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Netflix (NASDAQ: NFLX ) just won't stop -- and that's a good thing. The company just announced today that it's penned yet another deal for more original content, this time teaming up with DreamWorks Animation (NASDAQ: DWA ) for a multiyear content deal.
The deal will bring Netflix another 300 hours of original programming -- and another big step ahead of the competition.
Content for everyone
Over the past few months, Netflix has released or announced a slew of original programming spanning across multiple genres. Netflix has recently aired the political thriller House of Cards, the horror series Hemlock Grove, and rebirthed the comedy series Arrested Development. It's also announced a sci-fi series from the Wachowski siblings due out next year.
With the DreamWorks deal, Netflix will add a huge library of original programming for kids. DreamWorks will bring multiple new series to the online streaming service, based on classic characters like Casper and new and existing characters from DreamWorks movies. Netflix has said that the deal is the largest one it's made for original first-run content.
Deals like this aren't made to just retain existing Netflix customers; it's a broader plan that increases the reasons for potential customers to sign up for the popular streaming service. At some point, with a growing number of original programming, a huge library of existing content, and just an $8-a-month subscription fee, those holding out on the service may begin to ask themselves why they haven't signed up.
Staying ahead of the competition
One of Netflix's closest competitors, Amazon's (NASDAQ: AMZN ) Prime streaming service, has its own library of original content as well. The company recently created 14 pilot episodes, and let viewers vote on which one they wanted to see as a full series. Based on the feedback, the company will release five full-length series later this year and next year. Amazon also made its biggest content deal this month with Viacom to add hundreds of shows, mainly for kids. But Amazon's lifeblood isn't in growing its streaming service. The company's vast online retail empire is the foundation of its business -- but Netflix lives or dies on its content.
That's why the DreamWorks deal, and others like it, is so important. With options like Hulu, Amazon, and others, Netflix needs original programming to set itself apart from other services and give customers a reason to choose it over -- or in addition to -- the others.
In the first quarter of this year, Netflix added 2 million new subscribers -- proving the company's content offerings are what users want. Investors need to keep an eye out for the company's second-quarter earnings report later this month to see if Netflix has gained additional subscribers based on its original content push. With Netflix investing millions in original programming, additional subscribers are the only thing that can bring that money back into the company.
So far, Netflix seems to have gotten the jump on the competition in the original content game, but all of that could change quickly. Many investors are wondering if Netflix can fend off the burgeoning streaming competition. To help investors understand the company's competition,The Motley Fool has 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. The report includes a full year of updates to cover critical new developments, so make sure to click here and claim a copy today.