UPDATE 2-DreamWorks sees 3-D premiums up, film costs down

* DreamWorks sees 3-D premiums rising to $5 per ticket

* Cost of making 3-D films coming down-Dreamworks

* Goal is to make three films per year

* DreamWorks shares up 1.4 percent
(Adds quotes from Reuters Insider interview, byline)

By Sue Zeidler

LOS ANGELES, May 11 (BestGrowthStock) – DreamWorks Animation SKG
Inc (DWA.O: ) Chief Executive Officer Jeffrey Katzenberg on
Tuesday said he expects 3-D movie premiums to keep rising, yet
the cost of making a 3-D film will decrease.

Movies shown in 3-D are currently commanding premiums of
some $3.30 to $3.50 per ticket, according to industry experts.

“I think you’ll see over the next 18 months or so …
(prices) reaching the $5 premium level,” he said.

When asked on Monday in an interview by Reuters Insider if
the film industry was seeing a backlash in terms of ticket
increases, Katzenberg, a huge 3-D proponent, said: “Well, so
far, absolutely not. It’s been just the opposite.

“People have been very excited about the 3-D experience,”
he said.

Indeed, 3-D extravaganzas such as James Cameron’s “Avatar”
have smashed records at the box office as well as at the retail
level with its home entertainment Blu-ray sales. DreamWorks’
latest 3-D film, “How to Train Your Dragon” has also done well,
grossing about $409 million at the global box office since its
release on March 26.

DreamWorks will release “Shrek Forever After”, the fourth
film in the popular “Shrek” franchise, in 3-D.

Katzenberg said he expects the cost of making 3-D films to
come down in 2010. The incremental cost per 3-D film for
DreamWorks was pegged at about $15 million, or 10 percent of a
film’s total cost, a year ago.

“In 2010, we expect the incremental cost of 3-D to decline
to about $10 million per film,” he said.

On Tuesday, Katzenberg also said the company’s goal was
ultimately to ramp up its release schedule to three films per

In 2009, DreamWorks said it planned to release five films
every two years, adding an additional film every other year to
its existing two picture-a-year release schedule.

“Three films a year is a goal for us, but we have not
arrived there and we are approaching this in a conservative and
measured way. We are building the infrastructure … and are
well on our way towards doing it,” he said.

Katzenberg was also upbeat about 3-D television.

“The rate of adoption for that is going to be faster than
almost anything we’ve seen in the consumer electronics
marketplace,” he said on Tuesday, noting that a lot of content
was already starting to make its way down the pipe to the home,
led primarily by sports and followed by video gaming.

DreamWorks shares rose 53 cents, or 1.4 percent, to $38.03
in afternoon trading.

Stock Basics

(Editing by Maureen Bavdek)

UPDATE 2-DreamWorks sees 3-D premiums up, film costs down