DreamWorks Animation CEO Jeffrey Katzenberg didn't mince words on the state of Hollywood. Plus, he told us which Pixar film was a "bad idea."

DreamWorks Animation CEO Jeffrey Katzenberg. Photo: Kevin Moloney/Fortune Brainstorm TECH

FORTUNE -- With summer in full swing and popcorn flicks like Captain America and Harry Potter opening with robust ticket sales, you'd think Hollywood execs would be beaming. But DreamWorks Animation CEO Jeffrey Katzenberg has some beef with his industry. According to Katzenberg, audiences are flocking to theaters, but the quality of the movies are "unbelievably bad."  

Katzenberg appeared at Fortune's Brainstorm Tech conference last week in Aspen, Colo., where he offered the attendees some frank insight. Here's an edited portion of his comments: 

Today the thing that is probably most askew in Hollywood is the issue of marketability versus playability, and what that really means is that there is this sort of unholy alliance that has existed forever between art and commerce, show and biz. Today, it's out of balance, and it's too much on the biz, too much on the commerce, too much on the marketability. … The last seven or eight months of movies is the worst lineup of movies you've experienced in the last five years of your life. They suck. It's unbelievable how bad movies have been.

There is an ebb and flow that comes on, and there is an action and there's a reaction to it, and yes, they will change and there will be an adjustment that will get made to that.  It's a very entrepreneurial world, and I think you will see that right itself with time. But, right now -- today -- it's a particularly dreary moment.

We're always looking for a great idea, a great story.  You know, people often ask, how do you know if something is a great story, and unfortunately, I think it's more art than science to that. I do know that there are some things that just catch people's interest and it doesn't matter -- it works anywhere anyplace in the world.

I have to say every time I ever said the words "Kung Fu Panda" wherever I was in the world, somebody would smile and say, "What's that about?"  That to me is a good idea. It's not a story, but at least it's something that is going to intrigue people, and it's a place to get started.

You can have a good idea and bad execution and have a success.  I only know of one time that I can think of in the field of animation where somebody had a bad idea and had perfect execution and the movie was breathtaking: Ratatouille.

I assure you this is a bad idea. Let's have a semi-realistic rat in a kitchen cooking shit to eat. No one in their right mind is going to say, "Well, that's a good idea." It's a bad idea, but it's so beautiful in its execution and such a great piece of storytelling. And actually, I think it's one of the great pieces of animation of our time.

For a full transcript of the conversation, please click here.