Netflix Signs Exclusive Deal With Dreamworks 199
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."
$30 mil per movie title! (Score:5, Insightful)
$30 mil per movie title!
That just seems insanely expensive to me.
Re: (Score:2)
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?
Re:$30 mil per movie title! (Score:5, Informative)
Re: (Score:3)
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
Re: (Score: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. ;)
Re: (Score:3)
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.
Re: (Score:2)
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
The Perk, plus issues with your gripes (Score:2)
Well you have something of a point, but there is one real and compelling perk being added - game rentals.
However, I don't know the situation is as dire as you make it sound.
On the queue, I'm not quite sure what you mean since streaming was always a separate queue from the DVD queue anyway. If you mean, you'll not see the streaming option from the DVD queue for titles that you can watch now - I'm not sure that will be gone, they could keep links in place to move between the two sites.
The separate lists and
Re: (Score:2)
On the queue, I'm not quite sure what you mean since streaming was always a separate queue from the DVD queue anyway.
I don't mind the separate queues, as I do the searching. I like to be able to browse the entire collection, and add titles to either the DVD or Instant queue, based on which format the title is offered in. If I have to go to one site to browse and add to the DVD queue, and a separate site to add to the Instant queue, I will probably just drop the DVD queue.
Re: (Score:2)
If I have to go to one site to browse and add to the DVD queue, and a separate site to add to the Instant queue, I will probably just drop the DVD queue.
I see what you mean, that is a pretty good complaint... I am hopeful that they may at least present some kind of unified search results across the two companies, at least for now.
As much as I dislike the separated search I still would keep both queues around, for one thing I am interested in game rentals but also I like having the full HD version for some m
Re: (Score:2)
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
Re: (Score:2)
Re: (Score:2)
No, the MPAA is not a licensing organization. And what customers have they sued?
Re: (Score:2)
Re: (Score:3)
Um, if you are either downloading from unauthorized sources, or especially if you are uploading, you are not a customer. And when the guy says he doesn't watch movies, that really takes him even further out of the 'customer' category. So again, what customers, acting in their role as customer, have they sued?
Re: (Score:2)
More than one study has shown that downloaders are also in average big customers. They never sued people because they were customers, but then again, that's not what was claimed, so that's just a strawman.
Re: (Score:2)
Re: (Score:2)
If you trust TFA that he was actually sued for DOWNloading, then maybe. However, I don't think any of these cases were about downloading, they were all about sharing (which is how they find you in the first place). If, in fact, he was accused of uploading, that moves him into the category of (illegal) competitor, who happened to buy a copy so he could share it. That does not make him a customer.
Re: (Score:2)
If you are trying to make the MPAA seem to be some kind of good guy organization y
Re: (Score:2)
Um, if you are either downloading from unauthorized sources, or especially if you are uploading, you are not a customer.
UK Study: Downloaders Buy More Music | The Big Picture ...
www.ritholtz.com/blog/.../uk-study-downloaders-buy-more-music/Cached
27 Jul 2005 â" A belated Tuneful Tuesday post. A recent UK study confirms what we've known all along:"Computer-literate music fans who illegally share
Michael Geist - Gov't Commissioned Study Finds P2P Downloaders ...
www.michaelgeist.ca/content/view/2347/125/
2 Nov 2007 â" Dr. Michael Geist is the Canada Research Chair of Internet and E-commerce Law at the University of Ottaw
Re: (Score:2)
Besides why must Netflix negotiate with Dreamworks?
Because it is easiest to go to the central copyright holder for permissions. There are others you can license from, but only to the degree they're allowed to license. They also likely take a cut of the deals they make. Unfortunately this means dealing directly with a lot of different entities - which can be both expensive and time consuming. Some (like Disney) are hard to deal with (tried that myself).
Isn't there an MPAA
As another said, MPAA isn't a licensing authority. They're more like a union for motion picture companies -
Re: (Score:3)
And what interest would Netflix possibly have in doing that? This way, they get an exclusive deal, which gives them a leg up on the competition. With CARP rates they are essential in a commodity, race-to-the-bottom industry.
Re: (Score:2)
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
Re: (Score:2)
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.
Re: (Score:2)
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.
Re: (Score:2)
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.
Re:$30 mil per movie title! (Score:4, Insightful)
Re: (Score:3)
Re: (Score:2)
Wait, did you really think that you were going to continue to be able to get more content than your $100/mo cable service offers for only $8/mo? People aren't really that dumb, are they?
Re: (Score:2)
As I recall from the initial price increase, their entire revenue before the increase was like 2.3 Billion, and their licensing fees were expected to increase from ~$300 Million to 2.0 Billion.
Re: (Score:2)
Re: (Score:2)
Even so, eight dollars per month for 6 new movies per month isn't that high if you compare it to the prices your cable or satellite company demands for on-demand movies.
Re: (Score:2)
Re: (Score:2)
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
Re: (Score:2)
$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
Re: (Score:2)
Re: (Score:2)
$30 mil per movie title!
That just seems insanely expensive to me.
Yeah, I don't think I can afford that!
Re: (Score:2)
Emphasis on "Exclusive deal". They are also paying them not to give the movie to anyone else.
Re: (Score:2)
Re: (Score:3)
No it's not.
It sounds great (Score:2)
Except I've seen already seen everything Dreamworks Animation has ever produced.
Re:It sounds great (Score:5, Insightful)
Re: (Score:2)
I keep seeing this. Is this Netflix's goal? To be the world's (approved Regions only) babysitter?
Re: (Score:2)
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.
Re: (Score:2)
Why would you let them do that?
As has been noted by others, kids are into repetition. I watched things like Star Wars, Clash of the Titans and Strange Brew ad nauseum. If they enjoy it and it's not offensive to me, they're welcome to watch it again.
Letting your kid watch the same goddamn movie in a loop is about as stimulating as letting them stare at a wall.
I agree. But watching the same movie once every Saturday becomes ad nauseum soon enough. And let's not
Re: (Score:2)
Re: (Score:3)
and I turned out OK.
[citation needed]
Re: (Score:3)
I watched The Pirate Movie at least 300 times, and I turned out. I dunno about the OK part, but I am the very model of a modern major general, with information animal vegetable and mineral.
Re: (Score:2)
I take it you don't have kids
I don't want my kids to learn things from Shrek.
Re: (Score:2)
The kicker in our house to not axe Netflix streaming recently was the quantity of preschool to elementary school aged product available on demand.
Indeed. I tried it, and now I like it!
so how long will it take (Score:2)
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.
Re: (Score:2)
Re: (Score:3)
Now under the Netflix contract they will still be able to sell those digital downloads while providing streaming content to Netflix. So the deal with Netflix is relatively “sugar coated” and will allow Dreamworks to keep profiting off their content.
Re: (Score:2)
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.
Won't work (Score:2)
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
Re: (Score:2)
For this deal to pay off, every dreamworks movie they add to their streaming, needs to convince 4 million people to subscribe.
For this to pay off they just need to sit back and collect money. Its about keeping existing customers happy, not necessarily getting new ones.
Re:so how long will it take (Score:5, Informative)
Lost half their customers? Where did you get that nonsense? They lost about 4% of the customers, which they made up for in revenue with higher prices.
Re: (Score:2)
It's likely to get worse. They lost about 4% of their customers with rather anemic competition, just imagine how many they're likely to lose in the future as the somewhat moribund Blockbuster keeps making progress. Dish has apparently decided to add a better streaming plan to the Blockbuster offerings, right now it's Dish subscribers only, but they are reportedly planning on offering something to everybody else in the near future.
Not to mention the streaming options that are starting to appear to suck up an
Re: (Score:2)
What makes you think Blockbuster (or anyone else) is going to get a better deal than Netflix? Right now we are in a transition phase. A lot of contracts were done before streaming was popular, so streaming providers are currently getting a great deal (at the expense of the studios). As those contracts end and are renegotiated, no-one is going to be getting those cheap deals anymore, and their choices will be a) absorb the loss (not likely), b) pass the higher cost to the customer (what Netflix is doing),
Re: (Score:2)
Because the studios have no incentive to give Netflix the best deal. Netflix is the largest site at the moment in terms of subscribers and you better believe that they're going to get squeezed harder than any of the other sites are. Mainly because the industry is almost certain to use those sites as leverage to put the screws to Netflix.
Especially now that Netflix is spinning of its DVD rental business to Qwikster.
Re: (Score:2)
It seems pretty unlikely that a smaller customer is going to get a better deal than the largest customer. At least, I have never heard of that happening anywhere else. Other sites may pay a smaller total amount, but on a per-subscriber basis they are sure to pay more.
Re: (Score:2)
Re: (Score:2)
Re: (Score:2)
These are Dreamworks Animation films they are getting, not some cheap indie stuff. Just the 4 Shrek movies cost $535M to make.
Re: (Score:2)
Re: (Score:2)
The cost means everything when someone says that 'for $30M per movie it would be cheaper to produce their own movies'. On the other hand, the things you mention have absolutely nothing to do with how much it costs to make a movie.
I really don't get it. (Score:2)
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]
Re: (Score:2)
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
Loss Leader (Score:2)
This is why Netflix is doomed (Score:4, Interesting)
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.
Re: (Score:3)
Re: (Score:2)
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.
Re: (Score:2)
Re: (Score:2)
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]
Nteflix needed stream deals before hikes/Qwikster (Score:2)
...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
Netflix forced themselves into this deal (Score:2)
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)
What makes that likely? Seems rather UNLIKLEY (Score:4)
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.
Re: (Score:2)
Yes but by then the deal will have changed and you will only be able to see videos from before 1999.
On the bright side, that gets you all the Star Wars films, plus The Matrix... They really should have made some sequels to that.
Torrents? (Score:2)
Starz was only 200-300 mil/year... (Score:3, Interesting)
Re: (Score:3)
Re: (Score:3)
That's what I mean. Why did Netflix say no?
Because once they open the door everyone else will want their service to have a "premium" too, their service will fragment and Netflix will be only a platform for selling various other subscriptions? I know it happens for special interest TV but I can very well understand Netflix saying that we can negotiate price, but you don't get to say how we collect money from our customers. In fact, that might be the whole principle of the decision.
Does that include Netflix Canada? (Score:2)
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?
Re: (Score:2)
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.
Re:Nice slashvertisement (Score:5, Insightful)
Re: (Score:2)
The problem is that there is a decision point coming. Today, and for the foreseeable future, the US Internet connection system is a star configuration whereby a "neighborhood" is served by a node. This node is connected to the Internet at large. The pipe to the node is as big as practically possible at this point given the surrounding infrastructure.
Unfortunately, that node serves as many as 1,000 homes and has a capacity between 1 and 3 GB/sec. This works fine when out of 1,000 homes most are surfing t
Full Circle (Score:2)
And radio pioneered the solution to the Netflix inefficiency problem: broadcast. Before 1920, Netflix sucked as much as it does today, but then they fixed the upstream inefficiency problem.
And many people accepted that, though it did have one downside which took about 56 years to really deal with. VHS pioneered the solution to not everyone wanting to watch the same broadcast at the same time: time-shifting. So while people were flaming Netflix in 1975 nearly as much as they had been in 1919, things sudde
Re: (Score:2)
Pray tell, who would you solve the problem of displaying any movie from a huge library only a couple of minutes after they select it, using time-shifting?
Broadcast and timeshifting shove the technical limitations onto the user instead of solving them.
Re: (Score:3)
It pioneered how networks, shows, actors, writers and workers don't get paid a single dime.
It might work in the short term for a small number of viewers, but unfortunately it's not a viable plan in the long term for all viewers.
Re: (Score:2)
Pretty damn easy to 'pioneer' that stuff when you have zero cost because you are freeloading off the people who actually do the work. Oddly enough, it appears that most stolen and counterfeit items are cheaper than legally obtained things. I guess all the thieves and counterfeiters are also 'pioneers' in your mind too?
Re: (Score:2)
Yet ppl are ditching torrents for Hulu and Netflix.
BFD.
Re: (Score:2)
Do you seriously think this article is going to have a significant effect on Netflix at all? Positive or negative? I imagine most people have already made up their minds about Netflix and those that haven't might want to know that Netflix is actually doing something to make their product more enticing. If the post was entirely one long "SQUEE" of jubilation over the wonder that is the Netflix experience, extolling the corporate virtues and bashing anyone who opposed them, then maybe you would have a point.
Re: (Score:2)
25 million subscribers, $8 per month, 48 months = $9.6 billion in revenue over the period.
At $30 million a pop, thats is less than 1/3rd of 1% of their revenue per movie.
Re: (Score:2)
Only 4% left, but a bunch of other people switched to less expensive plans and as a result, Netflix is getting less revenue from them. On top of that, the move has been a God send to Blockbuster and a few of the other services which would otherwise have had a really hard time getting the initial subscribers to get going.
Re: (Score:2)
And there's people like me. I'm hanging on a little while longer just to see what happens. Right now I'm scrapping the bottom of the barrel on my Instant queue. In the next few weeks I'll probably quit or suspend my Instant service and go disc only.
Re: (Score:3)
Dreamworks exec: You're right! Quick! Have them stuff more hip cultural references into our cartoons that will be dated by next week! Call those pony people! See what they are doing, pervert it beyond all recognition, and stuff that in there, too!
Re:useless subject (Score:2)
All about Dreamworks... [youtube.com]
Re: (Score:2)
I think it was pretty obvious that Netflix and Redbox were doomed once you start to see ads like "rent it 28 days before (insert competitor name here)!"
Right, can't underestimate the importance of that kind of value. By the time the competitor gets the movie, the world could be overrun by zombies.
Exclusive = bad for all consumers (Score:3)
Exactly. Exclusive deals are bad for consumers because they eliminate competition. Netflix surely could have negotiated a lower fee for a non-exclusive deal. Since the $30 million per film will ultimately be passed along as higher fees to the Netflix subscribers in some way, subscribers are paying extra for something (exclusivity) that does not benefit them at all -- it benefit's Netflix, the company, in a strategic way. A non-exclusive deal would have been just as beneficial to Netflix subscribers, and