Netflix's July price hike and separation of DVD and video streaming plans snowballed into more problems than it anticipated. While it expected angry customers, Netflix didn't predict that it would have to go as far as cutting its third-quarter forecast by 1 million subscribers.
But now, after a list of problems such as losing Starz's content as well as more subscribers than expected, Netflix is attempting to dig itself out of the hole it created.
Netflix struck a deal with major Hollywood studio DreamWorks Animation, which will allow Netflix to stream its movies starting in 2013. This is a big deal for Netflix, considering it’s the first instance in which a major studio chose internet streaming over pay TV according to Reuters.
DreamWorks, which is the creator of children's movies such as "Shrek" and "Monsters vs. Aliens”, reached an agreement with Netflix that is worth $30 million per movie. The move is expected to blur the lines between content available on cable and content on the Internet.
"We are really starting to see a long-term road map of where the industry is headed," said Jeffrey Katzenberg, DreamWorks CEO.
Netflix was enthused about the deal as well, especially considering that it needs more content in order to compete with other video streaming services from the likes of Amazon and Apple.
"This is one of the few family entertainment brands that matter," said Ted Sarandos, Netflix chief content officer. "It's also a signal to people that we are in no way moving away from movies. Our programming is just reflecting more and more what people want."
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