Katzenberg approached Steven Spielberg and David Geffen about forming a live-action and animation film studio, which had not been done in decades due to the risk and expense, but all three were very successful.

They agreed on three conditions: They would make fewer than nine movies a year, they would be free to work for other studios if they chose, and they would go home in time for dinner.

They officially founded DreamWorks SKG on October 12, 1994, with financial backing of $33 million from each of the three partners[6] plus $500 million from Microsoft co-founder Paul Allen, and $300 million from CJ Group heiress Miky Lee, giving the CJ Group an 11% stake in DreamWorks; the deal was also initially understood to include distribution rights to DreamWorks films across Asia excluding Japan, although CJ ultimately handled rights for only China, South Korea and Hong Kong, with all other international territories handled by United International Pictures.

In 1995, traditional animation artists from Amblimation joined the new studio, which led to DreamWorks buying part of Pacific Data Images, a company specializing in visual effects, and renaming it PDI/DreamWorks in 2000.

[citation needed] In June 1995, DreamWorks announced that it had signed a $1 billion deal with MCA Inc. (then parent company of Universal Pictures) to distribute its theatrical releases in other countries and its home video releases worldwide over 10 years, while DreamWorks itself would distribute them for the company as a film production label in America.

The record company never lived up to expectations, though, and was sold in October 2003 to Universal Music Group, which operated the label as DreamWorks Nashville.

[citation needed] In 1998, the United States 9th Circuit Court of Appeals upheld a lawsuit against DreamWorks for trademark infringement by Dreamwerks Production Group, Inc.,[18] a company mostly specializing in Star Trek conventions.

In 2000, DreamWorks was planning on building a studio backlot after buying 1,087 acres of land in the Playa Vista area in Los Angeles.

Go Fish Pictures, a division of DreamWorks with the objective to distribute art-house, independent and foreign films, was founded in 2000.

However, The Chumscrubber was a commercial and critical failure, which led DreamWorks to shut down the division in 2007 shortly after the release of the Japanese film Casshern.

Under Katzenberg's watch, the studio suffered a $125 million loss on Sinbad: Legend of the Seven Seas,[23] and also overestimated the DVD demand for Shrek 2.

[25] The acquisition of the live-action DreamWorks studio was completed by the second iteration of Viacom, which had recently split from the original at the end of 2005, on February 1, 2006.

[26] On March 17, 2006, Viacom agreed to sell a controlling interest in the DreamWorks Pictures live-action library to Soros Strategic Partners and Dune Entertainment II.

[29] In June 2008, it was reported that DreamWorks was looking for financing that would allow it to continue operations, but as an independent production company, once its deal with Paramount ended later that year.

[30] Several public equity funds were approached for financing, including Blackstone Group, Fuse Global, TPG Capital and several others, but all passed on the deal given their understanding of the Hollywood markets.

On September 22, 2008, it was announced that DreamWorks closed a deal with Indian investment firm Reliance Anil Dhirubhai Ambani Group to create a $1.2 billion stand-alone production company and end its ties with Paramount.

[34] DreamWorks' slate of films in 2011, I Am Number Four, Cowboys & Aliens, and Fright Night failed, while The Help, Real Steel and Spielberg's War Horse had success at the box office.

[46] The logo was then turned into a motion graphic at Industrial Light & Magic, in collaboration with Kaleidoscope Films, Dave Carson and Clint Goldman.

[48][49] Music accompanying the logo to start in many live-action DreamWorks films was specially composed by John Williams.

The reimagined animation logo had music adapted from the track "Fairytale" for Shrek, based on the children's picture book of the same name by author William Steig.