J. Katzenburg Places A Smart Bet on Netflix

The latter half of 2011 hasn’t exactly been very kind to either DreamWorks or Netflix. The former saw it’s stock slide after poorer than expected first quarter results and the latter has been taking a hammering from just about everyone after they raised prices and then announced that they were splitting their streaming and DVD services across two separate companies.

Despite these setbacks, things keep moving along which leads us to yesterday’s announcement that DreamWorks has agreed to make it’s entire catalogue available on Netflix starting in 2013.

While there’s not much to say about the deal itself (you can read the entire press release or Variety’s take on it for the details), the very fact that it was made is significant for the simple reason that DreamWorks is the first major studio to sign directly with Netflix.

Until now, that major studios have treated Netflix almost like an annoyance that keeps reminding them that the media landscape is changing beyond their control. Collectively, they’ve tried to keep as much of their content off of Netflix as possible. Heck, they’ve even tried to keep DVDs off the service by instituting the pointless 28 day delay for new releases.

DreamWorks is the first to realise that they can stand to benefit from simply having their content available for people to see. New releases from Disney will likely disappear from Netflix as the Starz deal expires in Marc, and if that’s still the status quo come 2013, DW will be in a market where it’s main competitor is not.

This is the kind of innovation DreamWorks needs to invest in if it is to continue to exist as an independent company, indeed, I called for it just a few months ago when Paramount broke off talks to continue their distribution deal.

The proliferation of Netflix on mobile and TV platforms also ensures that DW’s content is everywhere they are and reaches the largest audience possible. It doesn’t matter if the quality is not top-notch, the convenience factor of being instantly available will override that in a heartbeat.

A lot of industry folks will be watching these developments very closely because if it turns out to be mutually beneficial to both companies, you can expect a lot of similar deals to follow.