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Netflix Signs Exclusive Deal With Dreamworks 199

Posted by samzenpus
from the let-there-be-movies dept.
tekgoblin writes "Netflix has signed an exclusive deal with Dreamworks Animation which will allow them to stream content from the studio to Netflix. The deal will allow Netflix to stream content from Dreamworks, which previously supplied content to HBO. The contract was negotiated at approximately $30 million per Dreamworks film title."
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Netflix Signs Exclusive Deal With Dreamworks

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  • by firex726 (1188453) <firex726@yah[ ]com ['oo.' in gap]> on Monday September 26, 2011 @09:34AM (#37514700)

    $30 mil per movie title!
    That just seems insanely expensive to me.

    • by mkraft (200694)

      Considering Netflix recently lost half their market value, I wonder how they are going to afford this? Are they only going to stream a handful of Dreamworks titles?

      • by mr1911 (1942298) on Monday September 26, 2011 @09:44AM (#37514792)
        Market cap is not working capital or cash flow.
        • by C_Kode (102755)

          Market cap is not working capital or cash flow.

          This is true, but they are generally tied to each other. For instance if a company has poor cash flow and working capital, their stock value tends to drop which knocks their market cap down. While the opposite occurs when a company has cash flow and capital.

          The original poster does have a point. Many times a company will sell stock help finance large investments like this. $30M per title. You've got to ask, exactly how many titles are they purchasing the rights too? Currently Dreamworks has released 2

          • Netflix's stock price dropped because of two things: loss of an important supplier (Starz) and a very bad PR move. They've found a new supplier in Dreamworks and put out a bunch of new PR and member perks, so it looks like they're actively fixing the previous issues.

            I bought NTFX stock when it hit bottom because they have a good service, they just had a few set backs. Hopefully these attempts to correct their current woes pan out. ;)

            • by timeOday (582209)

              I bought NTFX stock when it hit bottom

              Ahh, an optimist.

              I think they are leaping headlong into an unworkable business strategy - they are waving the white flag to the content owners. What choice do they have? But 30 million per movie? Nope, if they're paying that much, they'll never be able to rent movies to me at a price I'm willing to pay. They are no longer a force for lowering prices.

            • by Dahamma (304068)

              Their stock din't drop 60% in a couple of months because of bad PR.

              It dropped because people have finally realized that their current inexpensive-streaming-business model will never actually do what all of the hype around them previously claimed, which is replace cable and new release VOD services. Their inflated market value (ie. at 300 the P/E was about 70!) reflected people's expectation for massive growth in the industry, and that has now been shaken.

              Overpaying for a few Dreamworks titles is mostly jus

          • by RingDev (879105)

            This is true, but they are generally tied to each other.

            No, they aren't. Stock value is only tied to stock holders' desire to retain their stock, and non-owners to want to buy their stock.

            Having low capital is one way to make less owners want to hold on to their stock and would be buyers less interested in purchasing it, but it is far from the only means.

            Market instability, economic issues, significant real world events, etc... will all cause a stock to lose value even as the company it is part of is performing well above expectations.

            Is Netflix about to invest $900M on 30 movies?

            Netflix has roughly 25M cus

        • by bhagwad (1426855)
          But how does this work out There must be thousands of movies. Each one paying 30 mill means dozens of billions of dollars!
      • Considering Netflix recently lost half their market value, I wonder how they are going to afford this? Are they only going to stream a handful of Dreamworks titles?

        And loss of market value means what to their cash flow? Unless they plan to start selling stock it really doesn't effect the amount of money they have to spend after the IPO etc

        • by hedwards (940851)

          No, however, it does affect what what the shareholders think and how they vote when the shareholders meeting pops up and the executives come up for a vote. Vaporizing half the share price by making some pretty mind blowingly stupid mistakes and then giving us Qwikster is unlikely to be conducive to them winning their elections or getting any slack from the shareholders.

      • by mosb1000 (710161)

        The reason they lost half their market value is because they raised their prices, which they obviously did so they could afford to buy movies this way.

        • One thing's for sure, if they don't find a way to get their hands on the content people want, pricing structure won't mean a damned thing.

      • by Antisyzygy (1495469) on Monday September 26, 2011 @10:02AM (#37514986)
        Stock prices don't affect revenue and assets (except for the stock held by members of the company) of a company who issues the stocks, its the other way around. Netflix took a hit to its stock because people are not confident they will continue to grow as a company, however there was not an instantaneous change in their revenue. They still had as many subscribers after the stock took a hit as before +/- a few thousand probably.
    • Netflix has 25 million subscribers, little more then a dollar per subscriber per movie isn't all that bad once you consider $96 per subscriber per year and this is probably a multi-year deal so the cost is 0.30-0.40 per person per movie. The real news is that they lost Starz so their digital library will take a serious hit so instead of bolstering their library it is shrinking.
    • It depends. There are a lot of factors that could influence price.

      Time. How long does this last? Does $30 mil get them a years worth of access? 5 years? 10 years?
      Exclusivity. Is Netflix going to be the only ones who have access to these movies via streaming? Do others get rights, too, but Netflix gets to show first? How long before someone else can show the movies?
      Same price for each movie or average? Are some new release movies costing them $50mil while others only $3 mil?

      People keep bringing up the loss o

    • by rwv (1636355)

      $30 mil ... let's do some math. Dreamworks has 22 movies that have grossed on average $163 Million in the box office [boxofficemojo.com]. Approximately 16 Million tickets are sold for each Dreamworks film. Owning all the Dreamworks films on DVD or Bluray assuming a price of $15 each would cost $330. Meanwhile, Netflix has 20 Million subscribers [quora.com] paying at least $8/month. Subscribing to Netflix streaming for 3.5 years costs $336.

      From Netflix perspective, $1.50 out of $96 per year from every subscriber is being given to Dr

    • by wiedzmin (1269816)
      Who cares, as long as they don't increase the price of the streaming-only package, I get some awesome Dreamworks cartoons for free. I call that added value for the customer (me).
    • by Tetsujin (103070)

      $30 mil per movie title!
      That just seems insanely expensive to me.

      Yeah, I don't think I can afford that!

    • by DarthVain (724186)

      Emphasis on "Exclusive deal". They are also paying them not to give the movie to anyone else.

  • Except I've seen already seen everything Dreamworks Animation has ever produced.

    • Re:It sounds great (Score:5, Insightful)

      by tag (22464) on Monday September 26, 2011 @10:17AM (#37515186)
      But my kids will watch them over and over, ad nauseum.
      • I keep seeing this. Is this Netflix's goal? To be the world's (approved Regions only) babysitter?

      • by Tetsujin (103070)

        But my kids will watch them over and over, ad nauseum.

        Personally, I don't intend to let that happen. My girl can watch Pixar films all she wants, she can watch selections from my growing library of stop motion or Muppet movies... But no Dreamworks. We must have standards in our household.

  • for Dreamworks to realize that Netflix is making more than $30 million per movie and still wants more?

    This is a good deal for Netflix and a bad one for Dreamworks.

    • This is not an exclusivity deal so Dreamworks can sell digital content to others as well.
    • for Dreamworks to realize that Netflix is making more than $30 million per movie and still wants more?

      This is a good deal for Netflix and a bad one for Dreamworks.

      Because it's always a good idea to charge your resellers enough that they cannot make a profit? Dreamworks should have realized Netflix is not a charity up front.

    • Sure, they can raise their prices if they want netflix to die and no longer be a revenue stream. If they don't want money anymore then that's a great idea.

      Dreamworks must realize that for netflix to be a viable option then they need to allow for netflix to pay their competitors as well. Netflix can't survive as a Dreamworks-only outfit; So if Dreamworks raises their fees and netflix continues as a client then Dreamworks' competitors will start to fall off and so will customers. Then netflix will die
  • Does Dreamworks have that much stuff? I look at the Netflix top 100 and only 6 of the movies are streaming. Netflix appears to be circling the drain to me.
    http://www.netflix.com/Top100?lnkctr=mhT100 [netflix.com]

    • by hedwards (940851)

      That's why I switched to Blockbuster, none of the streaming services have much content compared with either Netflix's or Blockbuster's DVD library. And several of the ones that do exist are free. I might have kept the subscription with Netflix for streaming, but the library sucks. I wanted to watch a few back episodes of Eureka on streaming and only specific seasons were available for streaming. And the same often goes for other series as well.

      They can still pull out of their recent tailspin, but it's going

    • That's all it is. Netflix is betting that they've locked up exclusive rights to some blockbuster (no pun intended) titles for the next few years. Do they think they'll make money on the specific Dreamworks titles they've licensed? Nope. But if it works out that those titles become "must-see" titles, it'll bring subscribers in. And then hopefully they'll have some strategy in place to retain those subscribers. It's no different than a department store advertising an item at a loss in order to get peop
  • by jandrese (485) <kensama@vt.edu> on Monday September 26, 2011 @10:04AM (#37515012) Homepage Journal
    So Dreamworks has produced a little over 100 titles, so that would be a 3 billion dollar deal to get a tiny sliver of the movies they're about to lose with the Stars deal back. That is not sustainable by any measure. For comparison, with the DVD rental business the Disks would have cost somewhere on the order of $2 million. Back when the Streaming was just a sideshow for the disk rental business this didn't matter, but now that the company is split in two it's clear just how badly Netflix is screwed. The studios don't like it, and they ultimately have control over the business thanks to the fact that internet streaming to one household is considered "broadcasting".

    It doesn't even matter if this is the future of movie rentals. Studios have shown time and time again that they'll prefer to kill off any new and disruptive technologies instead of trying to profit off of them. They had to be dragged kicking and screaming by court rulings into the VHS and DVD era, and they're not going to go quietly into the streaming era either. Not that they'll have to anyway. They learned their lesson the first time and bought all of the congressmen and FCC executives they need to prevent them from ever having to face inevitable change anyway. Can you imagine legislation that would reclassify streaming in a sane manner from this congress or FCC? The thought is ludicrous.
    • by CastrTroy (595695)
      What's the legality associated with renting out movies that you own physical copies for? Netflix might find a better deal buying a copy for each movie they plan to stream online at the same time. It would work the same as their mail order service, except that they could deliver the DVD instantly (or the data contained there-in) and you could return the movie instantly. I'm not sure how well this could work out in real life, but I has to be cheaper than spending 30 million per title. Think of how many ph
      • by imunfair (877689)

        Zediva tried that and got smacked around for it - they might still be in court about it, but last I heard it wasn't looking good for them. Maybe a company with more money and clout would have better success, but that's a big risk for a profitable established company to fight the industry they rely on for content.

      • by Belial6 (794905)
        That is an interesting idea. There would definitely be legal battles over. I'm pretty sure that the music locker sites have already paved the way for the storing of media on a server as being legal. The could even go so far as to list the number of copies that are currently available in (near) real time so you would know whether you could stream or not right from the menu.
    • by PCM2 (4486)

      So Dreamworks has produced a little over 100 titles, so that would be a 3 billion dollar deal

      Netflix has struck a deal strictly with DreamWorks Animation, not DreamWorks as a whole. DreamWorks Animation has produced a total of 22 films. Furthermore, the deal only starts with the films DreamWorks Animation plans to release in 2013. Netflix will not automatically gain access to the studio's back catalog; rather, "certain titles" will be made available "over time" (and then only if Netflix chooses to pay for them). More info here. [dreamworksanimation.com]

  • ...not after.

    If Netflix had been on a run of announcing a half-dozen studio deals for streaming, they could have gotten away with the price hikes and the Qwikster split.

    As it stands now, especially with the sunset of the Starz deal, Netflix streaming is of marginal value. Most of the movie content is lame and the TV content is even hit or miss -- all of Mad Men and Lost, but I gotta get DVDs for Barney Miller, a show off the air for 30 years with a cast that's half dead and no complicated licensing issues

  • Due to Netflix's recent blunders, they aren't growing as fast as they forecasted and are at risk of losing streaming customers. (I dropped my DVD account after the rate hikes and then dropped my streaming account since it wasn't very useful as a standalone service.) On top of all this, Netflix couldn't renew their contract with Starz, which is going to cause their streaming selection to be even more lame by February. If Netflix hadn't signed something of worth, more streaming customers were going to lea

  • 2013!!!! (Score:5, Informative)

    by Crock23A (1124275) on Monday September 26, 2011 @10:10AM (#37515100)
    According to the article, no streaming content from this deal until 2013. Maybe I'll reactivate my account sometime around then but in all likelihood, I'll have found a much better alternative by then.
    • by SuperKendall (25149) on Monday September 26, 2011 @02:22PM (#37518202)

      According to the article, no streaming content from this deal until 2013. Maybe I'll reactivate my account sometime around then but in all likelihood, I'll have found a much better alternative by then.

      What makes you think that, at all? What ray of hope is there anywhere that something better will come along?

      One possibility was pay per stream, which is essentially what iTunes rentals was. Dead.

      Another model is Hulu. Oh awesome, I get to pay more than Netflix for an order of magnitude less content that includes commercials.

      Or perhaps you prefer a total balkanization of content? Like the NFL streaming you can buy on the PS3 - for $100...

      Like it or not, Netflix has the only streaming model that is really reasonably priced and commercial free with a pretty wide range of content. If Netflix falls you can look forward to paying $100 for the same amount of content, if you are lucky... By not buying into Netflix now, you are basically helping to seal the fate of the only solution that is close to good. When you come back in 2013 and find NOTHING viable apart from torrents, well don't come crying to Slashdot!

      My thought is that the death of DVD's and physical rentals is greatly exaggerated as long as the streaming scene is so horrific and fragmented. I will continue to support Netflix because they are the only content neutral providers that I like the approach of.

  • Hollywood is trying to kill Netflix as quickly as they can. Sometimes I think they would prefer us all to just use torrents.
  • by mj1856 (589031) on Monday September 26, 2011 @10:23AM (#37515274)
    I don't get it. Netflix drops Starz over 200-300mil/year [tekgoblin.com] but signs Dreamworks at 30 mil per movie? I'm sure Starz delivers more than 10 movies in a year. Do Netflix execs really think their audience will prefer cartoons over serious content?
    • Starz dropped Netflix. They wanted Netflix to charge an additional fee to get Starz content, so that their label would remain "exclusive." Netflix said no
  • You don't expand a thing like Netflix worldwide by letting all the middle men in control of someone else's works. I hope Netflix are smart and signing world-wide deals, not only USA-only rights. Maybe that's why they went to Dreamworks directly, to bypass all the layers of middle men?

    • Maybe that's why they went to Dreamworks directly, to bypass all the layers of middle men?

      That's probably not how it works. One of those middle men will have the rights to market Dreamworks in Canada, and likely part of that deal is exclusivity.

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