DreamWorks Animation has been making animated features that are then distributed by Paramount Pictures for a while now. It’s been a good model that’s, for the most part, worked out well. Heck, when they put out How to Train Your Dragon, people even started to talk about how they were approaching or meeting Pixar levels of success. But this partnership between companies appears to now be over, and the future of animated movies is looking a bit uncertain. What happened?

Well, despite the fact that the DreamWorks/Paramount relationship has been making money and achieving more and more critical success, Dreamworks Animation CEO Jeffrey Katzenberg hasn’t been happy with his end of the deal, and has started shopping around the rights to distribute Dreamworks films to other companies. As a matter of fact, Katzenberg is reportedly looking for someone to agree to purchase Dreamworks Animation as a part of a new distribution deal.

Paramount, for their part, doesn’t seem to be interested in playing hardball with Katzenberg. Instead of ponying up whatever dough would be necessary to purchase DreamWorks Animation and keep distributing their films, they’ve instead announced the creation of their own in-house animation studio Paramount Animation. In a press release announcing the creation of the new division, Paramount CEO Brad Grey said, “The marketplace has never offered as many opportunities to create wonderfully imaginative pictures at very appealing budget levels, so we feel this is a perfect moment to launch this effort. We are now eager to expand in animation with appropriate and prudent overhead and production budgets in a way that will allow us to be nimble, creative and innovative.” What’s all of this talk about “appealing budget levels” and “prudent overhead”? The newly formed Paramount Animation is focusing on producing features with budgets of up to $100 million. Already this is creating a bit of a stir in the film gossip community, as most modern, tent pole animated releases cost much more than that to produce; and general consensus is that you get what you pay for when it comes to the quality of an animated film. Is Paramount Animation set to release a string of shoddy looking, B-level animated films? Or will the smaller budgets actually allow them to be, as they put it, “nimble, creative, and innovative?” Time will tell, but I imagine that this desire to cut the budgets of animated films had to be one of the big stumbling blocks in the negotiations between Paramount and DreamWorks.

With the creation of this new animation studio, where does this leave DreamWorks Animation? Who is going to release their films? According to Deadline Berk, a Paramount executive told them that, “We did offer them a one-year extension on the same terms of what we have, but Jeffrey has indicated his desire to get a better deal.” This could be a dangerous game for Katzenberg and DreamWorks, as their last film Kung Fu Panda 2 underperformed on 3D sales at the box office, and the focus of the company moving forward is all on producing 3D films. Reportedly Comcast, Disney, Sony, Universal, and Fox have all already turned down Katzenberg’s deal to purchase DreamWorks Animation and distribute their films, as they all have in house animation studios already. This leaves him with only Time Warner to focus on as a possible partner.

More importantly than what this means for the corporations and executives, where does this leave fans of animated films? Will we now have to put up with a lackluster string of under-budgeted movies put out by a Paramount Animation company that has yet to get its bearings? Will DreamWorks’ future projects be put on hold if they can’t hammer out some sort of distribution deal? Did Jeffrey Katzenberg’s hard-nosed negotiating put Pixar one step closer to world domination? These are all questions.


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