DreamWorks Animation's Shrek & the 3-D Price Premium

Shrek Forever After
Shrek Forever After

Today DreamWorks' Animation's "Shrek Forever After" will open in over 4,300 theaters — more than half of them in 3-D. This, the fourth and last movie in the franchise, will be the green ogre's first venture into 3-D, and it should be a quite profitable one.

The first three Shreks, distributed by Paramount, grossed more than $1 billion together at the U.S. box office alone, and this could be the biggest Shrek yet.

Shrek is the type of movie that kids will want to return to again and again — not to mention the DVD.

But most relevant to DreamWorks Animation's bottom line is the fact that 3-D movie tickets cost about $3 more than standard movie ticket. And some high-end theaters are taking this movie as an opportunity to push the limits on ticket pricing.

In New York, a ticket to an Imax 3-D theater pushed as high as $20 earlier this week — the first time a theater has hit that mark for a regular film.

Richard Greenfield, media analyst for BTIG research points out that the average ticket price for IMAX 3D has risen 10 percent, while non-Imax 3-D theaters are 8 percent pricier on average than they were just earlier this year.

The question is: will consumers absorb the higher prices? Or will it be a turn-off, a disincentive that will keep people from making the trip to the theater?

Theaters seem to be reacting to the media hubbub about the $20 ticket price — an AMC spokesman says the $20 price was posted in error. A handful of pricey Manhattan Imax theaters, like Kips Bay, have brought the $20 tickets down to $17. The Lincoln Square Imax 3-D tickets are still selling for $20, though they're scheduled to drop a dollar below that key twenty buck mark.

"Shrek 4" is well positioned to be a true event film and draw families through Memorial Day and into June.

The studio's "How to Train Your Dragon," has had a remarkably long and successful run, grossing nearly five times what it did its opening weekend. That enduring performance is a testament to the demand in the market for that kind of family-friendly product, and to the studio's expertise with animation. And remember, strong box office performance bodes well for big DVD sales — so the studio is watching the movie's theatrical opening for signs of what to expect from their various revenue streams for many quarters to come.

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