Netflix, DreamWorks Sign Streaming Deal [Netflix Signs Agreement to Stream DreamWorks Content; DreamWorks Leaves HBO for More Lucrative Deal]

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Netflix has been gathering negative press lately, having suddenly increased service prices and then announcing a separation of its streaming and DVD businesses. But news of a new content partner might help allay concerns over the brand’s value.

Netflix has recently entered into an agreement with animation studio DreamWorks for the streaming of feature movies to Netflix customers. This is reported to have been finalized after HBO let DreamWorks off its contract two years early, having failed to reach an agreement to renew their partnership deal. DreamWorks is said to have closed a better deal with Netflix.

With the Netflix-DreamWorks partnership, subscribers can watch animation from the studio, including popular hits like the Shrek movie series, Kung Fu Panda and Madagascar. DreamWorks CEO Jeff Katzenberg says this is a “game-changing deal,” particularly because the industry is moving toward a situation in which the middleman is getting less and less pricing power. Netflix’ chief content officer Ted Sarandos agrees, saying content creators are now in a better position to negotiate their terms.

You’re seeing power moving back into the hands of content creators. 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.

The exclusive deal is said to be worth $30 million per film paid by Netflix to DreamWorks over an unspecified period of time. In contrast, HBO’s deals with film publishers is said to be about $20 million per film.

Aside from gaining access to DreamWorks feature films, the deal also gives Netflix access to TV specials from the studio. The deal is also seen as a way to reach out to a bigger audience, especially with most DreamWorks features being family-oriented.

Still, the loss of DreamWorks is not likely to hurt HBO too much, as it still has a slew of other partner content providers. The cable network has reportedly signed deals with Summit Entertainment — which distributed the Twilight series. Still Netflix is not without its own deals, having recently partnered with Discovery, and currently in talks with Sony Pictures.

It’s a competitive industry, and with Netflix being thrown into the mix, will cable companies rethink their strategies and business models? Will consumers move toward streaming media due to the convenience it gives and the availability of content?

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