For those of you who might not be aware of it, Comcast recently acquired DreamWorks Animation Studios for an incredible $3.8 Billion. Now we often see Hollywood as a huge money-making business and often it is, but movies, especially animation movies, require a significant investment and for every film that reaps in millions, there are bombs that cost a significant amount of money to the studio. This makes filmmaking in general quite a risky endeavour, as the studio now needs to recoup this figure over and above their traditional production costs to make a profit. However, Comcast has a lot of plans and to make up for this incredible investment they are looking to increase productivity and bring back some of the studio’s most favourable franchises to ensure a profitable return.
Deadline reports that NBC Universal (which owns Comcast) chief, Steve Burke had the following to say in an investor call this week:
The goal is to create characters that will lead to theme park attractions and licensed merchandise to take the low-single digit returns of the movie business and turn it into a different kind of business.
So, their objective with the acquisition is not to focus purely on the movie business, but rather leverage the movies as a way of cross-merchandising to other areas, which is becoming quite a trend for many of today’s blockbusters. Universal owns some big theme parks in the US and is now expanding to China and is hoping to not just use the Comcast deal to expand the animation properties into the TV market, but also to draw appeal to their theme park attractions and no doubt the toy and merchandise sales that will come with it and which continue to be big business.
In order to achieve this they have given Illumination Entertainment’s Chris Melandri (Despicable Me, Minions) creative control over the studio’s future animation efforts. Which is no surprise as Melandri has an incredible reputation with his past films in turning a modest budget into a massive profit and they are hoping his control over other movies may help to further drive down costs and increase returns. It is reported that one of their plans to achieve is for the studio to produce as many as four animation movies a year.
If this news is believed to be true, I am a little concerned. DreamWorks studio is currently producing on average two movies a year and to double up that effort you fear that they may need to sacrifice some quality to gain that extra quantity. I hope this won’t be the case, as making films just for the sake of making films has hurt the industry often in the past and often these cheap cash-ins tend to lead studios in the wrong direction.
One of their other plans though is to resurrect other popular franchises, and DreamWorks Animation has no other bigger franchise than their Shrek movies. One of Melandri’s responsibilities will be to see how they can leverage this property and see if they can expand it for a further three or four movies. Now, I’m a huge fan of the early Shrek films, but the last 2 films started to lose their magical charm on me, so if they are going to do something with this franchise – I hope they look at a completely different approach, as more of the same might seem a safe bet, but is likely to bore people as well. Mind you, kids are a powerful consumer market and may want to go see it anyway – what do I know?
And with regards to how they plan to make money on the TV market (another difficult and risky market) through Comcast, Burke had the following to say:
We have channels that are vulnerable. We own two or three channels that don’t make a lot of money. We’re constantly going back to cable and satellite companies and saying ‘We want more money.’ If we can get an extra dime from Dish [Network], I’d rather have it on USA than have it on a channel that isn’t getting traction from consumers. So we’ll go back and say, ‘OK, you can drop this one.’ We have a show, Mr . Robot, where we make $1.5 million per episode just from our [subscription video on demand] deal — without even airing the episode. That is a profitable show, year one, by a lot because Amazon wanted it. Over the next five years you’ll see companies make things that are different lengths, produced directly for mobile, do serialized shows that you pay $1 for five minutes and the next day you pay another $1….The business models and monetization haven’t caught up yet. But it will, because it has to.
So, how this all relates to their DreamWorks deal I’m not sure, but expect them to find different ways of appealing to a wider audience through web advertising as they currently do with their Tonight show and targeting their TV output to an ever differentiating market. My guess is, you will start seeing an increased number of animation shorts to appeal to the TV market, that could also possibly make money through their online platforms as well.
What do you make of this news – are you excited to see more Shrek or do you think these franchises have ran their course?
Last Updated: June 17, 2016