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Netflix is hoping that this week turns out better than last week, when their shares were battered by their decision to create Qwikster from their DVD-by-mail service and continued fall-out from their pricing changes. The company announced on Sunday that they had secured a streaming rights deal with DreamWorks.
This is the first time that a major network has chosen to go with an online streaming service instead of television. DreamWorks, producers of Madagascar, Shrek and many other animated hits, decided to walk away from signing a contract with HBO to go with a deal worth $30 million per picture over an unspecified number of years. In comparison, HBO now only pays DreamWorks $20 million in licensing fees, according to New York Magazine.
DreamWorks Chief Executive, Jeffrey Katzenberg, told The New York Times, who first reported the deal, that he believes that consumers will soon find no difference between streaming online and television. “We are really starting to see a long-term road map of where the industry is headed,” he said.
Ted Sarandos, Netflix’s chief content officer, called the deal an example of power returning to the content producers as they begin to choose whatever outlet they deem best to distribute their material.
The deal will not take place until 2013, though, with DreamWorks’ three releases that year likely to be among the first available. In 2013, they plan to release Turbo, The Croods and an adaptation of the classic characters Peabody & Sherman. Catalog titles, like Kung Fu Panda and the Shrek films, will be available over time.