Netflix (NFLX) has taken a few hits lately with the reaction to its plans to split its streaming and DVD business, but now it is punching back. The company signed a deal with DreamWorks which will give it access to its movies and TV shows for streaming over the Internet during the pay-TV window. Netflix won the deal over HBO, which is currently first in line among TV networks to show DreamWorks movies.
That’s right, Netflix outbid HBO. Estimates put the Netflix deal at $30 million per DreamWorks movie, versus the $20 million per movie that HBO is currently paying. This is exactly the kind of move Netflix needs to be doing right now to bring streaming up to par with cable TV. Netflix will have to cut many more deals like this with other studios to make that happen, but this suggests it will be more aggressive in the future. Normally, Netflix purchases streaming rights for later time windows, usually after premium cable channels get to show the movies.
The deal doesn’t go into effect until 2013, however. And in the meantime, by early 2012, Netflix will lose the right to stream Disney (DIS) and Sony (SNE) movies as a result of its negotiations with Starz falling through.
Sony and Disney are much bigger studios which pump out many more films every year than DreamWorks (DWA). Netflix must win more streaming deals from the larger Hollywood studios as well if it wants to be considered a serious alternative to regular TV.
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