DreamWorks and Pixar Dominate Digital Animation

DreamWorks and Pixar Dominate Digital Animation
DreamWorks and Pixar both make cutting-edge digital animated films. But behind the scenes, the two studios are about as different as Shrek and Mr. Incredible.

Based in northern California, Pixar has released six films in the last decade -- every one a blockbuster. That’s a record unmatched by any studio in Hollywood history.

"It's the perfect melding of the old, 1920s style studio system and the San Francisco-based, tech-heavy, stock-option culture,” said David Miller, an entertainment industry analyst at Sanders Morris Harris. “That's the secret to their success."

Southern California-based DreamWorks animation is riding high on the success of Shrek 2 -- the biggest-grossing animated film of all time. That's delivered big green to investors: DreamWorks shares are up more than 30 percent since going public in October.

Pixar's stock, up 25 percent over the last year, trades at a premium to DreamWorks. But DreamWorks has something Pixar doesn't.

"DreamWorks owns, exclusively owns, its characters and it owns the rights to the franchises,” said Marla Backer, a analyst at Soleil Securities. “Pixar doesn't have complete say over what happens with its characters."

That's because of Pixar's profit-sharing, co-production deal with Disney, which gives the Mouse House sequel rights to Pixar's current film library.