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Netflix (NFLX +5.1%) roars 6% higher after news of a content deal with DreamWorks Animation...

Netflix (NFLX +5.1%) roars 6% higher after news of a content deal with DreamWorks Animation breaks. Though the partnership will significantly strengthen the company's menu of children's programming including the rights to air Shrek and Kung Fu Panda series, with financial terms undisclosed there is a wildcard in the mix.
Comments (7)
  • DIgitalMediaView
    , contributor
    Comments (668) | Send Message
     
    As I noted in an earlier post, this sure looks like more high-risk spending on originals. We can safely guess that this is a nine-figure deal since they've called it “the largest deal for original first-run content in Netflix history” (and House of Cards was reportedly a $100M+ 2-season commitment). 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--and they could be spending much more--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, 10:13 AM Reply Like
  • mershaw2001
    , contributor
    Comments (108) | Send Message
     
    They don't actually pay the bill upfront, so it won't hurt them this upcoming quarter. Instead, they pay the bill over the lifetime of the contract. No need to worry now, pump the stock up, sell some shares, and use that money in the future to pay for content.
    17 Jun 2013, 02:18 PM Reply Like
  • forceOfHabit
    , contributor
    Comments (62) | Send Message
     
    mershaw2001: so true. As I understand it, they wont actually have any of this new content until 2016 which leaves a big window in which customers can switch over to AMZN Prime (which picked up a lot of the Viacom kid's content). And then in 2016 it will depend on whether or not the shows they bought are winners or not.

     

    I think the old phrase for this is something along the line of "buying a pig in a poke". I shorted some on the gap up, a little too early in the day as it turns out, but we'll see what tomorrow brings.
    17 Jun 2013, 06:59 PM Reply Like
  • Gary J
    , contributor
    Comments (3840) | Send Message
     
    Or people will sub both Netflix and Prime. Good move Netflix.
    18 Jun 2013, 06:40 AM Reply Like
  • richernow
    , contributor
    Comments (46) | Send Message
     
    I tried Netflix many times over the years and hardly ever found the movies i wanted. Just movies I had already seen or didn't want. And my wait-listed moves NEVER came online. I'm sticking with Prime. I seem to be finding almost all the films I want there-- At $79 a year ($6.5 a month), and Amz. 2-day FREE shipping (incredible!) I'm set for life. How can Netflix compete with that? And with all the great stuff on cable too,who needs Netflix? Subscribe to both? Are you kidding? I won't ever go back to Netfizz again. By comparison Netflix sucks big time. At least for me.
    18 Jun 2013, 02:10 PM Reply Like
  • Gary J
    , contributor
    Comments (3840) | Send Message
     
    Yeah finding a good movie among hundreds of thousands of titles on Netflix can be tough.
    18 Jun 2013, 02:30 PM Reply Like
  • Sakelaris
    , contributor
    Comments (1277) | Send Message
     
    Good point Gary J! Indeed, for me the problem is choosing which Netflix movies or shows I WON'T see, as the numbers of options are so high.

     

    Netflix gives so much, but people have to take the time and effort to look through its catalog.

     

    And one further point: The Netflix choices more than double for those who also use its DVD/Blu-ray service!
    19 Jun 2013, 12:17 AM Reply Like
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