While it’s far too soon to herald Netflix, Inc. (NASDAQ:NFLX) as the new HBO, there are reasons to believe that the video-streaming service has every intention of getting there. HBO didn’t arrive there overnight, and Netflix won’t either.
HBO began producing original content slowly before becoming a company, who because of the years its spent building a library of original programming, is in a position to essentially print money by licensing its content to companies like Netflix.
While Netflix’s House of Cards received critical acclaim and cult-followers beamed when able to binge-watch Season four of Arrested Development seven years after the show was dropped by FOX, it’s going to take a lot more than that for Netflix to fulfill its goal of being mentioned in the same sentence as HBO.
Earlier this week, that is precisely what Netflix did in signing an agreement with DreamWorks Animation that would target a considerably younger audience than those that watch of House of Cards.
Netflix And DreamWorks Deal:
The deal, whose terms were not announced, is believed to involve a much larger financial outlay than the production of the aforementioned shows and will see Netflix, Inc. (NASDAQ:NFLX) receiving over 300 hours of original programming produced for, rather than by, Netflix. Based on an earlier deal, Netflix will also begin receiving DreamWorks’ theatrical movies which will bypass cable television for their first home video showings. This arrangement will begin with The Croods early next year.
In addition to the 300 hours of programming, Netflix, Inc. (NASDAQ:NFLX) will also receive Rocky & Bullwinkle, Casper the Friendly Ghost, Lassie, Mr. Magoo, and Rudolph the Red-Nosed Reindeer based on DreamWorks recent acquisition of a Classic Cartoon Library.
It also means that Shrek, and a series based on Shrek, will be exclusively available on Netflix when it is released. It will force parents to question a $60-$100 cable bill when instead they can just share their login information and purchase a tablet for the kids.
Netflix, Inc. (NASDAQ:NFLX) rose more than 7 percent on Monday after the deal was announced, closing at more than $229. It has risen 148 percent so far in 2013, making it the best performer in both the S&P 500 Index and the Nasdaq-100. DreamWorks also rose a touch over 4 percent in Monday’s trading.
In February, after the House of Cards series launched, the magazine GQ suggested that Netflix, Inc. (NASDAQ:NFLX) was becoming “a supercharged HBO” with a business model for the future. That is, GQ explained, “a seamless, multi-device on-demand world, a place where services like Netflix will be so fat with content that the idea of paying a $150 monthly cable bill for a bundle of unwatchable crap will seem as quaint as a gathering around the Sony Trinitron with Ma and Pa on Tuesday at 8 p.m. for All in the Family.”