Dreamworks is outsourcing production from Los Angeles to partner with Sony Imageworks

Dreamworks Animation is undergoing significant changes in its production strategy, driven by a need to cut costs. The studio, headquartered in Glendale, California, has decided to shift away from the long-standing practice of producing films entirely in-house. This cost-cutting initiative was disclosed by Dreamworks Animation’s Chief Operating Officer, Randy Lake, during a series of meetings held last month, and the details are now being publicly revealed.

One major revelation is that Dreamworks Animation, known for being one of the last major feature animation studios in Los Angeles to handle the production of some of its films entirely in-house, plans to transition to a more collaborative approach. Morale within the studio is reported to be low, reflecting the workforce’s awareness of the impending changes.

In the coming years, particularly in 2025, none of Dreamworks Animation’s three slated films will be fully produced in-house. Instead, the studio is adopting a “mixed production model,” which involves partnering with external studios. One of the key collaborators in this new model is Sony Pictures Imageworks, a prominent animation studio with production facilities in Vancouver and Montreal.

The shift toward a mixed production model will involve significant changes in the division of responsibilities between Dreamworks Animation and Sony Pictures Imageworks. According to Dreamworks Animation’s Executive Vice President of Feature Production, Erika Burton, the studio will manage the creative aspects, including the story, art, editorial, and previsualization of an unannounced sequel. Dreamworks Animation will also handle around 50% of the asset build and one hour of production. In contrast, Sony Pictures Imageworks will take on the remaining 50% of asset builds and 20 minutes of shot production.

This strategic collaboration is part of Dreamworks Animation’s effort to reduce production costs by 20%, as indicated by Randy Lake during his presentation to the studio’s employees. The studio plans to achieve this goal by outsourcing certain aspects of the production process to partner studios in regions with tax advantages or lower costs. The mixed production model aims to balance cost efficiency while maintaining the high creative standards for which Dreamworks Animation is known.

Concerns among the studio’s workforce have arisen regarding potential job cuts. Lake has suggested that headcount reduction may occur through “natural attrition,” where certain contract workers may not have their contracts renewed. The studio is exploring options such as consolidating its staff to free up parts of its Glendale campus for lease to other parties.

While these changes mark a departure from Dreamworks Animation’s traditional approach, the studio emphasizes its commitment to retaining key talent and maintaining a significant portion of work in-house. The goal is to set a creative benchmark for the films while outsourcing some asset and shot work to partner studios.

In response to inquiries, a Dreamworks spokesperson clarified that the industry’s challenging box office environment and the increased costs of creating ambitious animated films are driving the studio’s decision. The new feature production model, involving collaborations with partner studios on a case-by-case basis, is set to be implemented for films released in 2025 and beyond.

The history of Dreamworks Animation’s COO, Randy Lake, who previously served at Sony Pictures Imageworks, has led to speculation about his intentions behind these changes. Lake’s background includes overseeing Imageworks during a period when the studio shifted a significant portion of its production from Culver City to Vancouver, Canada, taking advantage of favorable foreign tax credits.

Despite concerns, Dreamworks Animation aims to strike a balance between cost-effectiveness and maintaining a strong creative foundation. The studio is keen on avoiding the ownership of vendor studios, a strategy employed by some other animation studios, as it believes working with third-party vendors provides greater flexibility. The success of this new production model with Sony Pictures Imageworks could potentially lead to a long-term strategic partnership, according to Dreamworks Animation’s leadership.

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