Dreamworks Animation Transitioning Out Of In-House Production In Los Angeles; Lays Off 70

Sony Imageworks is the company's new production partner

Dreamworks Animation is choosing to shift away from producing films fully in-house at its Glendale, California studio, allegedly to cut costs. And it seems that it’s coming with layoffs of 70 positions, about 4% of its workforce. It’s not quite clear if that amounts to 70 people or if it was more, with multiple people holding the same titles.

“Dreamworks Animation reduced its workforce by approximately 70 positions,” a spokesperson from the company disclosed. “Roles affected were across corporate functions, feature, television and technology departments as part of an overall cost-reduction.” Morale was reportedly low at the studio before the layoffs officially got out there, as workers told, especially as the execs skirt paying them. It leaves Walt Disney Animation Studios as the last of the major Los Angeles-based feature animation studios that still did the production for some (not all) of its films entirely in-house. While next year’s theatrical films, Kung Fu Panda 4 and The Wild Robot, are being produced fully in-house, Orion and the Dark, which is heading to Netflix, is being produced by a partner studio.

Unfortunately, the 2025 slate, currently consisting of Dog Man, based on Dav Pilkey’s novels spun off from his Captain Underpants series that DreamWorks has already adapted, an unannounced sequel, and an unannounced original film will not be made fully in-house. The unannounced sequel will be made using the studio’s new “mixed production model”, working with Sony Pictures Imageworks, while the other two films will be animated entirely at non-Imageworks partner studios. It’s called similar to how the studio utilized Mikros Animation for 2017’s Captain Underpants: The First Epic Movie and Jellyfish Pictures for 2021’s Spirit Untamed. Except those productions were several years apart.

A Dreamworks spokesperson further explained:

The industry is facing a more challenging box office environment and the costs of making creatively ambitious animated films have increased. To reduce production costs while maintaining quality, DreamWorks is defining a new feature production model where a portion of the asset and shot work will be performed by partner studios on a case by case, budget dependent basis. This strategy will be implemented for feature films released in 2025 and beyond.

The new model is being tested with Imageworks, who is based in Vancouver and Montreal. They are the main animation studio for Sony Pictures Animation and a vendor studio, producing The Sea Beast and Over the Moon for Netflix and Storks and Smallfoot for Warner Bros., among other projects for other clients. Dreamworks Executive Vice President of feature production Erika Burton told employees that Dreamworks will handle all creative front end, the story, art, editorial, and previsuals of the unannounced sequel, as well as approximately 50% of the asset build and a single hour of production. Imageworks will handle the other 50% of asset builds and 20 minutes of shot production. The major responsibilities they’ll be handed include handling entire sequences and standalone parts of the film, rather than receiving random shots and pick-up work. At least that’s the current thinking of Dreamworks management. The percentages were said to be tentative and subject to change.

The studio’s chief operating officer Randy Lake laid out the plan to reduce production costs by 20%, which again probably involves employee payment. He called the layoffs a headcount reduction through “natural attrition”. He’s also proposed staff consolidation so that Dreamworks doesn’t take up the entire Glendale campus, opening it up for lease to earn money that way, aiming maintain the same quality of work with the lower production costs, setting a creative bar. He said he wanted to keep the majority of work in house, but outsource to such partners in tax advantaged and/or lower cost locations.

Sources: Deadline, Cartoon Brew