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Netflix Isn't Kidding Around

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Netflix (NASDAQ: NFLX  ) is following (NASDAQ: AMZN  ) for a change.

Just two weeks after it was revealed that Amazon Studios is producing pilots for five original children's shows, Netflix is jumping into the kid-friendly bounce house of original programming.

Netflix is teaming up with DreamWorks Animation (NASDAQ: DWA  ) to create the first Netflix original for children. The computer animation studio is putting out Turbo -- a movie about a snail that starts racing after obtaining the power of speed -- in July. Netflix will be the exclusive home of Turbo: F.A.S.T. -- a cartoon series based on the theatrical release's characters -- come December.

It's a smart move for both companies.

DreamWorks Animation could use the lift. Its credibility took a hit last week after it pushed back a pair of upcoming releases and reports surfaced about layoffs. Teaming up with Netflix -- which already has streaming rights for the studio's full-length features starting with this year's slate -- is a no-brainer. Netflix now has 33.2 million subscribers worldwide, and no one else has a shot to even be close. If you're going to strike an exclusive deal, it may as well be with the one that will give you a larger audience than even many traditional television outlets.

The move also helps Netflix. The leading video service has a hit with this month's House of Cards, and several upcoming original shows seem promising. The void in the original programming has been content for kids, and Turbo: F.A.S.T. will plant that flag.

Unlike Amazon, which is merely testing out the market with pilots, Netflix is going all in with this commitment. If Turbo is a hit with kids this summer -- and DreamWorks Animation has cranked out plenty of rendered blockbusters -- Netflix will be able to lock up families with its attractively priced streaming platform.

This could be pretty big. Yes, House of Cards is going to turn heads if it qualifies for Emmy considerations, but adults are usually fine with watching something once. Kids can watch the same episodes over and over, and that's probably a major reason Netflix subscribers streamed more than 2 billion hours of kids content last year.

Netflix turned heads in December when it struck a costly deal with Disney for early rights to the family entertainment giant's releases. Between exclusive Disney and DreamWorks Animation deals, parents of young children will be hard-pressed to cancel Netflix now.

Streaming is the future
While Netflix's first-mover status is often viewed as a competitive advantage, the opportunities in streaming media have brought some new, deep-pocketed rivals. Can Netflix fend off this burgeoning competition, and will its international growth aspirations really pay off? These are must-know issues for investors, which is why we've released a premium report on Netflix. Inside, you'll learn about the key opportunities and risks facing the company, as well as reasons to buy or sell the stock. We're also offering a full year of updates as key news hits, so make sure to click here and claim a copy today.

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8/22/2016 4:00 PM
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