JULY 31 | Shrek the Third is coming to DVD Nov. 13, DreamWorks Animation CEO Jeffrey Katzenberg confirmed Tuesday during a company conference call. But he cautioned investors on sales expectations because of the stiff competition the film will face.

“The fourth quarter is shaking up to be the most competitive home video market we have ever seen,” he said, adding that Shrek will face even more competition on DVD than it did at the box office this summer. “We’re looking at this next event with a healthy dose of caution.”

President and acting chief financial officer Lew Coleman added to the caution, warning that the home video market has changed in the last few years, becoming much more crowded and more mature. He noted that franchise films tend to see declines in sales with each successive release.

Coleman also said the international DVD market is “more difficult” partly due to increases in piracy in the U.K., Germany and Spain.

That said, the company expects the home video release of the third movie in the Shrek franchise to be its primary driver of income in the fourth quarter.

The studio didn’t say whether the film would also get a release on HD DVD or Blu-ray Disc.

The theatrical success of Shrek the Third helped DreamWorks Animation quadruple its second-quarter income to $61.8 million for the period ended June 30.

Revenue nearly tripled to $222.5 million, up from $74.9 million the previous year.

The film has grossed $720 million in worldwide box office since its May release. It delivered $109 million to the company’s revenue in the quarter, more than half of overall revenue.

Over the Hedge, was the second biggest driver of revenue in the quarter, contributing $26.9 million in revenue from pay TV and home video. An estimated 13.4 million DVDs of the film have been shipped.

Flushed Away, which debuted on DVD Feb. 20, contributed $12.4 million in revenue in the quarter, with 5.1 million units now shipped.

The company’s 2005 releases Wallace and Gromit: Curse of the Were-Rabbit and Madagascar continue to sell, accounting for $14.7 million and $12.7 million in revenue, respectively. Shark Tale brought in $10.7 million in revenue.

Other library films accounted for $36 million in revenue, driven by the first two Shrek films.

The studio said DVD sales of Shrek and Shrek 2 rose around the theatrical release of Shrek the Third, but DreamWorks doesn’t expect sales to be as strong around the video release.

“We just saw such a lift in the second quarter; we are cautious about what we will see in the fourth quarter,” Katzenberg said.

Katzenberg confirmed there two more films in the Shrek franchise are coming. The studio also is working on spin-off Puss in Boots, originally planned as a DVD premiere.

Katzenberg said DreamWorks is watching the digital download business but said “right now, it’s a non-market.”