Recently, DreamWorks Animation (NYSE: DWA) announced that it would be making more movies. According to the press release, the move calls for five movies every two years. The plan would be for one year to have the normal two projects, while the next year would have three releases.

This is an interesting scheme. It has many implications. First, it means that CEO Jeffrey Katzenberg is extremely confident in his company's ability to produce compelling content. Second, it means that he believes that 3D theaters will be more important than ever in the near future. Third, it is a direct attack against Disney's (NYSE: DIS) Pixar asset. DreamWorks Animation is, without a doubt, becoming much more cutthroat in its competitive stance.

DreamWorks Animation (NYSE: DWA), whose cartoons compete with similar products from Disney (NYSE: DIS), News Corp. (NASDAQ: NWS), Viacom (NYSE: VIA), Time Warner (NYSE: TWX), and Sony (NYSE: SNE), issued its Q1 stats after the bell on Tuesday afternoon.

Now, I'm just about 100% certain that I've used this goofy pun before, so let me apologize upfront for dragging it out yet again (you'll soon see that I had no choice): DreamWorks Animation had a quarter that dreams are made of!

DreamWorks Animation (NYSE: DWA) reported Q4 earnings after the bell on Tuesday, and the shares dropped over 5% in the after-hours session. As you might have guessed, the company missed expectations.

According to my earnings preview, the call was for 60 cents per share. Unfortunately, DreamWorks reported 58 cents per share on a 31% drop in net sales. However, there also was a 12-cent per-share tax benefit included in that bottom-line number. Last year, DreamWorks reported 98 cents per share.

This wasn't the quarter that dreams are made of.

DreamWorks Animation (NYSE: DWA) will be reporting Q4 earnings today after the market closes up shop. How will the computer-cartoon studio do? Well, I can tell you that investors are hoping for excellent numbers, considering that the stock hit a 52-week low of $18.87 on Monday.

The call is for 60 cents per share. That would be a pretty steep drop compared to last year's Q4, which came in at 98 cents per share. Of course, as this transcript from Seeking Alpha demonstrates, DreamWorks benefited last year from Shrek the Third. That's a tough act to follow, so the drop in income is to be expected. What the market really wants is a beat.

Actor Kevin Bacon famous for the six degrees of separation theory -- that is, Kevin Bacon is connected by film role to every actor through at most six other actors. For instance, Bacon was a guest on NBC's Will and Grace when Will said to Bacon, "You did a movie with Val Kilmer?" and Bacon replied, "No, but Val was in Top Gun with Tom Cruise, and Tom was in A Few Good Men with me. Huh, that was a short one."

Why am I talking about this? Bernie Madoff, who claims he stole $50 billion from investors around the world in a Ponzi scheme, is a mere one degree of separation from Kevin Bacon and his wife Kyra Sedgwick. New York magazine reports that the two "lost everything except for their checking accounts and the land they own" thanks to Madoff.

How did Bacon get sucked into the Madoff network? I don't know. It could have been through his Hollywood connections -- after all Steven Speilberg and Jeffrey Katzenberg are among the other Madoff victims and it would surprise me if Bacon didn't know them. Fortunately, both Bacon and Sedgwick are still working actors so they can rebuild their savings at a relatively rapid rate.

DreamWorks Animation (NYSE: DWA), the computer-cartoon studio that competes with the animation product of other entities such as Disney (NYSE: DIS), News Corp. (NYSE: NWS) and Sony (NYSE: SNE), posted Q3 results after the close on Tuesday. Revenues saw a modest decrease of almost 6%, coming in at $151.5 million. I am categorizing a 6% decrease as modest in this case because the studio had a Shrek sequel out in the previous year. The drop was expected. Net income was 41 cents per diluted share, a figure which includes a $0.03 tax benefit. Even so, DreamWorks Animation beat expectations. Wall Street was counting on only 32 cents per share.

Operational cash flow isn't faring too badly. It increased 9%, and the company seems to be doing well enough in terms of generating revenues from its portfolio of films. Kung Fu Panda helped to drive the quarter, but it isn't done yet, as the home-video release should affect Q4 in a most positive manner.

Now that the data is out, DreamWorks Animation is really readying itself for its next big test. Madagascar: Escape 2 Africa, the sequel to the hit Madagascar, is waiting in the wings. In fact, the wait is almost over. The film is due November 7, and the company needs to post big numbers on this one.

So here's the deal -- home theater systems are so popular these days that some perceive them as a threat to the movie business. But DreamWorks Animation (NYSE: DWA) CEO Jeffrey Katzenberg thinks digital 3-D is going to bring people back into theaters in a big way, judging by comments he made in Las Vegas at ShoWest. Katzenberg believes that current 3-D technologies are as revolutionary a technology as color television was when it first came onto the scene. He could be right.

Studios like Disney (NYSE: DIS), News Corp. (NYSE: NWS), Time Warner (NYSE: TWX), Viacom (NYSE: VIA), Sony (NYSE: SNE) and General Electric's (NYSE: GE) NBC Universal are certainly hoping he's right. As I mentioned recently, the actual number of tickets sold in theaters last year was pretty flat. So they want to do everything they can to get people excited about leaving their homes and justifying spending a ton of money on tickets and concession items (heck, in my local mall multiplex, a bottle of Dasani water sets me back well over three bucks!).

I don't think Katzenberg is overstating the issue, but it will take a lot of investment and effort by movie studios to ensure that the public really gets the value of the 3-D experience; some effective marketing campaigns will be in order. I should point out that I haven't seen a 3-D movie since the bygone days of my youth -- yes, I was there for Jaws 3-D and the great Friday the 13th Part III in 3-D, the latter of which was the first Friday to feature Jason con hockey mask -- and, to be honest, I don't relish going to one now. I'm not crazy about wearing glasses for my moviegoing experience. Nevertheless, I probably am unique, and I think once theaters are converted to a critical-mass point for digital 3-D, the movie industry will be better for it. And DreamWorks Animation will certainly attract a bigger audience to its cartoons when 3-D becomes ubiquitous.

Disclosure: Steven Mallas owns shares of Disney and General Electric; positions can change at any time.