Streaming video giant Netflix (NASDAQ:NFLX) lost about 1 million paying subscribers to its new dual-pricing model. Here’s what worried investors need to consider, though: Netflix still has a total subscriber base of more than 23 million customers, and 21 million of them subscribe to the streaming service. For movie companies still finding their feet in streaming video, Netflix still is — like it or not — where the audience is.
Dreamworks (NASDAQ:DWA) knows it: The company behind movies like Shrek announced a new agreement with Netflix on Sunday, one that will bring its movies to the streaming service instead of Time Warner‘s (NYSE:TWX) HBO in 2013. The deal will bring Dreamworks an estimated $30 million per movie when it goes into effect. Netflix needs partners now more than ever, and movie-makers need to reach an audience disinterested in going to theaters or buying DVDs.
Here are four movie-makers that investors should keep an eye on as key Netflix partners in the coming year:
Sony
Sony (NYSE:SNE) has been hurting as a whole during the past two quarters. The March earthquake and tsunami in Japan, hurting production and resulting in poor television sales, fueled a net loss of $191 million in the quarter that ended in June. However, the company’s movie division, Sony Pictures, remains a bright spot for the company, raking in an operating profit of $53 million during the same period.
It was at the end of that quarter that Netflix’s failed negotiations with Liberty Media‘s (NASDAQ:LSTZA) Starz saw Sony’s movies pulled from the streaming service. At a time when Sony could use every last bit of revenue from its movie-making segment, the company should follow Dreamworks’ lead in partnering with Netflix rather than a traditional movie channel like Starz, especially when it could mean $30 million in revenue per movie.
Walt Disney
Walt Disney (NYSE:DIS) is enjoying some renewed vitality in its theatrical movie business thanks to the re-release of The Lion King in 3D. However, its future in the streaming video is fuzzy at this point in time. Its films will disappear from Netflix when Starz does in the coming months, and competing service Hulu, partially owned by Disney, is likely to sell to another company soon.
Disney needs to decide soon whether it wants to run its own streaming service or provide its content to multiple partners. Viacom (NYSE:VIA) has proven that licensing to many streaming partners is most profitable, and Disney would benefit greatly from partnering directly with Netflix following the dissolution of its agreement with Starz, the same as Sony.
Comcast
Unlike Walt Disney and News Corp. (NASDAQ:NWS), Hulu part-owner Comcast (NASDAQ:CMCSA) has taken a more liberal approach to branching out into streaming video. The company announced in July that it would begin offering Universal Pictures films through Amazon‘s (NASDAQ:AMZN) Amazon Prime streaming video service.
Like Sony and Disney, Univeral movies are among those that will disappear from Netflix once the company’s partnership with Starz ends in February. It is an ideal time, then, for Comcast to extend its reach as Dreamworks has and forge an individual deal with Netflix. The company hasn’t publicly stated that its deal with Amazon is exclusive, either. “The more, the merrier the revenue” should be the name of the streaming game for Comcast’s Universal.
News Corp.
Another of Hulu’s part-owners, News Corp., has proven especially skittish in how it makes its properties available on streaming services. That skittishness hasn’t hurt its film and television divisions too terribly yet. The company reported a strong second quarter in August, with the 20th Century Fox film segment’s operating income totaling $210 million, up more than 53% from the same period in 2010.
But if a partnership with Netflix could equate to tens of millions of dollars in additional home revenue per picture, News Corp. would be foolish to ignore the opportunity. News Corp.’s Fox also has partnered with Amazon Prime for streaming video, and like Comcast, it has not named the deal as exclusive.
As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.
