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Netflix Signs Animation Streaming Deal With DreamWorks

26 Sep, 2011 By: Erik Gruenwedel

The deal supplants an agreement with HBO in 2013, marking a major blow to Time Warner’s traditional first-run movie pay-TV channel

DreamWorks Animation has signed a distribution agreement with Netflix that allows the latter's subscribers to stream such movie franchises as “Shrek” and “Madagascar,” among others, beginning in 2013.

The pact, which reportedly is worth about $30 million annually throughout an unknown number of years to DreamWorks, initially was posted Sept. 25 on Netflix CEO Reed Hastings’ Facebook page — the latter a newly signed social media partner with Los Gatos, Calif.-based Netflix.

DreamWorks Animation theatrical titles in 2013 include Turbo, about a snail; pre-historic comedy The Croods; and a “Rocky & Bullwinkle” adaptation called Peabody & Sherman. DWA's vaunted catalog titles such as Kung Fu Panda and Antz also will be available.

Netflix COO Ted Sarandos characterized DWA as one of the few family entertainment brands that “really matters,” and greatly increased the number of first-run movies Netflix will have in the pay-TV window.

“You’re seeing power moving back into the hands of content creators,” Sarandos told The New York Times. “When a company like DreamWorks ends a long-running pay-TV deal — when a new buyer in the space steps up — that’s a really interesting landscape shift.”

DreamWorks Animation CEO Jeffry Katzenberg called it a “game-changing deal.”

“This arrangement allows us to get more value for our content while giving us a greater degree of flexibility in how we distribute it across multiple platforms in today's evolving digital world,” Katzenberg said.

The deal would be Netflix’s second swipe at HBO, which lost out on the rights to a reboot of British crime drama “House of Cards,” now in exclusive production by Netflix and helmed by Oscar-winning director David Fincher and starring Kevin Spacey.

The move marks a strong rebound for Netflix, which has taken a PR beating in recent weeks following an unpopular price increase and hasty decision to rename its DVD and Blu-ray Disc by-mail rental program Qwikster.

Eric Wold, research director with Merriman Securities in San Francisco, said the recent decision not to renew the license deal with Starz Entertainment should free up about $250 million content spending that Netflix now can direct toward higher-profile studios.

"At this point, we believe it is increasingly clear that the two biggest earnings drivers in 2012 — marketing and content spend — are firmly in management's control," Wold wrote in a Sept. 26 note before the DreamWorks Animation annoucement.


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