DreamWorks is About to Get More Awesome

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DreamWorks Animation (NASDAQ: DWA ) is on the cusp of acquiring AwesomenessTV, a rising star in the world of YouTube. Created by Brian Robbins (who served as executive producer of several teen and tween hits, including One Tree Hill, Smallville and What I Like About You), AwesomenessTV was started with a $5 million grant from Google (NASDAQ: GOOG ), which quietly paid potential content creators to lure new talent. The site amassed another $3.5 million in a Series A round of funding.

Since its debut in June 2012, AwesomenessTV has gained more than 43,000 followers on Twitter, more than 44,000 Likes on Facebook (NASDAQ: FB ) and more than 489,000 subscribers on YouTube. One of its most popular videos is a Taylor Swift parody that has garnered more than three million views.

According to AllThingsD , AwesomenessTV has attracted the attention of DreamWorks, which intends to buy the company this year for an unknown sum.

If true, this acquisition would give DreamWorks control of a growing YouTube property and provide the company with an interesting bargaining chip to sweeten its deal with Netflix (NASDAQ: NFLX ).

More than 18 months ago DreamWorks announced that it would drop HBO for a new deal with Netflix. At the time, analysts estimated that DreamWorks would earn $30 million per picture -- $10 million more than it reportedly received from HBO.

That deal only applied to DreamWorks' movies, but the studio has since created a new animated series for Netflix, Turbo F.A.S.T., that will debut this fall. The series is based on DreamWorks' next animated film, Turbo, which will also appear on Netflix long after its theatrical debut.

By acquiring AwesomenessTV, DreamWorks could offer Netflix a promising replacement to Nickelodeon -- if and when the network decides to pack up and leave.

Viacom (NASDAQ: VIA ) CEO Philippe Dauman has repeatedly denied reports that Nickelodeon's ratings have been hurt by the network's deal with Netflix. Regardless, rumors continue to suggest that Netflix will lose Nickelodeon if it fails to reach a new agreement with Viacom.

If Netflix is able to retain Nickelodeon, AwesomenessTV could serve as another way to lure and retain the teen and tween market, which could be critical to Netflix's near-term success.

Without the appropriate adult content, however, it could be difficult for Netflix to retain those subscribers after they mature.

As it stands, Netflix is positioning itself to attract viewers under the age of 18. Between the Disney (NYSE: DIS ) and DreamWorks deals, the potential for AwesomenessTV (through DreamWorks), and the existing slate of Nickelodeon and Cartoon Network content, Netflix is slowly becoming the number-one venue for family-friendly entertainment.

Aside from original series like House of Cards, however, Netflix has yet to secure any major (exclusive) deals for appealing adult-oriented content.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: DIS , DWA , GOOG , NFLX , VIA

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