Netflix Deal: Dreamworks Helping Users Cut The Cord?
The ‘Cutting The Cord’ momentum has been picking up steam over the last couple of year. First it started with Warner Bros announcing a potential long-term deal to stream movies over Facebook, starting with the Dark Knight. Then Miramax recently announced an FB App to stream its movies. Now Netflix has bounced back from recent criticism to announce this mega-deal with DreamWorks (get Netflix stock now!) worth at least USD30 million. The fact that DreamWorks chose the streaming method instead of continuing its Pay-TV deal with HBO is a surprise. “We are really starting to see a long-term road map of where the industry is headed,” the New York Times quoted Jeffrey Katzenberg, CEO of DreamWorks Animation, as saying.
Given that statement, is the announcement really a surprise? Netflix is going to be the dominant cord-cutting leader purely because of its audience base. It has 20 million subscribers and profits of USD161 million in 2010. It operates in 45 countries streaming its famous USD8 a month flat fee. Sure, it has rivals but none can currently compete on its decade-old proven platform to stream premium content effectively.
But Facebook will definitely become the second formidable cord-cutter. With 800 million users, most of whom are active, the idea of streaming movies for 30 Facebook credits (USD3) may prove too tempting for Hollywood studios. By virtue of being social media, the network effects of friends liking what friends are watching will create a viral solution (or called passive peer pressure), that’s unstoppable. The only problem Mark Zuckerberg faces is ensuring that a streaming service can be put into place in the social media site without major hiccups. But if he does, then watch out.
Netflix’s DreamWorks content will only start reaching customers in 2013. By then the floodgates would have opened for other content providers.
Asia-wide shouldn’t be late in following this trend because Netflix has stated that they will conquer the world territory by territory. And if not them, somebody else. Watch those Connected TVs get into the action and look-out for more intense diversification from Pay-TV content aggregators. ‘Cutting The Cord’ is a race and the content providers are front of the pack.