Netflix Signs on DreamWorks, but Is It Enough?

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Netflix, in an effort to minimize its exodus of customers, has inked a deal with DreamWorks Animation over the weekend. While you won’t be able to get your Toy Story 3 fix, you can probably console yourself with a little Shrek.

It’s unclear how long the deal, which is valued at $30 million per film to DreamWorks, would last between the two companies. According to the New York Times, DreamWorks walked away from a possible licensing deal with HBO and chose to partner with Netflix instead. It’s the first time a major Hollywood studio has chosen a video streaming service over pay television.

(MORE: Sell Netflix to Amazon? That Might Be Crazy Enough to Work)

But wait, let’s backtrack a minute. There are a still few key unresolved facts. The content won’t actually show up until 2013—a full year after Starz content disappears from Netflix’s queues. The question remains: What will customers do in between the loss of Starz and the addition of Dreamworks? And will they put up with the service during that time? Along with the busted Starz deal, Netflix will lose a plethora of Walt Disney and Sony Pictures films—this is one challenge that even Woody and Buzz can’t solve.

However, it’s still a step in the right direction. Netflix recently inked a deal with Discovery, bringing on shows like Man vs. Wild and Deadliest Catch which will hopefully stem the bloodletting. After shedding nearly 1 million customers after a recent price hike and spinning its DVD service off into a venture called Qwikster, the company needs some good news, stat. That, my friends, would ideally include adding premium content from several major studios.

(MORE: Netflix Backlash Rages On in Response to ‘Qwikster’)

Ironically, the price hike, which has been a major source of tension, begets a simple fact: By raising subscription prices, the company will theoretically be able to generate more revenue, which in turn could be used to license more streaming content for its customers.

All told, things may be rosier for DreamWorks than for Netflix. DreamWorks CEO Jeffrey Katzenberg thought it was a “game-changing deal” as more and more people choose to watch things online. And Netflix’s chief content officer, Ted Sarandos, rightly pointed out, “When a company like DreamWorks ends a long-running pay TV deal — when a new buyer in the space steps up — that’s a really interesting landscape shift.”

[via New York Times]

Erica Ho is a reporter at TIME. Find her on Twitter at @ericamho and Google+. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.

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