A Bet on Games, Animation, Sports

When Skydance Media and Paramount International executives outlined their plans for the merged firm to buyers on July 8, they confirmed a sequence of slides. Considered one of them highlighted Skydance’s story and was entitled “Animation, Sports activities and Video games Divisions Drive Development.”

The truth is, these are three key areas that administration additionally sees as core upside alternatives for the mixed firm. In spite of everything, Skydance Video games will add a key leisure progress space to the Paramount story, whereas the merged agency’s scale in animation and sports activities might be boosted.

In fact, there are the plans for $2 billion in value financial savings, the potential to profit from a reworked streaming technique (with the expectation of a partnership for Paramount+), and the elevated deal with being a creator-friendly leisure juggernaut.

However under, The Hollywood Reporter is taking a more in-depth have a look at the three companies of gaming, animation and sports activities and why they’re notably anticipated to profit from the Paramount-Skydance mega-deal.

Simply take gaming for instance. With Skydance being seen as bringing extra know-how experience and publicity to Paramount at a time when Hollywood giants are sometimes battling deep-pocketed Silicon Valley titans, the rising gaming enterprise has been touted by high executives on the two firms. “One of many large issues on this enterprise, which I’ve spoken to a lot of you ceaselessly about, is progress,” mentioned Jeff Shell, the previous NBCUniversal CEO who now works for RedBird Capital, which has backed the deal, and is about to turn into president of the post-merger Paramount. “And Skydance takes a bunch of components of the enterprise that Paramount must get into, together with video games … and provides a progress engine to the corporate.”

Ellison himself touted that Skydance Video games is “comprised of two main interactive recreation groups. The primary is run by Dan Prigg, which is a digital actuality improvement studio. Our most up-to-date title, Strolling Lifeless: Saints & Sinners has bought over 3 million models.” The second gaming unit, he described as “a AAA interactive studio that’s run by Amy Hennig who’s accountable for the Uncharted franchise, and our first title is Marvel 1943: Rise of Hydra, which is in partnership with Disney and Marvel.” Its subsequent title is about within the Star Wars universe. “One of many issues we’re additionally doing … is actually pushing the boundaries of what’s potential in narrative gameplay, the place now we have created a proprietary AI digicam system that means that you can have all the enjoyable of the moment-to-moment, second-to-second gameplay however current it such as you’re in a cinematic” expertise.

Evercore ISI analyst Vijay Jayant, who has an “in line” score with a $11.50 inventory worth goal on Paramount, was among the many Wall Road consultants to focus on the gaming alternative after the deal announcement. “The partnership additionally allows new interactive and gaming proficiencies, together with two in-house recreation developer studios and powerful franchises (e.g. upcoming console video games in Marvel and Star Wars and the VR recreation The Strolling Lifeless),” he wrote.

That mentioned, Andy Gordon, accomplice at RedBird Capital, signaled that the gaming enterprise will take a bit longer to function at its peak. “2026 is a yr that we not solely produce two animated movies, however we additionally may have all of our online game belongings at full deployment,” he mentioned.

Animation

Talking of animation, the Skydance and Paramount management sees the previous’s animation unit, which has 800-plus in-house artists and fully-integrated 24-hour manufacturing capabilities, boosting the latter on this space to gas the merged firm’s broader youngsters and household enterprise.

Ellison described “Skydance Animation, which we inbuilt partnership with John Lasseter,” as one of many core verticals of Skydance and once more touted confirmed artistic expertise. “Our mission was to purpose extremely excessive and construct a studio that would stand alongside Pixar’s and DreamWorks Animation,” he defined. “We’ve been capable of recruit a few of the most proficient artists on the planet over to the studio. Just some examples: Brad Chook, who’s the director of The Incredibles and Ratatouille, in addition to Nathan Greno, who’s the director of Tangled.”

The studio can also be behind Luck, whose voice forged contains Jane Fonda and Whoopi Goldberg and which a administration presentation touted because the “highest-performing authentic household movie on Apple TV+,” in addition to the upcoming Netflix movie Spellbound.

And once more, Skydance is betting on its know-how edge and partnerships. “We’re additionally constructing a cutting-edge studio within the cloud in partnership with Oracle and have a multi-picture partnership with Netflix, the place we’re scaling to 2 function movies a yr that we’ll be delivering beginning in 2026,” Ellison mentioned, calling the cloud resolution a driver of value financial savings and operational efficiencies.

Shell put the deal into the broader field workplace and scale context. “From a theatrical perspective, animation is so vital, and Paramount is already very robust with Nickelodeon, however should you add John Lasseter … we’re going to right away be a pacesetter in animation,” he emphasised.

Ellison was much more enthusiastic. “The addition of Skydance Animation to Nickelodeon creates an animation powerhouse that can instantly make us probably the greatest and strongest inside the trade,” he argued.

Barrington Analysis analyst Jim Goss was among the many Wall Road observers who took notice of the animation alternative, highlighting that the merger would guarantee “elevated studio heft,” amongst different issues. “Skydance has partnered with Paramount for over a decade throughout numerous blockbuster franchises, and the transaction will unify rights to some vital properties,” he wrote. “Moreover, the merger with SkyDance will add to the animation capabilities.”

Sports activities

Final however not least, the post-merger Paramount is betting on its sports activities enterprise that can mix CBS Sports activities and Skydance Sports activities, launched in 2022 “to capitalize on the rising demand for sports activities and leisure content material throughout platforms,” as Ellison outlined. “Our imaginative and prescient for the studio is to create the world’s first all-sports storytelling content material studio, and we’re extremely honored that after a yearlong
course of, we have been chosen by the NFL to be their key leisure accomplice for all of its storytelling.”

He additionally sang the praises of its rising fame, touting that “in a really quick time period, Skydance Sports activities has rapidly turn into a number one studio for leagues, groups, and athletes alike.” Its first image, launched in partnership with Matt Damon, Ben Affleck and Amazon Prime Video, was Air, whereas its upcoming docu-series in regards to the Dallas Cowboys is already on observe to be one of the crucial profitable tasks ever within the enterprise,” Ellison signaled.

In the meantime, Shell famous the significance of this enterprise for the 2 firms individually and the mixed enlarged agency. “Sports activities is essential for the entire firm, notably CBS,” he underlined. “Add the sports activities capabilities of Skydance to what [CBS Sports president and CEO] David Berson and his workforce are already doing at Paramount, and it makes us a pacesetter in sports activities.”

Jayant additionally sees the advantages of bringing Skydance’s and Paramount’s sports activities capabilities below one roof, writing: “Throughout sports activities, Skydance’s partnership with the NFL is complementary to CBS which is a long-term rights purchaser with expansive distribution capabilities.”

Others on the Road additionally weighed in on the potential progress areas. Morningstar analyst Matthew Dolgin, who has a four-star score and $20 honest worth estimate on Paramount shares, favored what he heard on animation and sports activities. “Skydance has had success in producing or co-producing a number of profitable films and tv reveals, and Skydance Sports activities and Skydance Animation, with their relationships with the Nationwide Soccer League and Netflix, respectively, are intriguing,” he concluded.

However TD Cowen analyst Doug Creutz needs to see extra proof that the outlined progress alternatives can truly be captured. The merger companions “indicated that sports activities is a serious focus for RedBird and that New Paramount is more likely to proceed to accumulate sports activities rights,” he wrote in his report. “Skydance additionally has divisions dedicated to animation (below former Disney/Pixar animation lead John Lasseter) and video video games; the previous has so far been restricted to productions for streamers, whereas the latter stays largely unproven.”