Dreamworks Animation Skg Inc (DWA)’s False Start Will Test the Power of TV Over Internet

As for Despicable Me 2, Comcast Corporation (NASDAQ:CMCSA) must have expected a large haircut this week as the racing snails arrived to steal potential viewers from the same target demographic. But it didn’t happen. The Steve Carell vehicle with a production budget about half the size of Turbo‘s stayed strong in its third week. That’s as much a testament to Despicable‘s quality as it is to the Turbo concept not appealing to kids and their parents.

This is very bad news for Dreamworks Animation Skg Inc (NASDAQ:DWA) and Netflix. Turbo is underperforming last year’s Rise of the Guardians, which bombed at the domestic box office despite an all-star cast and heavy marketing support. It’s starting to look like Dreamworks Animation Skg Inc (NASDAQ:DWA) and Netflix have a non-starter on their hands with the follow-up TV series.

It’s a little early to draw any long-term conclusions from this huge miss. After all, Guardians ended up earning its keep with a strong showing overseas plus very good DVD and Blu-ray sales. I don’t expect that title to sprout sequels, spin-offs, and TV series, but it’s also not the unmitigated disaster that the weak opening weekend seemed to portend.

How to find the big takeaway
In the end, this becomes an important litmus test for the Netflix distribution model. If Turbo: F.A.S.T. catches on with its young Netflix audience, it could light a fire under the core film’s video home sales as well. If not, well, there’s your first failed Netflix show and another whiff for Dreamworks Animation Skg Inc (NASDAQ:DWA). Wait until the show premieres on Netflix this fall, and then watch out for announcements of a second season — or lack thereof.

None of this will change the picture for tonight’s second-quarter earnings report, but it’s something to keep in mind for us long-term Netflix investors.

The article DreamWorks Animation’s False Start Will Test the Power of TV Over Internet originally appeared on Fool.com is written by Anders Bylund.

Fool contributor Anders Bylund owns shares of Netflix, but he holds no other position in any company mentioned.

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