While the theatrical distribution deal is largely identical to the one that DreamWorks Animation had with Paramount, Katzenberg and company were wooed by Fox's aggressive approach to digital distribution. In a conference call announcing the new arrangement, Katzenberg said "Our new agreement with Fox presents more favorable economics overall for DreamWorks Animation because we are taking advantage of lower costs associated with the emerging digital distribution landscape and managing domestic television distribution in-house." In other words: look for "Shrek 5" to be playing on FX. A lot.
What is less clear is how this new arrangement will affect Blue Sky Studios, the Greenwich, Connecticut-based animation house that produces the successful "Ice Age" movies (the last one, "Ice Age: Continental Drift," was a solid performer domestically but a smash overseas). Some have speculated that, with his oversized personality and history with many executives at the studio, Fox may install Katzenberg as the head of all animation in the Fox umbrella, much in the same way that Disney had John Lasseter manage both Pixar and Walt Disney Feature Animation after Disney purchased Pixar in 2006. However Fox didn't buy DreamWorks Animation. It's just distributing its films. And their deal with Blue Sky is still a profitable one, working for the most part creatively and financially in a way that both Blue Sky and Fox can appreciate.
With both Blue Sky and DreamWorks Animation films under its wing, though, Fox will be a major competitor in the animation marketplace. Sony, Universal and Disney all have two animation production lines – for Sony they have both their Sony Animation stuff as well as the Aardman product from England (distributed in a similar relationship as the one forged by Fox and DreamWorks Animation); Universal is home to Illumination movies ("Despicable Me" and "The Lorax"), plus smaller movies from Laika and Focus (like this past weekend's spectacular "ParaNorman"); and Disney of course has Pixar and Walt Disney Feature Animation, plus oddball projects like Tim Burton's "Frankenweenie" and whatever the hell the Henry Selick animated movie would have been.
It will be interesting to see how Fox maneuvers the dynamics between Blue Sky and DreamWorks Animation. Given recent successes like the "Alvin and the Chipmunks" movie, it's clear that the studio knows how to market that kind of product to key demographics, and with a number of high profile DreamWorks Animation movies in the pipeline, like sequels to "How to Train Your Dragon" and (yes, again) "Madagascar" in the works, it should prove to be a profitable relationship indeed.