Curtains for Shrek marks challenge for DreamWorks

Shrek has done a lot for DreamWorks Animation SKG Inc and as the lovable ogre undergoes a mid-life crisis in his latest movie outing, the studio is looking for ways to replicate his success.

Shrek Forever After, which opens on Friday, is billed as the fourth and final film in the animated Shrek franchise.

If the green ogre voiced by comedian Mike Myers is showing any signs of wear, it may be reflected in forecasts from some analysts that the movie might open below expectations.

DreamWorks is as dependent on franchises as any Hollywood studio in this age of big budget movies and, with the curtain coming down on Shrek, the company increasingly will have to rely on its three other franchises to keep growing.

In a conference call with analysts last month, DreamWorks chief executive Jeffrey Katzenberg called Shrek Forever After one of the "most highly anticipated movies of 2010."

He added that the company's "growing stable of franchises will continue to generate value at the box office and beyond for many years to come."

But so far, those franchises -- Kung Fu Panda, Madagascar and How to Train Your Dragon -- have failed to match Shrek, with its stellar DVD sales, merchandise licensing, touring stage show and California theme park attraction.

"Shrek made DreamWorks. You might think that DreamWorks made Shrek, but it's really the other way around," said analyst Barton Crockett of Lazard Capital Markets.

The Shrek franchise has already generated more than $1 billion in profit for DreamWorks since the first film came out in 2001, Crockett said.

By comparison, Kung Fu Panda and Madagascar have shown only about two-thirds that revenue generating power, said Michael Pachter, analyst with Wedbush Morgan Securities.

But Pachter said not every franchise will hit the jackpot.

"The goal is to be very profitable and so the baseball analogy is hit lots of singles and doubles and then occasionally hit a home run," he said. "If you try to hit a home run every (time) at bat, you're going to strike out a lot."

In the latest film, Shrek suffers a mid-life crisis. He ducks out of the obligations of family life and makes a deal with the evil Rumpelstiltskin to trade a day from his past, in exchange for being able to run free and scare villagers.

But the day that Shrek gives up -- unbeknownst to him -- is the day he was born. Even though he still exists, his wife Fiona does not know him and Shrek must fight to win her love and overthrow Rumpelstiltskin.

If the movie has elements of angst, some investors this week displayed similar concerns about DreamWorks.

The company's stock fell 5.9% on Tuesday after Benjamin Mogil, an analyst at Thomas Weisel Partners, said in a note he expects Shrek Forever After will have a lower than expected opening weekend of between $75 million and $90 million at US and Canadian box offices.

Crockett told Reuters he expects the film will make $100 million to $120 million during its opening weekend, which matches what other analysts expect.

The stock closed up 3.5% on Wednesday to $35.31.

Shrek Forever After has a 50% approval rating on review aggregating website RottenTomatoes.com.

Roger Moore of the Orlando Sentinel wrote that "DreamWorks seems bored with the ogre who laid the golden egg." But Pete Hammond of Box Office Magazine said it is "without question the funniest film of the year -- at least so far."

Shrek the Third had 41% approval on Rotten Tomatoes and earned $799 million at worldwide box offices in 2007. Better reviewed Shrek 2 made $920 million in 2004.

Although the giant green ogre may be making his final bow, DreamWorks has more plans to milk the franchise.

Next year, the studio will release a spin-off movie called Puss and Boots, with Antonio Banderas voicing the swashbuckling cat he plays in Shrek.