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Netflix announces another vastly ambitious content deal – and Wall Street is in love

June 17th, 2013 at 1:50 PM

Netflix on Monday announced a blockbuster deal that will bring no less than 300 hours of original content from DreamWorks to its streaming video service. That means Netflix will have the rights to premier new series with characters from franchises that might include Shrek, Madagascar, Kung Fu Panda and Casper the Friendly Ghost. A deal of this magnitude with a leading animation house could be extremely expensive and no details about actual programming have been divulged at this point. That’s why it’s fascinating that Netflix’s share price soared by as much as 8% on Monday.

Wall Street loves the content deals Netflix is now striking; apparently the success of House of Cards and Arrested Development has convinced investors that original content is a winning hand for Netflix, even (or particularly) when it pays top dollar.

Where does this leave Hulu and Amazon? In a hurry.

Both have dabbled in original content, but have shied away from placing majestic bets such as the $100 million price tag of House of Cards. Netflix now threatens to pull away from its streaming video rivals permanently by defining itself as the service with expensive, high-quality original content that spans target viewer demographics from 5 to 65 years old.

Hulu and Amazon now face the dilemma of making a quick decision: Either jump in the pool and start spending hundreds of millions on new series or accept their futures as a second-tier, cut-rate streaming services.

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