Long Term Implications Of The Dreamworks and FOX Deal

So by now you’ve surely read the news that DreamWorks has agreed to a deal with FOX to distribute their theatrical releases for the next 5 years. While that that creates a lot of relief it’s also worth pointing out that the deal is only for 5 years, which as I can safely tell you, isn’t a lot of time at all. So if we think long-term, what will it mean for DreamWorks and what will happen once those 5 years are up? Here’s a few thoughts.

Even 1% Will Benefit DreamWorks

Although Jeffrey Katzenberg didn’t get a cut in the fee he pays to FOX, he did get a concession in the online/streaming department. This concession of 1% will pay dividends over the coming years as more and more content moves online. The studio already has a deal with Netflix and you can expect similar moves onto other platforms to follow suit. Getting a discount will give them the extra space they need to eek out that competitive advantage over Disney and others.

The Terms Aren’t Ideal, But They May Not Matter In 2017

The terms are far from ideal in overall terms, but in reality, DW is simply playing for time. Come 2017 the theatrical distribution landscape will be markedly different; mainly thanks to the likes of Sony passing out free digital projectors to cinemas. With that in mind you can anticipate that the costs and risks associated with distribution will be different too, and it may come to pass that DW can self-distribute or at least be in a good position to bargain hard with FOX if the deal works well in their favour until then.

Blue Sky Stands To Benefit Too

There’s been some hubbub about the future of Blue Sky in all of this, but to be honest, they can stand to benefit too. They are wholly owned by FOX so there’s no way they’ll be allowed to wither while an independent party makes off with the big bucks. If anything, it should get renewed interest from FOX and perhaps a bit more leeway to produce riskier movies instead of the latest Ice Age installment. Hopefully, FOX will see that calculated risks often pay off nicely, just as they’ve done for DW. It may just take the odd situation of FOX people actually handling them to realise this.

All-in-all, it’s exciting times ahead for everyone, including Disney.

 

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