Netflix Stock Draws the Line


Netflix is still trying to make things right with your kids, and for now the apology's resulting in Netflix stock closing 7% higher today.

Less than a month after showing Viacom's Nickelodeon and Nick Jr. content the exit door of its virtual vault, the world's leading video-streaming service is expanding its partnership with DreamWorks Animation .

The multiyear deal announced this morning calls for 300 hours of new programming streaming exclusively on Netflix starting next year.

Netflix and DreamWorks Animation already have a deal in place for Turbo: F.A.S.T. to stream on Netflix come December. The show -- based on a movie that the studio is putting out next month about a speedy snail in a racing circuit -- was announced in February. The two companies also teamed up for a multiyear streaming deal for DreamWorks Animation's theatrical releases before that.

However, this particular deal will expand on Turbo F.A.S.T. by featuring episodic television show content. This is where Netflix's biggest void is after losing SpongeBob SquarePants, Dora the Explorer, and other beloved Nickelodeon shows late last month.

Can Shrek and the Madagascar animals prove popular enough to keep families with young children glued to Netflix? didn't seem like much of a threat to Netflix's market dominance, but that may have changed in the eyes of children when it inked a deal for Viacom's shows that went dark on Netflix three weeks ago.

We're also not just talking about DreamWorks Animation characters that we know including Shrek and Kung Fu Panda. The computer animation studio made a throwback acquisition late last year for Classic Media to arm up its arsenal with Casper the Friendly Ghost and Rocky & Bullwinkle. Classic Media's Mr. Peabody and Sherman is already slated for a full-length feature hitting theaters early next year.

We also can't forget that Netflix struck an even bigger deal than its three different DreamWorks Animation transactions six months ago with Disney . The world's leading family entertainment brand is already providing Netflix with a few of its animated classics, with far more on the way in the coming years.

Between Disney and the now-expanded DreamWorks Animation partnerships, it would seem as if Netflix's lock on young families is secure. Just as most cable packages include both Disney and Nickelodeon, it wouldn't be a surprise if more families find that they need subscriptions to both Netflix and Amazon Instant Prime to keep their children entertained.

Everybody wins. Well, everybody wins except whatever rival service springs up trying to woo young families from Netflix or Amazon. The two top dogs are carving the marketplace out between themselves, and the results have to be encouraging for shareholders since Netflix stock has more than quadrupled since bottoming out last summer.

TV dinner
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Longtime Fool contributor Rick Munarriz owns shares of Walt Disney and Netflix. The Motley Fool recommends DreamWorks Animation. It recommends and owns shares of, Netflix, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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