Netflix DreamWorks, Netflix is to air original television programming from
Dreamworks Animation in a deal described as a major coup for both
companies.
Financial details were not disclosed but Netflix said the multi-year
agreement is its biggest deal for original first-run content. It
includes more than 300 hours of new TV episodes in a deal starting in
2014.The transaction helps Netflix compete with pay TV channels such as HBO and Showtime, and it gives Dreamworks a potentially lucrative outlet for its shows as it tries to shed its reliance on two or three big-budget movies each year.
Netflix doubled down on original children's programming, hoping to strengthen its push to become a family entertainment brand. The new content should ease some of the pain of losing a range of children's shows from Viacom's Nickelodeon network, including future episodes of Dora The Explorer, which Amazon snapped up for its streaming service in early June.
"This is arguably a groundbreaking deal," said Tuna Amobi, a Standard & Poor's equity analyst who covers both Netflix and DreamWorks Animation.
While concerns remain about how much the deal will cost Netflix in the end, the company said it is a global deal that will allow it to debut the original series in the 40 countries where Netflix operates. That could help spread the costs over more territories and more subscribers if Netflix continues to grow overseas.
Investors hailed the deal as a win-win. Netflix shares rose 7.3%, while DreamWorks was up 4%.
The deal suggests DreamWorks will significantly ramp up its production of TV shows. Currently, it only produces Dragons: Riders Of Berk for Cartoon Network, which completed a run of 20 episodes at 23 minutes each - less than eight hours of content in all - in March.
A second season of Dragons is set for release in the autumn, and Netflix had already contracted with DreamWorks for a series based on its upcoming film Turbo. But the deal suggests that several new series will have to debut each year to fulfil the industry standard deal length of five to seven years.
New series will be based on characters either from future film hits, past franchises like Shrek, or even older hits, including the hundreds of characters like Casper The Friendly Ghost, which DreamWorks acquired when it bought Classic Media last July.
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