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Dreamworks Animation Skg Inc (DWA)’s False Start Will Test the Power of TV Over Internet

On the eve of Netflix, Inc. (NASDAQ:NFLX)‘s second-quarter earnings report, the company got some bad news from a partner. This disaster will serve as an important test for the Netflix, Inc. (NASDAQ:NFLX) model of TV shows over the Internet.

Dreamworks Animation Skg Inc (NASDAQ:DWA) had high hopes for Turbo, an animated comedy about a garden snail competing in the classic Indy 500 race. Dreamworks Animation Skg Inc (NASDAQ:DWA) sees this film as a tentpole, and is already working on a TV series built on the accelerated snail’s content shell. Netflix, Inc. (NASDAQ:NFLX) has exclusive rights to broadcast this show in every country where the company offers streaming video services. You’d expect no less, because Netflix also co-produces the show.

The racing snails who failed to win box office honors this weekend. Will they do better on Netflix? Image source: PR Newswire.

So Turbo is kind of a big deal, not only for Dreamworks Animation Skg Inc (NASDAQ:DWA) but also for content partner Netflix. The digital video veteran has already produced five original shows, mostly to good reviews. House of Cards and Arrested Development are up for Emmy consideration in some high-value categories, and Hemlock Grove competes for some less prestigious technical Emmys. Next year, I wouldn’t be surprised to see Orange Is the New Black in the running for both drama and comedy awards.

Netflix is investing untold millions ( literally untold — Netflix never discloses the size of its original content projects) in these original shows and plans to increase these investments next year. But the Turbo series will lean on a shockingly weak tentpole.

Turbo bowed to American audiences this weekend, and the numbers are in. According to Box Office Mojo , the film scraped together $21.5 million for an uninspiring third place on this weekend’s chart. Time Warner Inc (NYSE:TWX)‘s R-rated, low-budget horror film The Conjuring scared up a $41.5 million pole position, followed by the third week of Universal Studios’ Despicable Me 2 at $25 million.

Universal owner Comcast Corporation (NASDAQ:CMCSA) and Time Warner Inc (NYSE:TWX) can celebrate their unexpected successes. The Conjuring was made on a minuscule $20 million budget, and R ratings often act as box office speed bumps. Nobody expected a home run. But the largely no-name creative team delivered some serious scares, conjuring up a fantastic 84% “fresh” rating on Rotten Tomatoes. Create something great and the free word-of-mouth marketing will come, and that’s what happened to Time Warner Inc (NYSE:TWX)’s demonic film.

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