Computer animation pioneers Pixar and Dreamworks have set the stage for a potentially bruising box office battle after both studios changed their schedules this week to target summer releases, analysts said on Thursday.

Pixar Animation Studios Inc., creator of hits from Toy Story to The Incredibles, said on Tuesday it would move the theatrical release of its films to summer with DVD releases to follow during the holiday season.

The next day, DreamWorks Animation SKG, home of Shrek and Shark Tale, said it would shift expected blockbuster Shrek 3 from November 2006 to June 2007, and that the company generally planned on theatrical releases in its second and fourth quarters.

There is concern ... there's going to be a flood of product in market, DreamWorks Chief Executive Jeffrey Katzenberg told analysts this week.

I think 2006 is the anomaly, the one year in which there seems to be more product than in any other year to date. In 2007, it recedes back down.

Some analysts see a risk of overcrowding.

Both DreamWorks and Pixar expect to have early summer releases in 2006 and 2007, and while this is not a disastrous scenario, we think it is an incremental negative for both companies, Banc of America analysts said in a note to clients.

Fulcrum Global Partners analyst Richard Greenfield said that while summer releases generally garnered better returns, head-to-head competition in theaters and in DVD releases would hurt the profitability of both companies.

We believe the beginning of an annual summer movie 'war' in 2006 does not bode well for either company, with ego... playing far too great a role in decision-making, Greenfield said in a note to clients.

Noting that other major Hollywood studios planned forays into animation, Prudential Equity Group analyst Katherine Styponias also said more players "could result in lower average box office for all players,"

But others said moviegoers' appetite for family fare seems to be endless, and that the timing of movie releases tends to be less important than appealing to the right audience.

Paul Dergarabedian, president of box office tracking firm Exhibitor Relations, noted the nearly simultaneous releases of Polar Express, The Incredibles, SpongeBob SquarePants and Shark Tale this fall did not appear to have hurt the studios that distributed them.

All but SpongeBob, the most recent release, have reached at least $100 million in ticket sales despite having debuted within six weeks of each other.

It almost seems like a family film audience is almost an inexhaustible resource, Dergarabedian said. Kids will come and see them, and they will see them all.

Unlike adults, whose decision to see movies could rest on word-of-mouth or box office totals, children don't care about the money or the reviews, Dergarabedian said. Kids are the perfect audience if you can grab them with the marketing.

Another factor aiding DreamWorks and Pixar in an increasingly crowded marketplace, was the strong and mainly positive reputation of their computer-generated creations, said Animation magazine editor-in-chief Ramin Zahed.

People are familiar with the brand and know that when they go to their movies, this is what they are going to get, Zahed said. There is a school of thought that believes that if you make good movies, people will find them.

Source: Reuters