When Skydance Media and Paramount Global executives outlined their plans for the merged company to investors on July 8, they showed a series of slides. One of them highlighted Skydance’s story and was entitled “Animation, Sports and Games Divisions Drive Growth.”In fact, those are three key areas that management also sees as core upside opportunities for the combined company. After all, Skydance Games will add a key entertainment growth area to the Paramount story, while the merged firm’s scale in animation and sports will be boosted.Of course, there are the plans for $2 billion in cost savings, the potential to benefit from a reworked streaming strategy (with the expectation of a partnership for Paramount+), and the increased focus on being a creator-friendly entertainment juggernaut.But below, The Hollywood Reporter is taking a closer look at the three businesses of gaming, animation and sports and why they are particularly expected to benefit from the Paramount-Skydance mega-deal.Just take gaming as an example. With Skydance being seen as bringing more technology expertise and exposure to Paramount at a time when Hollywood giants are often battling deep-pocketed Silicon Valley titans, the growing gaming business has been touted by top executives at the two companies. “One of the big problems in this business, which I’ve spoken to many of you forever about, is growth,” said Jeff Shell, the former NBCUniversal CEO who now works for RedBird Capital, which has backed the deal, and is set to become president of the post-merger Paramount. “And Skydance takes a bunch of parts of the business that Paramount needs to get into, including games … and adds a growth engine to the company.”Ellison himself touted that Skydance Games is “comprised of two leading interactive game teams. The first is run by Dan Prigg, which is a virtual reality development studio. Our most recent title, Walking Dead: Saints & Sinners has sold over 3 million units.” The second gaming unit, he described as “a AAA interactive studio that is run by Amy Hennig who is responsible for the Uncharted franchise, and our first title is Marvel 1943: Rise of Hydra, which is in partnership with Disney and Marvel.” Its next title is set in the Star Wars universe. “One of the things we’re also doing … is really pushing the boundaries of what’s possible in narrative gameplay, where we have created a proprietary AI camera system that allows you to have all of the fun of the moment-to-moment, second-to-second gameplay but present it like you’re in a cinematic” experience.Evercore ISI analyst Vijay Jayant, who has an “in line” rating with a $11.50 stock price target on Paramount, was among the Wall Street experts to highlight the gaming opportunity after the deal announcement. “The partnership also enables new interactive and gaming proficiencies, including two in-house game developer studios and strong franchises (e.g. upcoming console games in Marvel and Star Wars and the VR game The Walking Dead),” he wrote.That said, Andy Gordon, partner at RedBird Capital, signaled that the gaming business will take a bit longer to operate at its peak. “2026 is a year that we not only produce two animated films, but we also will have all of our video game assets at full deployment,” he said.Speaking of animation, the Skydance and Paramount leadership sees the former’s animation unit, which has 800-plus in-house artists and fully-integrated 24-hour production capabilities, boosting the latter in this area to fuel the merged company’s broader kids and family business.Ellison described “Skydance Animation, which we built in partnership with John Lasseter,” as one of the core verticals of Skydance and again touted proven creative talent. “Our mission was to aim incredibly high and build a studio that could stand alongside Pixar’s and DreamWorks Animation,” he explained. “We’ve been able to recruit some of the most talented artists in the world over to the studio. Just a few examples: Brad Bird, who is the director of The Incredibles and Ratatouille, as well as Nathan Greno, who’s the director of Tangled.”The studio is also behind Luck, whose voice cast includes Jane Fonda and Whoopi Goldberg and which a management presentation touted as the “highest-performing original family film on Apple TV+,” as well as the upcoming Netflix film Spellbound.And again, Skydance is betting on its technology edge and partnerships. “We’re also building a cutting-edge studio in the cloud in partnership with Oracle and have a multi-picture partnership with Netflix, where we’re scaling to two feature films a year that we’ll be delivering starting in 2026,” Ellison said, calling the cloud solution a driver of cost savings and operational efficiencies.Shell put the deal into the broader box office and scale context. “From a theatrical perspective, animation is so important, and Paramount is already very strong with Nickelodeon, but if you add John Lasseter … we’re going to immediately be a leader in animation,” he emphasized.Ellison was even more enthusiastic. “The addition of Skydance Animation to Nickelodeon creates an animation powerhouse that will immediately make us one of the best and most powerful within the industry,” he argued.Barrington Research analyst Jim Goss was among the Wall Street observers who took note of the animation opportunity, highlighting that the merger would ensure “increased studio heft,” among other things. “Skydance has partnered with Paramount for over a decade across various blockbuster franchises, and the transaction will unify rights to some important properties,” he wrote. “Additionally, the merger with SkyDance will add to the animation capabilities.”Last but not least, the post-merger Paramount is betting on its sports business that will combine CBS Sports and Skydance Sports, launched in 2022 “to capitalize on the growing demand for sports and entertainment content across platforms,” as Ellison outlined. “Our vision for the studio is to create the world’s first all-sports storytelling content studio, and we are incredibly honored that after a yearlong process, we were selected by the NFL to be their key entertainment partner for all of its storytelling.”He also sang the praises of its rising reputation, touting that “in a very short period of time, Skydance Sports has quickly become a leading studio for leagues, teams, and athletes alike.” Its first picture, released in partnership with Matt Damon, Ben Affleck and Amazon Prime Video, was Air, while its upcoming docu-series about the Dallas Cowboys is already on track to be one of the most successful projects ever in the business,” Ellison signaled.Meanwhile, Shell noted the importance of this business for the two companies separately and the combined enlarged firm. “Sports is critical for the whole company, particularly CBS,” he underlined. “Add the sports capabilities of Skydance to what [CBS Sports president and CEO] David Berson and his team are already doing at Paramount, and it makes us a leader in sports.”Jayant also sees the benefits of bringing Skydance’s and Paramount’s sports capabilities under one roof, writing: “Across sports, Skydance’s partnership with the NFL is complementary to CBS which is a long-term rights buyer with expansive distribution capabilities.”Others on the Street also weighed in on the possible growth areas. Morningstar analyst Matthew Dolgin, who has a four-star rating and $20 fair value estimate on Paramount shares, liked what he heard on animation and sports. “Skydance has had success in producing or co-producing several successful movies and television shows, and Skydance Sports and Skydance Animation, with their relationships with the National Football League and Netflix, respectively, are intriguing,” he concluded.But TD Cowen analyst Doug Creutz wants to see more evidence that the outlined growth opportunities can actually be captured. The merger partners “indicated that sports is a major focus for RedBird and that New Paramount is likely to continue to acquire sports rights,” he wrote in his report. “Skydance also has divisions devoted to animation (under former Disney/Pixar animation lead John Lasseter) and video games; the former has thus far been limited to productions for streamers, while the latter remains largely unproven.”
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