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.


Disney? Partnering with YouTube?

 Via: Animation Magazine

As was announced yesterday (although I can’t find the press release because, well, their a wee bit behind on updating their website) Disney has agreed to partner with YouTube to create custom content for the streaming website. This is interesting on a couple of fronts but mainly because it seems to run counter to what the company as a whole has been saying in regards to the internet.

The main media outlets have discussed the deal and what it will cover but what about the details, the nitty gritty. There’s a lot of talk about “interactive content”, “family-friendly videos”, “user-generated” and so forth but at the end of the day, what does that get you?

This is where animators need to pay attention because it’s easy to get swept up in the rush to interact with your customers. There’s no right way to do it, but there are plenty of false leads out there.

For Disney, sure, this interactive partnership is a great idea, but unfortunately its likely to be dead in the water if it can’t get other divisions of the company behind it. Case in point, the film studio. If the company is trying to engage fans, they would be much better off to allow fans to use the original source material but as we all know, Disney videos get yanked from YouTube barely after they make it up.

This seems to send a mixed message. On the one hand the company is attempting to engage with consumers but on the other, its trying to push them away. This is the unfortunate result of a large conglomerate having different parts moving in different directions.

Animators need to look at such behaviour and be able to do so in an objective manner. Which direction would you choose? Is it better to trust your fans or lock up your content? Plenty of you out there are extremely reluctant to put your films on YouTube. That’s grand, but unless you’re Bill Plympton, you’re only hurting yourself in the end.

As for the Disney/YouTube deal, expect to see a bit of content come out but it will be hamstrung by the former’s corporate guys from ever using some of the more valuable material. Expect the entire thing to die a quiet death in a few years (or not).

All in all, it seems YouTube is the big winner here. Having a name like Disney attached is sure to give them the leverage they need to strike more deals. Keep an eye on them.

Mattel Hopes For A HIT

 Via: Wikipedia

It was announced yesterday that Mattel, the all-conquering toy manufacturer licensing company has acquired what’s left of HIT Entertainment, the intellectual property holder for many established children’s characters and shows such as Thomas the Tank Engine, Barney, Bob the Builder anf Fireman Sam.

It’s kinda funny how, as an adult, all these characters you loved as a kid suddenly become “properties” rather than actual characters. They can be bought, sold or licensed to anyone and everyone who’s willing to pay. They have to make profits and should the company go bust, they can be scooped up in the resulting fire sale.

In some ways it’s disheartening but in reality its not a surprise. Pretty much any show you see on TV these days is either owned by a large company or whose rights are held by one. As much a we’d like to believe that Thomas is really just a story invented for grandchildren, that is all in the past.

It will be interesting to see how well this deal plays out in the coming years though and whether or not the synergy to be gained from having your properties in-house will pay off for Mattel.

J. Katzenburg Places A Smart Bet on Netflix

The latter half of 2011 hasn’t exactly been very kind to either DreamWorks or Netflix. The former saw it’s stock slide after poorer than expected first quarter results and the latter has been taking a hammering from just about everyone after they raised prices and then announced that they were splitting their streaming and DVD services across two separate companies.

Despite these setbacks, things keep moving along which leads us to yesterday’s announcement that DreamWorks has agreed to make it’s entire catalogue available on Netflix starting in 2013.

While there’s not much to say about the deal itself (you can read the entire press release or Variety’s take on it for the details), the very fact that it was made is significant for the simple reason that DreamWorks is the first major studio to sign directly with Netflix.

Until now, that major studios have treated Netflix almost like an annoyance that keeps reminding them that the media landscape is changing beyond their control. Collectively, they’ve tried to keep as much of their content off of Netflix as possible. Heck, they’ve even tried to keep DVDs off the service by instituting the pointless 28 day delay for new releases.

DreamWorks is the first to realise that they can stand to benefit from simply having their content available for people to see. New releases from Disney will likely disappear from Netflix as the Starz deal expires in Marc, and if that’s still the status quo come 2013, DW will be in a market where it’s main competitor is not.

This is the kind of innovation DreamWorks needs to invest in if it is to continue to exist as an independent company, indeed, I called for it just a few months ago when Paramount broke off talks to continue their distribution deal.

The proliferation of Netflix on mobile and TV platforms also ensures that DW’s content is everywhere they are and reaches the largest audience possible. It doesn’t matter if the quality is not top-notch, the convenience factor of being instantly available will override that in a heartbeat.

A lot of industry folks will be watching these developments very closely because if it turns out to be mutually beneficial to both companies, you can expect a lot of similar deals to follow.