Rivals Amazon.com and Netflix add studio partners
The race to snap up Hollywood content for online consumption is heating up.
As Amazon.com Inc. bulks up its streaming video service with movies and television shows from 20th Century Fox, embattled market leader Netflix Inc. has closed an exclusive agreement to offer films from DreamWorks Animation SKG Inc.
Both partnerships were announced Monday, underscoring what has become an increasingly competitive landscape for subscription Internet video in the last few months. Netflix, which for several years has dominated the DVD-by-mail and online-streaming business, has lost customers since a recent price increase and news that in February it will no longer offer movies from Walt Disney Studios and Sony Pictures.
The deals also demonstrate that many Hollywood studios are now just as happy to sell distribution rights for their films and TV programs to Internet companies as traditional television channels, provided that they can make more money.
“The content owners have made a philosophical shift over the last six months,†said James McQuivey, a media and entertainment analyst for Forrester Research. “They’ve started to look at these alternative distributors as the same as old-school distributors, as long as they’re getting the money.â€
The DreamWorks Animation-Netflix deal, first reported to be in the works in July, will begin with movies released in 2013 and run through 2016. To make the switch to online streaming from pay television, DreamWorks is ending early a partnership with HBO that had been scheduled to run through 2014. However, the pay-cable network will hold onto DreamWorks’ previously released titles until its rights expire, typically after a seven-year run for each picture.
In a statement, DreamWorks Animation Chief Executive Jeffrey Katzenberg said Netflix would give his company “more value for our content†but didn’t specify financial terms. HBO previously paid about $20 million for each of the studio’s movies, according to a person familiar with the matter but not authorized to discuss it publicly.
DreamWorks Animation is the highest-profile movie company to forgo pay cable and instead partner with Netflix, a strategy pioneered last year by independent studio Relativity Media. However, the two to three pictures a year that DreamWorks produces don’t come close to the 30-plus films that Netflix will lose annually from Disney and Sony.
The Fox agreement, meanwhile, adds about 2,000 older films and television shows from the studio — including “Mrs. Doubtfire,†“24†and “Buffy the Vampire Slayer†— to the Amazon Prime service, which already has more than 9,000 titles. Most of the same content is already available on Netflix.
Customers pay $79 per year for Amazon Prime, which also includes free two-day shipping on many products.
The deal enhances Amazon’s content offerings ahead of a widely anticipated announcement Wednesday of a new tablet to compete with Apple Inc.’s market-leading iPad. Amazon’s tablet may come with access to its Prime video offering.
“The whole thing with the tablet, if you’re going to buy it, is you’ve got to have something to watch on it,†said Colin Gillis, research director for BGC Partners.
Times staff writer Richard Verrier contributed to this report.
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