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More on the Netflix (NFLX) - Dreamworks Animation deal: The partnership between the two media...

More on the Netflix (NFLX) - Dreamworks Animation deal: The partnership between the two media players calls for 300 hours of original programming and appears to be a deeper commitment by Netlflix toward children's programming. Though Netflix let a deal for content from Viacom's Nickolodean expire early this year, it now has Dreamworks and Disney (starting in 2016) supplying it with content for kids. Financial terms weren't disclosed. NFLX +1.4% premarket
Comments (13)
  • Gary J
    , contributor
    Comments (3869) | Send Message
     
    Pre-market likes it on both sides!
    17 Jun 2013, 09:10 AM Reply Like
  • Sakelaris
    , contributor
    Comments (1280) | Send Message
     
    It is true that Netflix lost some Viacom content for children, but this Dreamworks deal might more than make up for it! This is especially true if you keep in mind that children are used to watching different shows every few years.

     

    Keep in mind, moreover, that Netflix's Viacom content was only lost on its streaming side anyway; Netflix still has DVDs for rent of the Viacom programming.
    17 Jun 2013, 09:57 AM Reply Like
  • DIgitalMediaView
    , contributor
    Comments (668) | Send Message
     
    More high-risk spending on originals. We know it's a nine-figure deal since they've called it “the largest deal for original first-run content in Netflix history.” The Viacom hole they are trying to fill is seven times as big as this programming commitment (3900 episodes of mostly 1/2 hour shows). Rather than spend $200M to renew with Viacom, they shift the spending over to Dreamworks originals? If they committed close to the same amount of money, then they are increasing their content costs in the kids category by a significant multiple and there's no guarantee these programs will have the same popularity as the known quantities Viacom was providing. How can NFLX afford to increase its programming costs so dramatically when they're operating on razor thin margins?
    17 Jun 2013, 10:05 AM Reply Like
  • Sakelaris
    , contributor
    Comments (1280) | Send Message
     
    To Digital Media: Do you really have a cost figure on this Dreamworks deal? If Netflix calls it "the largest deal for original first-run content," they may simply be referring to the number of viewing hours being arranged, not the cost.
    17 Jun 2013, 10:30 AM Reply Like
  • DIgitalMediaView
    , contributor
    Comments (668) | Send Message
     
    No one has a disclosed cost figure. It would be rather disingenuous to call it the largest deal and not mean "financially." DreamWorks Animation CEO Katzenberg called it “an unprecedented commitment to original content in the Internet television space.” Your strained interpretation seems highly unlikely.
    17 Jun 2013, 11:47 AM Reply Like
  • Tvaddic
    , contributor
    Comments (237) | Send Message
     
    Dreamworks said that their entire tv unit will double and make 200M in revenue by 2015, so NFLX isn't paying as much as it seems.
    http://reut.rs/1aqjGCj
    19 Jun 2013, 02:07 AM Reply Like
  • DIgitalMediaView
    , contributor
    Comments (668) | Send Message
     
    $200M in annual revenue as "steady state" for 5 years = $1B. NFLX deal is multi-year and given that DWA CEO described it as huge commitment, seems reasonable to assume it will be a significant focus of their future efforts, which may mean shift away from other commitments on top of growth. So clearly this is a major nine-figure deal. That's what everyone is speculating.

     

    "while financial terms of the DreamWorks deal were not disclosed, Netflix is probably writing a big check to get this content...The DreamWorks deal covers more than 300 hours of content; at the same cost per hour as House of Cards [$4M/hr], it could cost more than $1.2 billion over the license period! This appears to be in the general ballpark of production costs for popular animated series on network TV. But even if the Netflix shows cost half that amount, it will still represent a significant chunk of the company's content budget during the license period." http://aol.it/16JqatD
    19 Jun 2013, 09:24 AM Reply Like
  • ValueThis4
    , contributor
    Comments (14) | Send Message
     
    Unfounded surges like these make me even more confident in my small short position. Spending even more on content that won't add anything to the bottom line until 2016 when they need money NOW? Genius! Further, if the financial terms weren't disclosed, how can anyone be certain this is a net positive for the company? If no one can be sure this deal is in fact a net positive for a company already struggling to earn money, why would anyone add to their long position or cover their short one? If it weren't so funny it might almost be sad
    17 Jun 2013, 12:08 PM Reply Like
  • Tvaddic
    , contributor
    Comments (237) | Send Message
     
    The passage was worded funny, the deal starts 2014, but the first Dreamworks show from NFLX comes out in Dec. from a previous deal.
    17 Jun 2013, 02:35 PM Reply Like
  • Gary J
    , contributor
    Comments (3869) | Send Message
     
    "Unfounded surges like these make me even more confident in my small short position."

     

    I guess I just am not getting this short position stuff. I thought a share price that just keeps going up is bad.
    17 Jun 2013, 04:52 PM Reply Like
  • Ben Bush
    , contributor
    Comments (5) | Send Message
     
    Netflix may not even exist by 2016. These deals are all pie in the sky! The company's cash flow is so largely negative, they need new subscribers in order to pay for future commitments. What a great business model.
    17 Jun 2013, 02:42 PM Reply Like
  • Tvaddic
    , contributor
    Comments (237) | Send Message
     
    This post was worded incorrectly, the Disney deal starts in 2016, while the Dreamworks deal starts next year. And another Dreamworks show comes to Netflix Dec. from a different deal.
    17 Jun 2013, 04:58 PM Reply Like
  • richernow
    , contributor
    Comments (46) | Send Message
     
    Ben do you really think Netflix could go out of business in just 2 years? Is that really possible?? What makes the deals "Pie in the sky?" Seems a bit extreme. Short here so got my fingers crossed and waiting to exhale.
    20 Jun 2013, 03:35 AM Reply Like
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