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One of Hollywood’s most renowned special effects companies is jumping from the ones and zeros of coding The Matrix to the statistical frenzy of stock indexes.
DNEG — whose visual creators have won Academy Awards for work on Tenet, Inception, and Blade Runner 2049 — announced Tuesday that it’s combining with a special-purpose acquisition company (SPAC) to go public with a $1.6 billion valuation. The details are below (spoiler alert).
A quick refresher on SPACs, because it’s been a while. Also known as “blank check companies,” they raise money from investors and list on a stock exchange for the sole purpose of merging with a private company that wants to go public. In theory, this allows companies to avoid the regulatory hassles and paperwork of a traditional IPO. In reality, shares of merged SPAC companies have tumbled as regulators have stepped up scrutiny and investors have pulled out of tech-driven, early-stage companies. Shares for half the companies that merged with SPACs in the last two years are down 40% or more, amounting to billions in losses.
DNEG, which also did the effects for the recent James Bond blockbuster No Time Left to Die and The Matrix Resurrections, will merge with a SPAC called Sports Ventures Acquisition. While the blank check merger path is a fraught one, the company is convinced its magic will work on the trading floor:
- The streaming wars are about to power never-before seen demand for special effects: the nine leading streaming companies — including Netflix, Disney, Warner Bros, Amazon, Comcast, and Apple — are expected to spend $140 billion on content in 2022 alone, according to a recent Wells Fargo analysis.
- Effects companies are highly coveted because of their potential for the metaverse, a future internet world powered by avatars and online worlds — last month, video game maker Unity Software paid $1.6 billion for special effects studio Weta Digital, famous for its work on the Lord of the Rings movies.
Seeing is Believing: “I’ve never seen this type of demand uptick and a push toward quality and scale in the industry,” Namit Malhotra, DNEG’s CEO, told the Wall Street Journal. “We’re on a massive expansion spree.”