How Will DreamWorks Animation Boost NBCUniversal's Theme Park Business?
The acquisition should give Universal Studios a substantial shot in its arms race with Disney.
One of the key areas of NBCUniversal that stands to gain from the company's $3.87 billion acquisition of DreamWorks Animation is its theme park business.
Universal runs second to rival Disney in what is currently a two-studio theme park arms race: Combined revenue from the four Universal Studios parks reached just over $1 billion in the first quarter of this year, compared with Disney Parks and Resorts' $4.3 billion in first-quarter revenue. DWA's popular franchises (Shrek, Madagascar, Kung Fu Panda and How to Train Your Dragon) will give Universal plenty of owned intellectual property to compete with the vast stable of branded attractions at Disney's destinations, which soon will add much-anticipated Star Wars Lands in Anaheim and Orlando.
Specifically, DWA's particular genre of IP hews a lot closer to the kind of cultural output that has helped make Disneyland and its sister parks the happiest places on Earth.
"Having family-friendly brands is particularly important in driving traffic to these parks, and that's not something that Universal was necessarily known for," a source familiar with these types of deals tells The Hollywood Reporter, pointing to classic Universal Studios attractions based on its monster movies as well as Jaws, Jurassic Park and Psycho. (In recent years, it also added rides based on Despicable Me's Minions, from Universal partner Illumination Entertainment.)
And like so many other deals in Hollywood, China looms large as a major factor. "The theme park business is probably growing fastest in Asia, and the Kung Fu Panda property alone provides a good driver for China," the source says. The third installment of that franchise was a U.S.-China co-production and will likely be a prominent presence at Universal Studios Beijing, which is scheduled to open in 2019. (Disney's long-delayed $5.5 billion resort in Shanghai will open this June 16).
Universal already licenses several Shrek-related attractions, and its Singapore park features zones dedicated to Shrek and Madagascar. In addition to saving money on those licensing fees, it now can also pocket the fees from pre-existing licensing agreements that DreamWorks Animation receives from a handful of other theme parks around the world. And it will earn royalties on any admissions to and sales originating in areas based on DWA properties, in the same way that Warner Bros. earns royalties from the three Wizarding Worlds of Harry Potter (located within, incidentally, the Universal Studios in Orlando, Japan and Hollywood).
Increasing its portfolio of owned content also puts Universal Parks & Resorts in a good position to expand to new locations. NBCUniversal CEO Steve Burke confirmed in a Feb. 3 earnings call that the company had purchased an additional 475 acres in Orlando but said that it had no "firm plans" for it at the moment. Combined with a deal it struck with Nintendo last year to create attractions based on its most popular video game properties, Universal now has plenty of brands to populate a whole new theme park.