DreamWorks and Netflix in Deal for New TV Shows
LOS ANGELES — DreamWorks Animation, trying to lessen its dependence on the volatile movie business by aggressively expanding into TV programming, has decided to forgo cable television in favor of Netflix.
In a multiyear deal announced early Monday, DreamWorks Animation will supply a flood of new episodic TV programs to the Internet streaming service. The partnership calls for 300 hours of original programming, perhaps the biggest commitment yet to bring Hollywood-caliber content to the Web first.
The new programs will be “inspired” by characters from past DreamWorks Animation franchises, which include “Shrek” and “The Croods,” and its coming feature films. Series will also come from Classic Media, which the studio bought last year. Classic Media’s holdings include characters like Casper the Friendly Ghost, Lassie, She-Ra and Mr. Magoo.
The agreement is the latest in the hotly competitive market for streaming content, with major services like Netflix, Hulu and Amazon vying to capture viewers who are gravitating to the Web, especially younger ones.
Until now, DreamWorks Animation’s primary focus has been the release of about two costly movies a year. Its success record is strong, but one miss can send its stock price plummeting, as was the case late last year, when “Rise of the Guardians” severely underperformed expectations; the company eventually took an $87 million write-down tied to the film.
Investors on Monday responded favorably to the announcement, driving Netflix shares up more than 7 percent, to $229.23, and DreamWorks Animation shares up about 4 percent, to $23.74.
The studio’s characters currently appear on four TV shows. Three are made by Nickelodeon under a licensing agreement, while DreamWorks Animation supplies a fourth, based on “How to Train Your Dragon,” to Time Warner’s Cartoon Network.
The first of the new DreamWorks Animation programs will appear on Netflix sometime next year. Netflix has exclusive rights to the series in all of the countries in which it operates; it has about 27 million streaming subscribers in the United States.
A DreamWorks Animation spokeswoman declined to provide more details, including financial terms. Jeffrey Katzenberg, the studio’s chief executive, plans to outline his TV strategy in a conference call on Tuesday with analysts and reporters.
DreamWorks Animation had three primary TV options: starting a cable channel of its own, perhaps in partnership with 21st Century Fox, which distributes its movies; teaming with an upstart children’s network like the Hub (or taking it over); or bypassing cable completely and going with Netflix.
Mr. Katzenberg and his company parted ways with HBO in 2011, opting instead to distribute their films and television specials through Netflix. Mr. Katzenberg and Netflix announced this year that a new episodic series called “Turbo: F.A.S.T.” would come to the streaming service in December. (It is based on “Turbo,” a film that arrives in theaters on July 17 and features a speedy snail.)
For Netflix, the DreamWorks Animation programming will help fill a hole left by Nickelodeon. Because of a dispute over terms, Netflix declined this year to renew its contract with Viacom, Nickelodeon’s corporate parent. (Viacom in turn made a deal with Amazon this month for Nickelodeon shows like “Dora the Explorer.”) New films from Disney and Pixar will move to Netflix from Starz in late 2016.
Children are avid streaming consumers, particularly overseas, and cartoons allow the company to pitch itself to parents as a commercial-free alternative to television. Animated shows for younger viewers are also less likely to appear on the pirated-content sites that compete with Netflix for viewers.