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BusinessIdeas/CommentaryStudios

My First Thoughts and Questions About This Comcast-Dreamworks Deal

We don’t know a whole lot about Comcast’s purchase of Dreamworks Animation, but one thing that’s almost a certainty is that it will lead to one of the American animation industry’s biggest shakeups in at least a decade.

Here are some of my first thoughts and questions regarding the acquisition:

What’s going to happen to Dreamworks feature animation division?

This is the big question for many people, especially for the hundreds of employees who work at the feature animation studio in Glendale. So, let’s just be blunt, if you’re working there right now, you’re not going to be sleeping easy for a while.

The studio is being handed over to Chris Meledandri, who runs Illumination Entertainment. Meledandri’s entire mission has been to re-invent feature animation pipelines and shift them away from the bloated infrastructure of Hollywood. Guess who pushed Fox to acquire East Coast outfit Blue Sky Studios in the late-1990s. Yup, that was Meledandri. And when Meledandri started up Illumination, he teamed up with French animation shop Mac Guff, which is now owned by NBCUniversal.

In other words, knowing Meledandri’s history, it would be a complete betrayal of his principles to keep Dreamworks Animation running in its current state. Meledandri runs lean and mean; he doesn’t believe in the standard big-studio approach where you spend $40 million on an animated feature before you even start production. (This is not to say that Meledandri is perfect. I know, because I wrote The Art of Fox/Blue Sky’s Robots, and that film — despite some lovely artwork — was a mess, both on- and off-screen. They couldn’t figure out the story, and by some accounts, nearly twice as much footage was animated than what ended up in the film, which burned out a lot of animators. Meledandri also lost $100 million of Fox’s money making Titan A.E. so he understands better than most how not to make animated features.)

But this still doesn’t answer the key question about Dreamworks’ future. Because, while I don’t see the L.A. studio continuing in its current form, it’s also inconceivable to me that Dreamworks would completely stop producing animated features. Dreamworks has amassed an amazing team of artists and technical people, not to mention a tried-and-true workflow. It would be insane to dismantle that entire operation after everything that Jeffrey Katzenberg has built. In any case, Katzenberg has removed himself from the picture, thereby keeping his hands clean for what is to follow. That’s perhaps the surest sign that there are big changes ahead.

What is 20th Century Fox going to do?

Dreamworks’ distribution deal with Twentieth Century Fox ends in 2017. So, where does this leave Fox? They own Blue Sky Studios, but Blue Sky puts out an average of one film per year, which is hardly enough content for a major distributor in this current era.

Regardless of what happens to Dreamworks as a feature animation producer, let’s not forget that animation is in a boom period and studios want as much animation as they can get their hands on. So, Fox is now faced with a shortage of animation content. This opens up an opportunity for other players to provide content to Fox, especially for newer players like Reel FX, whose film The Book of Life, was actually released by Fox in 2014.

What will become of the mega-deal between Dreamworks and Netflix?

As recently as last January, Dreamworks and Netflix announced an expansion of their multi-year deal. Obviously, this acquisition won’t have an impact on Dreamworks’ immediately forthcoming Netflix series like Voltron and Guillermo del Toro’s Trollhunters, but you’ve got to believe that there will be some kind of long-term impact because Comcast and Netflix are competitors, not friends.

One NBCUniversal exec, Alan Wurtzel, recently told the media that he wasn’t concerned with people who binge-watch on Netflix because eventually people go back to “watching TV the way that God intended.” He also said that, “I don’t believe there’s enough stuff on Netflix that is broad enough and consistent enough to affect us in a meaningful way on a consistent basis.” Let’s just say that that the Dreamworks-Netflix partnership is not long for this world.

Why did NBCUniversal even want Dreamworks in the first place?

Steve Burke, CEO of Comcast’s NBCUniversal, has been clear on what this deal is all about. In a statement today, Burke said he intends for Dreamworks to help “grow our film, television, theme parks and consumer products businesses for years to come.” In other words, NBCUni views Dreamworks as Disney saw Pixar, Lucasfilm, and Marvel: a source of dependable and proven properties which it can monetize across its many different divisions.

With the Dreamworks purchase, NBCUni not only gets access to Shrek, Madagascar, How to Train Your Dragon, and Kung Fu Panda, but also everything in the Dreamworks Classics portfolio, which includes Casper, Lassie, Little Golden Books, Pat the Bunny, Olivia, Peter Cottontail, Postman Pat, Veggietales, The Lone Ranger, Volton, Where’s Waldo, Baby Huey, Richie Rich, Little Lulu, George of the Jungle, Crusader Rabbit, Rocky & Bullwinkle, Dick Tracy, Brenda Starr, Gasoline Alley, Broom-Hilda, Gumby, Felix the Cat, Underdog, Gerald McBoingBoing, and Roger Ramjet, to name just a few.

This is a massive boon for NBCUniversal, which previously owned just a handful of properties, like Woody Woodpecker and The Land Before Time. NBCUni has also made extensive use of Curious George in both TV animation and at its theme parks, but that character is licensed from Houghton Mifflin Harcourt Publishing Co.

If NBCUNi dreams of following in Disney’s footsteps, they’ve got a long way to go. The company hasn’t shown an ability to think holistically like Disney about entertainment properties, nor has it shown a firm understanding of how to spread successful properties across its entire entertainment holdings. Should they have the vision to begin doing so, the Dreamworks purchase will be a great asset.

Last fall, NBCUni announced the launch of a new kids division, but now with the Dreamworks purchase, they get Dreamworks TV, which gives them a fully built-up kids division run by experienced children’s entertainment veterans. Also, Comcast took full control of the preschool channel Sprout in 2013. Not only could this channel benefit from the Dreamworks deal, but Comcast now has enough IP to potentially start up an entirely new kids channel to compete with Cartoon Network, Disney Channel, and Nick.

And there’s other possibilities, too. For example, imagine Dreamworks TV producing a Minions preschool series for Sprout. Depending on how far Comcast pushes, that option is now in the realm of possibility.

  • Patrice Jean-Baptiste

    Ultimately, I would hate if the Netflix deal w/ Dreamworks, but I feel that what’s going to happen. As you stated, it’s undeniable the animosity that both NBC and Comcast have for Netflix. Just…ugh…

  • Doconnor

    ‘eventually people go back to “watching TV the way that God intended.”‘ With that kind of attitude, Comcast won’t be long for this world.

    • Mermaid Warrior

      Seriously, that sounds like something you’d hear in a parody. Made me think of that Bojack Horseman scene where his dad says “Do you go through the Panama Canal like a Democrat, or go around the horn the way God intended?!”.

    • Chicken McPhee

      It’s troubling that it comes down to something as subjective as religion.

    • Revy

      I literally played a game of guessing that dude’s age, and I very conservatively put him at no younger than 60. Turns out he is 82 fucking years old.

      “TV the way God intended.” LMAO It says a lot that someone so absolutely out of touch with modern media is at the top of NBCUni’s food chain.

      • AmidAmidi

        Wrong Alan Wurtzel. This guy is not 82. Your initial guess of around 60 is a better bet.

  • Innuendo

    I just want to see a Despicable Me x Megamind crossover film now, that’s all.

    • Barrett

      That would actually be hilarious, if they pushed the fourth wall by acknowledging how many similarities there are between the two. A Batman v. Superman style mock-crossover would be hella fun!

  • I just hope Croods 2 doesn’t disappear, I thought the original was beautiful and I’ve really been looking forward to a well done sequel for it.

  • Mermaid Warrior

    I’ve been thinking a lot about DreamWorks lately, how they haven’t really had any big hits in the past few years. Not a good sign for such a major animation studio, especially one that once rivaled Disney. But I certainly didn’t expect this.

  • Matt Norcross

    Maybe DreamWorks can take over production of the Woody Woodpecker movie if the deal is completed.

  • D.A.V.E.

    As someone who’s been enjoying the Dreamworks/Netflix content, this is very disappointing. I wonder how this will affect how Voltron and Trollhunter will develop their stories the most.

  • Slim Cognito

    God dammit, I feel so bad for all the poor employees who will now be laid off. My assumption is the feature division will be consolidated into Illumination and they’ll outsource everything.

    Great article, Amid.

  • Scott Johnson

    Looking at Meledandri’s history and seeing that it’s all producing films (And the best out of 20 is Ice Age 1 and Despicable Me 1)….I don’t have a lot of confidence to where Dreamworks’ big feature films will go.

    • That’s my biggest concern as well. Dreamworks Animation’s quality may not always been consistent, but when their movies are good, they’re really good. Illumination’s output up to now has been mediocre at best (with the first Despicable Me being their strongest film). I fear this is going to impact their movie output, and not for the better.

  • Marcos Vitor Lopes Araújo

    I want a Felix the Cat film

    • KW

      Why ruin something good? Leave Felix where he belongs, untainted in the past.

      • NamelessDrake

        DWA bought him with the intention of making him a “fashion brand,” a vision I’m not sure if Universal will share. I don’t know if Universal has any plans for him.

    • Felix the Cat

      There WAS a Felix the Cat film. It was terrible.

  • CrystalClearTruth

    They gutted the talent of Dreamworks a while ago already. This was the inevitable result. There’s no surprise here.

  • John

    Intuitively speaking, I think they paid 3 billion too much. Most of Dreamworks Feature properties have already been exploited. The winner in this deal was Katzenberg.

  • Christopher Douglas

    And if that happens, by all means. I don’t succumb easily.

  • John Pannozzi

    Universal chairman Jeff Shell had this to say about the Netflix deal:

    “I actually love that deal, so I talked to [Netflix chief content officer] Ted Sarandos this morning, he’s a friend of mine. We at Universal have tons of deals with Netflix around the world. We sell our product to Netflix. I love the Netflix deal and I hope we can continue to supply them with the product they wanted to buy in the past.”

    Taken from http://www.hollywoodreporter.com/news/jeff-shell-talks-dreamworks-animation-888695

    So, it looks like the deal is safe.