Arrested Development cast members at premier of new season. Getty/ Stuart C. Wilson
Netflix took another step to expand its original programming on Monday. It signed a deal with Dreamworks — the animation studio that created Shrek, Madagascar and Kung Fu Panda — to create an original animated series for Netflix.
Netflix and Dreamworks expect the first episode to air in 2014. The contract says Dreamworks will create 300 hours of programming for Netflix. The reports said the two companies signed a “multi-year” contract but did not specify for how long.
This is not Netflix’s first foray into original programming. The company launched original series such as House of Cards and the new season of Arrested Development in 2013. Netflix’s Chief Content Officer Ted Sarandos said in May that Netflix wanted to spend of to 15% of its entire licensing budget on production of original content.
Sarando’s plan shows Netflix realizes creating quality content is costly; it cannot necessarily be done in-house. Netflix might have learned that lesson the hard way. House of Cards was a hit but other such as Hemlock Grove and Arrested Development were considered failures on arrival. (Negative reviews of Arrested Development sent the shares down $14.55 to $214.19 in one day.)
At the same time, Netflix does not want to be reliant on the content of major television companies. For good reason: It lost the rights to 1,800 titles when it failed to reach agreements with several content providers, including Starz and Nickelodeon.
Outsourcing the content looks like a good compromise, retaining control while leaving the work to the experts. It’s a plan Wall Street likes too; shares of Netflix and Dreamworks rose 7% and 4% respectively on Monday after the announcement.
But does that mean Netflix should lay off of producing its own content for the foreseeable future? To be fair, traditional television has had its fair share of flops. And the success of House of Cards — which arguably brought the word binge-watching to the mainstream — shows Netflix has some promise as an independent producer in the future. In the meantime, however, a few contracts with the kings of content such as Dreamworks couldn’t hurt.
