In the summer of 2005, DreamWorks Animation SKG Inc.'s board held a retreat at the exclusive Jackson Hole, Wyo., mountain resort. The animation studio behind the "Shrek" franchise had stumbled badly in its first few months as a publicly traded company and executives were under pressure to come up with a new game plan.  One of the board's conclusions was basic: the company needed to make better movies. While arch-rival Pixar Animation Studios was making one highly-polished movie a year, DreamWorks was rushing to meet a more ambitious slate of two. Consequently, DreamWorks was suffering from a decidedly mixed track record outside of its flagship "Shrek" movies.

Originally published in the Wall Street Journal by Merissa Marr

So DreamWorks has a new motto for its business going forward: Slow down. The company has decided to add a year to the production of its films.

"We've been racing to the finish line and that has meant compromising on story telling sometimes," says DreamWorks Chief Executive Jeffrey Katzenberg. There's a strong financial incentive, he adds: "If we improve our box office performance by 10 percent, it adds $100 million pre-tax profit to the company."

The studio has been making other changes, too. It has overhauled its top team after its problems in 2005, when it had to restate its earnings estimates twice because of miscalculating how many "Shrek 2" DVDs it would sell. That episode resulted in an informal SEC inquiry, which was later dropped. The Glendale, Calif. company also has has unified its production systems and streamlined its corporate structure.

The changes are important because, as it stands, DreamWorks Animation risks looking like a one-trick pony whose only trick is the popular "Shrek" franchise, the third installment of which comes out in May. Two of its last three movies have required write-downs, including "Flushed Away," which Cowen & Co. analyst Lowell Singer estimates could be as high as $115 million.

There also is the realization that "Shrek" may not last forever. That has forced the company to think about developing other franchises -- a particularly difficult task at a time when a flood of animated films is hitting movie theaters, many of them about cute talking animals. This summer alone has "Surf's Up," about surfing penguins, and "Ratatouille," about a rat's adventures in Paris.

"I didn't realize how similar they were all going to be," says Mr. Katzenberg, who describes a moment a year ago when he was in a movie theater and sat through back-to-back trailers for several near-identical animated movies. "Fortunately, our next six or seven movies are unlike anything we've done before or anything anyone else is doing."

The next 18 months or so will bear out whether DreamWorks Animation can make the transition it has in mind. Despite the slower production schedule, it still is aiming for one original movie and one sequel each year.

Mr. Katzenberg says the studio is able to stick to its goal of two movies a year while also extending the production time because it had a "deep bench" of movies in development. That is unlikely to include movies with its production partner Aardman Animations though, with the two expected to break up this year after "Flushed Away."

Having put some of its early problems behind it, Mr. Katzenberg says the studio already is in better shape, with a strong slate of movies. After "Shrek 3," it is releasing Jerry Seinfeld's animation debut, "Bee Movie," in November. Next year brings "Kung Fu Panda" and "Madagascar 2."

To strike the jackpot of one sequel a year in the long term, the studio needs at least three franchises running at any one time. It currently has two: "Shrek" and "Madagascar."

DreamWorks executives say "Shrek" likely has two movies left in it after No. 3 (a fourth is already in the works for 2010). "Madagascar" has been sketched out as a four-chapter series, with a third movie teed up for either 2011 or 2012.