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Netflix Signs Exclusive Deal With Dreamworks
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!
That just seems insanely expensive to me.
Except I've seen already seen everything Dreamworks Animation has ever produced.
So, instead of Netflix streaming movies to me, Dreamworks will stream movies to Netflix and Netflix will relay them to me? Also, doesn't $30,000,000 seem kind of fucking insane? ET was a good movie and all, but I'll take a few thousand Starz licensed movies for $600,000,000 over twenty Dreamwrosk movies for $600,000,000.
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.
Good to see that after all the negative publicity Netflix has pulled in for itself over the past several months, they can still find a way to slasvertise here. This clearly will heal all the wounds of the rate hikes, the company split (with our customer information split too), the loss of starz programming, the random cycles of titles being acquired and lost for streaming, etc.
Yep, we all love netflix now for sure!
Damn_registrars has no butt-hole. Damn_registrars has no use for a butt-hole.
...how in the world is this economically feasible?!?!?
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
22 titles. $30 million per title. So, they are paying $660 million?
Anyone know how long the contract is for? Seems to be a relevant tidbit. All I found is that it is $30 million per picture over an UNSPECIFIED number of years
Netflix had $2.6 billion in revenues prior to their "price changes". They make about $250 million in FCF (what they actually add to the bank). Seems that only 4% of customers left Netflix due to the pricing changes.
I hope this is a 10 year deal or something because Netflix will need more contracts over time. You would think that they would be smart enough to do the contract in a pay-per-view manner. Strange.
Wow, the article is only about a paragraph long and the summary missed the most important part - Netflix can't even stream any of the movies until 2013! With content deals like this, they'll be dead long before they're allowed to show anything
Dreamworks! The poor man's Pixar!
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.
I read the internet for the articles.
...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 like music?
I'm just not convinced that Netflix has the market muscle, cash, talent, connections or relationships with studios to negotiate streaming deals in the face of studio greed.
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 leave.
This does set an interesting precedent though for their future negotiations. Will all other movie studios consider their new releases to be worth $30 million each? Don't see how Netflix could sustain that.
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.
Rather than visiting the submitter's own web site where they just re-hash what they already got from GigaOm, how about just going to the source?
http://gigaom.com/video/netflix-steals-dreamworks-from-hbo/
Hollywood is trying to kill Netflix as quickly as they can. Sometimes I think they would prefer us all to just use torrents.
The two rules for success are:
1) Never tell them everything you know.
I don't get it. Netflix drops Starz over 200-300mil/year 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?
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?
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
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 people into the store. Or a network buying a sports package (example: Fox taking the NFC football contract in the early-mid 90's) knowing that while they may not make money on the games, it'll be a positive benefit for the network overall (promoting their network during games, games as a lead-in to other programming, etc.)
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)!"
Blockbuster can afford to do deals like those when they charge $3 for new releases. Exclusivity deals only benefit the businesses involved, and never the consumers.
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 and Dreamworks won't get money from them.
Another startup may take their place but the same thing will happen again, and customers will tire of constantly switching to new services to pick up the catalog they want, and then the whole streaming thing will be dead. What may happen is that studios will start their own services to supply the customer directly, and then it will be up to generic hardware providers (media streaming TVs, roku, etc) to be compatible with their services directly. But that probably won't work since customers would rather pay a flat fee than subscribe to multiple distributors each at their own rate.
Twinstiq, game news
Great. Exclusive deals mean one thing. We, the consumers, have to subscribe to multiple services to have everything available. The big win in the past was to be able to single source it. Online streaming services of the future are just going to be like cable channels today, and it will end up costing consumers more in the end, because we'll have to use several of them each. Great to see the market in this space deteriorating back to the current status quo, just on a new medium, and with new players involved.
Yes, I know you are being sarcastic.
But what Hollywood would prefer is for us to pay very high prices, over and over again, for the same content. In their minds, copyright infringement is simply not an option for us, and the only problem remaining is one of enforcement (which should be taxpayer funded, of course, and the taxpayers should spend as much as it takes to get this problem under control).
We pay huge sums of money to punish ourselves for failing to buy in to their artificial scarcity, so that we can again pay huge sums of money to watch their crap.
What a deal.
That's what I mean. Why did Netflix say no? With Starz providing thousands of titles, Netflix could eat that fee and still a bargin compared to the $30/mil per movie tag associated with this Dreamworks deal. Reviewing my viewing habits on Netflix instant shows about 75% is Starz content, 20% is kids shows for my two-year-old, and the other 5% is non-Starz traditional content. So it looks like the only winner after Netflix drops Starz is my kid. Did Netflix really need to pay to boost that market?
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 suddenly settled down and Netflix got good again.
Then in the early 21st century, Netflix pioneered a return to all of 1919's problems. What's fascinating, is that they've managed to build an image of coolness and modernity, instead of as luddites or evolutionary throwbacks.
As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
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.
Live today, because you never know what tomorrow brings
Netflix is only going to bare their coffers with actions like this.
Blockbuster (aka Dish Network) starts their streaming offerings Oct 1st, for Dish Network customers.
For $10.00 a month, you get unlimted streaming (PC and Dish Unit) of their over 100k titles, plus 1 dvd out at a time mailing service, with in store direct exchange (so just like the old Netflix service, with added faster turnaround). Plus you get their Dish HD Platinum add-on pack for no additional charge.
There will be a standalone service offering in the near future.
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 ratings is rather awful though.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
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.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
All about Dreamworks...
Bow-ties are cool.
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 would have cost them less, and would have allowed people that don't use Netflix to access the content as well. This deal is worse than a non-exclusive deal for all consumers, whether they subscribe to Netflix or not. Exclusivity is only good for Netfix, the corporation, and it's shareholders (if they didn't overpay).
Don't know where you're living, but the death of physical rentals around these parts is pretty well complete; all we have are Redbox and Blockbuster machines. There are no rental stores left, so if you want anything but the latest new releases
They are paying $330M to relay a Dreamcast stream? Wouldn't have been easier to just use one of the DVDs?
I don't get it. Netflix drops Starz over 200-300mil/year 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?
The only thing decent Starz has ever *produced* was Spartacus: Blood and Sand, IMO. Other than that, they're a Disney outlet. That's really what will hurt them, not so much 'Starz'. Even at that, Disney doesn't tend to put much out via Starz of their 'good' content. There have been maybe 3? Disney flicks on Netflix in the last few years, so it's not a big loss. It's more consumer shock than anything, as most people go "OMG NOT STARZZZZ" when they really don't understand how little content that really is.
And yes, I think DreamWorks is a much bigger name, for movies. Starz doesn't make movies. They shill them.
Hopefully, this will end the argument that the damages for copyright infringement are just $.99 for sharing a song or $1.99 for sharing a movie. Distribution rights are much, much more expensive.
> only streaming movel that is really reasonably priced I think Crunchyroll's $6/mo for streaming subtitled anime a week or so after broadcast in Japan to be reasonable. Less content than NF, but lots of stuff I really want.
I agree about the dearth of physical rental stores. but I was more talking in that part about getting physical rentals at all - I don't miss the local rental places whatsoever because I can still rent physical discs through Nteflix.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Ok, I agree that's pretty reasonably priced (I've used it before myself) but very narrow in scope...
Because of content provider issues, I can't see Crunchyroll expanding to be a general video source if Netflix fails.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
and two-thirds of them suck. Actually, all of them (Except Kung-Fu Panda) are kinda sucky.
This ain't gonna save Netflix.
side note: I have started going back to my local mom and pop video store. It is awesome to help a local biz and I really like browsing a brick-n-mortar video store again. They have 99 cent 7 day rentals and are next to Wal-Mart.
Netlix has jumped the shark
Well I don't know the details of the proposal, but Xphile said that "They wanted Netflix to charge an additional fee"; that implies that Netflix couldn't simply eat the cost.
It's official. Most of you are morons.
Actually, I'd prefer "a total balkanization of content" - I see no need to pay for a wide range of content when I'm not interested in most of it. MLB's streaming service, for example, is actually pretty nice, and while you might call it expensive, I consider it a pretty good deal to be able to watch any game I want at any time I want, with commentary from either team's announcers. We can both agree that it is a complete waste of money if you're not a baseball fan. American football, on the other hand, holds zero interest for me, nor does basketball. A package service that includes all three is not a deal I'd be interested in; if you're a football fan that hates baseball, why would you prefer a package that includes all three over just paying for football? For that matter, if you're a fan of pro football vs college ball (or vice-versa) why would you want to pay for both? Or even down to the level of college conferences or teams?
Movies and are much the same. There are some studios that simply do not turn out anything I'm interested in. There are some I'm opposed to giving money to (sony/universal). Why shouldn't each studio run their own streaming service, and let people pick and choose which they want?
In short, a wide range of content means I'm going to be paying for a lot of stuff I don't want -- the same complaint most people have about cable/satellite tv packages. You're advocating for the same approach to streaming media that people already do not like.
You realize Starz owns lots of rights to tons of movies right? Starz owns Anchor Bay and all of their films as well, they have thousands of movies on Netflix right now and it will be a big hit when they go bye bye in February
I know Starz entirely as "the channel that brought Torchwood to America for a season". That was pretty decent (though it started off stronger than it ended), and it was in no way Disney.
Actually, I'd prefer "a total balkanization of content" - I see no need to pay for a wide range of content when I'm not interested in most of it. MLB's streaming service, for example, is actually pretty nice, and while you might call it expensive, I consider it a pretty good deal to be able to watch any game I want at any time I want, with commentary from either team's announcers.
I agree that it's one viable model, and in some cases like sports as you mention it may be really nice.
But I am just trying to preserve options; we already have the end-game in balkanization today with iTunes and most sports finally having paid streaming options. I can buy any movie or TV show I like piecemeal, and indeed I don't mind doing so...
However, I want to keep up competition and support services that attempt to provide large blocks of programming for a much lower fee.
"There is more worth loving than we have strength to love." - Brian Jay Stanley