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SAN FRANCISCO, CA - OCTOBER 24: Netflix envelopes sit in a bin with other mail at the U.S. Post Office sort facility on October 24, 2011 in San Francisco, California. Online movie rental company Netflix reported third quarter earnings of $62.5 million, or $1.16, per share compared to $38 million, or 70 cents per share one year ago. (Photo by Justin Sullivan/Getty Images)
Update Tue 4:15 p.m.: Dreamworks Animation adds German broadcaster to list of partners
A day after announcing the deal with Netflix, Dreamworks Animation announced another agreement to produce animated television series for German broadcaster Super RTL.
The five-year deal begins in September and includes "more than 1,100 programming half hours," according to a statement.
"The licensing agreement includes new television series inspired by DreamWorks hit franchises and future films, the first two of which will be How to Train Your Dragon and a show based on the soon-to-released [sic] Turbo," the statement says. Super RTL will have exclusive broadcast rights in Germany for all original series produced by Dreamworks Animation and access to the Dreamworks Classics library.
In a conference call Tuesday with analysts, Dreamworks CEO Jeffrey Katzenberg called the agreements with Netflix and Super RTL the most recent steps in the company's very aggressive move into the television business.
"Over the next five years, we will produce nearly 1,200 new episodes of Dreamworks branded programming," Katzenberg said. "So in addition to being the world's largest feature animation studio, we're now on a path to becoming one of the biggest producers of high quality family TV programming globally."
Katzenberg said he expects television to generate approximately $100 million in revenue in 2013 and to grow to more than $200 million a year by 2015. He said the company is pursuing more deals like the ones with Netflix and Super RTL in other countries.
"We're in discussions throughout the world," he said. "We've been out now for the last 60 days in active conversations in virtually every market that Netflix is not in, including China."
Consumers should expect to see more characters from successful Dreamworks Animation films find new life in television series.
Katzenberg didn't want to say that every single future Dreamworks Animation movie would be followed by a television series, but, he said, "I think many, if not most, will." He credited the success of feature films Madagascar and Kung Fu Panda and the TV shows they inspired with making Dreamworks an attractive partner to a company like Netflix.
Update Mon 7:18 p.m.: Netflix to partner with Dreamworks on original series
In a deal announced Monday morning, Netflix is going to start running original television series from Dreamworks Animation. The deal comes after Netflix announced a deal with Disney last December.
In a statement, the two companies call the agreement the largest deal for original first-run content in Netlix history. No financial details were disclosed, but the deal calls for 300 hours of new programming.
The new shows will be inspired by characters from Dreamworks hits like "Shrek"and "Kung Fu Panda" but also from the Classic Media library that Dreamworks acquired last year for $155 million. That library includes old cartoon characters like "Rocky and Bullwinkle"and "Casper the Friendly Ghost."
"Netflix is now where HBO was in 1999," said Robert Thompson, director of the Bleier Center for Television & Popular Culture at Syracuse University. "It’s emerging as the exciting new place that’s getting all of these interesting new programs.”
In some cases, those programs are brand new, like the political series "House of Cards." But Netflix has also revived an old series in "Arrested Development."
Thompson said the fact that these programs are choosing to premiere on a streaming service like Netflix and not on a cable channel like HBO is more evidence that the way we watch television is changing.
"There are a lot of people who can get an awful lot of programming and live without satellite or cable entirely," the director said.
But Thompson and other analysts agree that cable and satellite television aren't going away anytime soon.
Michael Pachter, a Los Angeles-based analyst with Wedbush Securities said cable networks still have the most money to invest in original programming. He cited AMC as an example.
"I’m not even sure we’d even discover shows like ‘Breaking Bad' if we didn’t have AMC," said Pachter. "Prior to ‘Breaking Bad’, and ‘Walking Dead’ and ‘Mad Men,’ I don’t think I would have subscribed to AMC. Now, I want it."
Pachter said the deal between Netflix and Dreamworks will benefit Dreamworks by allowing the studio to pull in more funding to produce television content. Whether it’ll pay off for Netflix, remains to be seen, he said.
Wall Street thought the deal was good for both companies. Netflix shares rose 7 percent on the news of the partnership, while Dreamworks shares climbed 4 percent.