That’s the big question DreamWorks Animation investors are asking ahead of this weekend’s release of the studio’s first major film since March’s Mr. Peabody & Sherman. That film resulted in a $57M impairment charge, making it DWA’s third flop out of its last four releases. So it needs How to Train Your Dragon 2 to succeed. If if does, then it “will boost investor confidence around the DreamWorks story,” B. Riley & Co’s Eric Wold says this morning.
Investors are optimistic. DreamWorks shares are up 20% over the last 30 days, wiping out the dip they took around P&S. Imax helped yesterday when it said that it will release a digitally remastered 3D version of the film into its domestic theaters starting this weekend — a change from the original plan to just offer in some overseas markets. That’s a “vote of confidence from Imax management…as well as a potential incremental box office boost for the film,” Wold says.
But Dragon 2‘s financial fate partly depends on what happens with soccer’s World Cup, which kicks off on Thursday. The film opens in Latin America this weekend as the tournament gets underway, and will hit most of Europe next week. “Excluding the U.S., the countries participating in the World Cup contributed an estimated 48%” of DreamWorks’ worldwide box office results, says Janney Capital Markets’ Tony Wible. Will potential ticket buyers stay home to watch the games — or could Dragon 2 benefit from the light competition as other studios stick to the sidelines? Most analysts take the latter view: Wible says that Dragon 2 faces “a great competitive environment with no animated releases planned until Planes 2” on July 18. He adds, though, that superhero and sci-fi films including X-Men and Transformers “could also compete for the same audience.”
The Street is counting on Dragon 2 to beat the first film from 2010, which generated $495M worldwide with 44% coming from the U.S. The consensus view is that the sequel will hit $615M. Stifel analyst Benjamin Mogil expects $625M (36% from the U.S.), with a domestic opening weekend of $55M. Wible also anticipates a $55M domestic open contributing to $553M in global sales (41% from U.S.) for the film’s run. But Wold says he wants to see a $70M domestic weekend open “in order to be comfortable” with his projection for the film to gross $775M worldwide (35% from the U.S.). Hudson Square Research’s Jeffrey Logsdon also expects a big domestic open — about $70M — leading to a gross of about $200M here and an additional $500M worldwide.