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Report: Netflix Eying Exclusive Streaming Rights to DreamWorks Animation Movies

24 Jul, 2011 By: Erik Gruenwedel

Deal could see animation studio terminate its HBO contract early

Netflix and DreamWorks Animation reportedly are in discussions to allow the online disc rental pioneer exclusive streaming access to its movies, supplanting a current pay-TV agreement with HBO.

The pact, which could be finalized in the coming days, according to a Bloomberg report, is noteworthy as it would be the first time a major studio has licensed its movies to subscription video-on-demand at the same time — not after — the pay-TV window. It also coincides with the week both companies file quarterly fiscal results.

Netflix, which releases fiscal results July 25, has aggressively sought top-tier TV programming and movies as it expands its burgeoning streaming service into Latin America and Europe.

The service recently announced that beginning Sept. 1 it would raise the monthly fee for combined rental discs and streaming to $15.98. Separate streaming and disc rental programs cost $7.99 monthly.

DreamWorks Animation, which has a pay-TV deal with HBO through 2014, according to a regulatory filing, is set to release Puss In Boots in November and Madagascar 3 and Rise of the Guardians in 2012.

DreamWorks Animation releases its movies on DVD and Blu-ray Disc through Paramount Home Entertainment. That agreement and others recently came under question when Paramount announced it would launch its own animation unit — effectively ending its theatrical distribution deal with DreamWorks when it expires next year.

Separately, an online report said Netflix was bidding on a new TV serial from the creator of “Weeds,” based on the Piper Kerman memoir Orange Is the New Black: My Year In a Women's Prison.

Netflix earlier this year outbid HBO and others for the rights to “House of Cards,” a new series to be helmed by director David Fincher (The Social Network) and starring Kevin Spacey.

Michael Pachter, analyst with Wedbush Securities in Los Angeles, said such a deal would enhance Netflix's streaming portfolio only by a dozen or so movies.

"It's nice to have, but I'm not sure it moves the needle," Pachter said.

Representatives from both companies were not immediately available for comment. Netflix, as a rule, does not comment on market rumors and speculation.

Separately, Richard Greenfield, analyst with BTIG Research in New York, noted that continued acqusition of streaming content by Netflix and last week's rollout of the updated Mac Mini from Apple without a disc drive underscored ongoing efforts by digital media companies to kill the DVD.

Greenfield said that a potential subscriber to Netflix would have a hard time signing up for disc rentals, given the scant reference to physical media or even a link to sign up for a disc-only membership on the online disc rental pioneer's home page.

Indeed, Greenfield discovered that signing up for a disc-only membership on Netflix requires visiting a separate URL address: DVD.Netflix.com, which he said is not mentioned on the home page or searchable on Google.

"You simply have to 'know' the website," Greenfield wrote in a July 25 post. "We highly doubt anyone new to Netflix would know to read their corporate blog. [They're] not exactly making it 'easy' to find DVDs without streaming."

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