The club worked hard to convince Ozil to sign a new deal at the Emirates Stadium, where he is reportedly now being paid £350,000 a week.
He has since attracted criticism for his performances and attitude – and has fallen out of favour with Gunners boss Unai Emery.
And ex-Arsenal defender Dixon has no doubt that the bumper new contract took the edge off the former Germany international.
“When you give somebody that amount of money it probably wouldn’t affect some players. But it looks as if it has softened him,” Dixon told The Sun.
“He doesn’t look driven, he doesn’t look hungry, and when that happens you have a problem.
“Signing him up on a big deal was seen as a must not to lose him. But the character of the player has to be taken into consideration.”
Arsenal face a fight to secure a top-four finish and could do with Ozil reproducing his best form as they chase a Champions League spot.
“You need Ozil firing as well as the ability of the team to carry him at times when he is not quite functioning,” Dixon added.
“There is no doubt that the team needs a player like Ozil playing at his best.”