Netflix has been troubled lately. After announcing their plans to separate DVD and streaming packages (and thus raise prices by 60% for subscribers), the company has suffered a heavy deluge of backlash. At the same time, attempted deals with cable movie channel Starz fell through so that the Netflix-Starz contract currently in place will expire early next year. This would have left the movie rental giant with little to offer its streaming customers, since the Starz deal included both Disney and Sony Pictures content.
Now, at least, some of that damage is being restored. DreamWorks announced, as reported in the New York Times, that it has penned a big money deal with Netflix to allow the streaming powerhouse to show DreamWorks movies online. The deal is worth an estimated $30 million per movie.
This marks some big changes in Hollywood thinking and it’s no wonder the independent DreamWorks would be the first to see where the industry is going and jump on board.
“We are really starting to see a long-term road map of where the industry is headed,” Jeffrey Katzenberg, DreamWorks CEO, said in an interview. “This is a game-changing deal.”
This deal could also give Netflix a big leg up against emerging competition from big names like Walmart, Apple, Amazon, and more.
The deal with DreamWorks is exclusive, but no one has said how long it’s for. As Gigaom’s Janko Roettgers says, Netflix has almost literally stolen DreamWorks from HBO, since the deal cuts HBO out of the picture – rumors say that Netflix had been attempting to woo HBO to replace Starz. This deal basically does an end-run around HBO and takes their best content from them.
With Netflix’ stock down by more than half and investors very unhappy about the company’s direction, this announcement couldn’t come at a better time for CEO Reed Hastings (pictured).