'Monsters vs. Aliens' may get rematch

Pic 'on the bubble' for sequel; DWA Q2 revenue off 7%

If DreamWorks Animation only concerned itself with U.S. audiences, "Monsters vs. Aliens" would get a sequel, CEO Jeffrey Katzenberg said Tuesday. But given its underperformance in some major international audiences, it's a tossup.

"This is the first movie we've had that's right on the bubble," Katzenberg told The Hollywood Reporter after speaking with analysts Tuesday.

Katzenberg said executives will make discussions of a possible "Monsters" sequel part of their annual worldwide marketing tour.

"We want to talk to people that are on the ground," he said. "To get in sort of casual headline conversation can be misleading, so we're taking the opportunity to be face to face with people and have in-depth conversations."

Katzenberg's remarks came just after DWA reported that second-quarter revenue and net income dropped 7% compared with the year-ago frame. Nevertheless, the company beat Wall Street's expectations, and the stock traded higher after the closing bell.

With a contribution of $32.7 million in revenue, "Kung Fu Panda" drove the upside earnings surprise with an assist from "Madagascar: Escape 2 Africa," which brought in $26.1 million.

"Monsters" has grossed $377 million worldwide at the boxoffice, with $198 million coming domestically. Some territories performed well, while others were "very big misses," Katzenberg said.

"Domestically it has performed at a level that would surely qualify it as a sequel, and internationally it did not," he said.

That's not to say it won't be a franchise, as DWA has "Monsters vs. Aliens: Mutant Pumpkins From Outer Space" coming to NBC. Other holiday-themed NBC TV specials based on DWA properties are "Merry Madagascar," "Scared Shrekless" and "Kung Fu Panda Holiday Special."

Library titles, combined with Broadway's"Shrek the Musical," contributed $50.8 million during the quarter, and "Bee Movie" and "Shrek the Third" were good for $9.7 million and $2.4 million, respectively.

Lew Coleman, the company's CFO, attributed the 7% slide in both revenue and net income to tough comparisons. Last year, "Kung Fu Panda" was well on its way to earning $635 million at the worldwide boxoffice, and "Shrek The Third" was raking in big money from pay TV.

Katzenberg also predicted Tuesday a 10% per-film decline in costs by 2011 as DWA takes advantage of a weak economy in which to advertise its movies as well as new moviemaking tools and efficiencies derived from its decision to make an extra film every two years.

Also helping earnings this time around was a one-time $24 million benefit courtesy of a renegotiated agreement with Activision Blizzard that allowed DWA to recognize some video game revenue earlier.

The company said it had sold 22.4 million "Shrek the Third" DVDs through the end of the quarter, 10.2 million "Madagascar: Escape 2 Africa" DVDs and 9.5 million "Bee Movie" DVDs. The "Monsters vs. Aliens" DVD comes out domestically Sept. 29.