. com).
In modern times, an increasing volume of film production companies are releasing 3D videos because of their popularity. In addition, many companies are beginning to realize that 3D videos are cash cows as a result of the high ticket prices. With this thought, Katzenberg, CEO of DreamWorks Animation, explained that "every film DreamWorks makes to any extent further will be produced in 3D (CG Modern culture). " Katzenberg is bets that 3D motion pictures are here to stay this time around, unlike the 3D trend in the 1950's. One of the major contributing factors to the renewed interest is the fact that 3D videos can now be produced in a more affordable manner. That is largely because of the progress in technology, which allows companies such as DreamWorks to "use the latest stereoscopic 3D technology to create its movies from the ground up (CG Culture). " Katzenberg explains that 3D film development will be quite worthwhile for DreamWorks Animation:
"I really believe CG animation is in the best position to adopt advantage of the latest improvement in 3D technology, " said Katzenberg. "Since our motion pictures are created digitally, it presents numerous opportunities for our filmmakers. And by moving into this area now, DreamWorks Animation is developing know-how that will distinguish our films and provide a lasting competitive gain (CG Society). "
FINANCIAL PERFORMANCE
In spite of a hardcore economic climate recent years, DreamWorks Animation has performed above and beyond expectations. In '09 2009, DreamWorks reported "double-digit year-over-year development in revenue and earnings per show (Market Watch). " Revenue increased by 12% from 2008-2009, and earnings per talk about increased 10% (Market Watch). The following table shows the performance of DreamWorks Animation for recent years:
Figure1. Modified from "DreamWorks Animation SKG, Inc. " Morningstar Equity Research, p. 2. Copyright 2010 by Morningstar.
In comparison to other film production companies, DreamWorks Animation is quite small in proportions. The following desk compares DreamWorks Animation with the more broadly-oriented Walt Disney Company:
Figure 2. Designed from "DreamWorks Animation SKG, Inc. " Morningstar Equity Research, p. 2. Copyright 2010 by Morningstar.
COMPETITIVE ADVANTAGE / VRIO FRAMEWORK
When DreamWorks SKG spun off DreamWorks Animation, this didn't create a genuine first-mover advantage, because it was not the first occupant in the portion. However, it can be regarded as a first-mover strategy in the sense that DreamWorks Animations was an totally separate company dedicated to animation, unlike the other broadly-oriented film companies. DreamWorks have this to become a significant occupant in the animation portion of the film industry, which created a competitive edge.
DreamWorks Animation partnered with high-tech companies such as PDI, which allowed usage of important technology. As a result, this created a competitive benefits for the business. The capacities that DreamWorks Animation has at its removal are costly to use in-house, and could be costly and/or difficult to get. In addition, because it has majority desire for PDI, DreamWorks Animation can conveniently employ the capabilities. With the necessary technology in its grasp, DreamWorks Animation can increase within its portion.
Another capability beneficial to DreamWorks Animation is its custom system used to create the animated movies. As the system environment has been improved to raised suit the precise needs of the business, this potential is difficult to complement. Employing this functionality DreamWorks Animation can reduce time-related costs that other industry companies are faced with. This allows the producer to concentrate on animations, and never have to worry about enough time needed to edit a field.
STRATEGIC FIT / FUTURE PERFORMANCE
As a concentration differentiator, DreamWorks Animation has penetrated the animation section of the film industry and has turned into a pivotal player in that market. With the countless supportive capabilities open to the company, they have successfully broadened within its topic, and is growing. Strategically, DreamWorks Animation matches seamlessly within the film industry, due to its focus on a single, smaller section.
The introduction of more complex 3D systems, and the associated cost savings definitely provides a promising prospect for the company. Due to its advanced capabilities, DreamWorks Animation can fully take good thing about this opportunity. Therefore, in the next few years, the performance of the business should meet and possibly exceed prospects.
