The battle for supremacy in the cutthroat world of family-friendly entertainment just got a whole lot more interesting.
Comcast announced today that it had agreed on a deal to buy DreamWorks Animation for $3.8 billion. As the parent company of Universal Studios and Illumination Entertainment, Comcast is in effect creating an animation super-team, adding major DWA’s major franchises (including Shrek and Kung Fu Panda) to a core that includes the Minions and this summer’s The Secret Life of Pets. This is a strategic move being made not only to benefit its film library, but several other facets of its business, including several on the consumer-facing side.
Intellectual property and recognizable, marketable brands are more valuable than ever in a content-saturated world. Successful franchises are vessels for corporate ambition and conglomerate synergy, representing opportunities not just for endless sequels, but also longer-lasting revenue streams that include merchandising and theme parks. The latter has become a prime focus for Disney, which is making historic renovations to its industry-leading theme parks to incorporate its new crown jewel, the Star Wars franchise.
Comcast is also working hard to upgrade its theme parks, with a focus on Universal Studios in Orlando and Hollywood, which it owns outright. Last year, Universal Hollywood opened a Simpsons-themed attraction similar to the one in Florida, and last month, they opened a second Wizarding World of Harry Potter. But those are properties that they’ve licensed from other entertainment conglomerates, not ones they own outright — and the more you own outright, the more money you get to keep when visitors pour in to check out your new attractions.
To that end, Universal, which would sell Minions-branded urinal cakes if there was a market, is working to leverage all of its own properties. That includes a ride called Minion Mayhem, updated Jurassic World experiences, and a Kong: Skull Island ride. The bet here is that the DreamWorks Animation characters will also factor heavily into the revamped theme parks.
In fact, there was already a Shrek presence at Universal Studios in Florida, and a much bigger one at the independently owned, Universal-licensed park in Singapore. But DWA has also focused heavily on licensing characters to new theme parks, including playing a heavy role at Dreamworld in Australia, and parks in Malaysia and Dubai.
Universal will also have a stronger bargaining position in future licensing negotiations, and more importantly for fans in the United States, it will be able to freely add beloved cartoon franchises to its theme parks. It takes a long time to plan and build rides, but an initial infusion of the newly acquired characters will likely be done rather quickly. Disney will finish its new Star Wars upgrades in the next few years, so the clock is ticking.
And don’t underestimate how much Universal will want to win business from Disney, especially with its DreamWorks Animation acquisition. The co-founder of DWA, Jeffrey Katzenberg, was part of the team that revived Disney in the ‘80s and ‘90s — he ran the studio during its Lion King glory years — before being dumped in a power struggle in 1994. Now is his best chance yet to take down the empire he helped rebuild.
There seems to be a bottomless consumer appetite for recognizable brands and fictional universes, and Universal will have no problem slicing and dicing its new properties to feed that demand.