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DreamWorks Animation will make fewer movies because not enough people are seeing them

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DreamWorks Animation plans to cut around 500 jobs and reduce its film output from three per year to two per year as part of a major restructuring meant to improve its profitability. The studio, known for Shrek and the Madagascar series, has struggled at the box office in recent years despite finally finding some critical success with How to Train Your Dragon. Continued box office misses have put DreamWorks Animation in a tough place. Twice this year, other companies have considered buying it, though neither purchase — from SoftBank or Hasbro — panned out.

"Great films, better box office results, and growing profitability"

"The number one priority for DreamWorks Animation’s core film business is to deliver consistent creative and financial success," Jeffrey Katzenberg, CEO of DreamWorks Animation, says in a letter to investors. "I am confident that this strategic plan will deliver great films, better box office results, and growing profitability across our complementary businesses."

DreamWorks previously laid off 350 employees after a big loss at the end of 2012. This year, it's fluctuated between mild profits and big losses. In part, that's been because of original films failing to live up to its expectations. The studio's current schedule may resolve that, with plans to release one sequel and one original film each year. Sequels typically perform well and often do quite a bit better than the original film they're based on, so this is a logical — if staid — strategy for DreamWorks Animation to take up. It just means the studio will have to ensure that some of its originals are good enough to keep building on.

The studio's 500 layoffs will come from "all locations and all divisions" of the company. However, Variety editor Marc Graser says that this will include the closure of the studio's location in Northern California, where How to Train Your Dragon came out of. Staff from that location will have the option of moving south to DreamWorks Animations' main campus, but it's likely to mean that the studio will lose some of the artists responsible for its best work in the process. That's bad news given that Dragon has been the force behind DreamWorks Animation's recent acclaim — but, on the other hand, that hasn't done enough to help the studio out monetarily, which is ultimately what matters.