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Making an animated movie is a tedious process because of all the intense computing power and rendering required.  ”An expert animator can do about 3 seconds of animation in a week,” Dreamworks CEO Jeffrey Katzenberg says, speaking onstage today at the Techonomy conference.  But a joint R&D effort with Intel, which he describes as the largest such effort in Hollywood today with a budget in the “many tens of millions of dollars” promises to change the way computer-generated animation is produced.  Katzenberg expects a 50X to 70X improvement in the productivity of his animators.

The research project is in its third year, but has never been revealed before.  It takes advantage of Intel’s Sandybridge multicore processor.  The issue with multi-core processors is that software is way behind in taking advantage of their paralel computing capabilities.  ”The problem is software does not let you optimize all this,” says Katzenberg, “it is almost like having a 1,000 horsepower engine in your car and driving 30 mph.”

Animators have to work with low resolution files, then send it to rendering overnight for 8 hours and see if it came out right. Then they do it again. ” The Holy Grail would be for us to have an artist actually see their work as they do it,” says Katzenberg.  And that is exactly what this research project aims to do for Dreamworks. The animation house had to rewrite all of its in-house animation software, but is already seeing the fruits of the collaboration, which runs through next year.

The fruits of the research is already showing up in Dreamworks movies.  ”This now allows us to operate at 50X to 70X of what we were doing,” he says.

DreamWorks Animation, the animated movie powerhouse that created hits like Madagascar and Shrek, has cut a deal to provide streaming films and TV specials via Netflix.

In scoring the deal, Netflix managed to beat out HBO, marking the first time Netflix’s web streaming has beat out a major pay-TV producer in securing a distribution deal with a major film maker.

Jeffrey Katzenberg, chief executive of DreamWorks Animation, told the New York Times that consumers no longer distinguish between web-based or TV-based content.

“We are really starting to see a long-term road map of where the industry is headed,” Katzenberg said. “This is a game-changing deal.”

Ted Sarandos, chief content officer at Netflix, said, “You’re seeing power moving back into the hands of content creators. When a company like DreamWorks ends a long-running pay-TV deal — when a new buyer in the space steps up — that’s a really interesting landscape shift.”

Netflix isn’t exactly sitting pretty, though. It faces growing competition from Apple, Amazon, Vudu and Wal-Mart. And Dish Network announced a Blockuster-branded streaming and DVD-by-mail service on Friday, presenting yet more competition for Netflix. Meanwhile Netflix consumers are reeling from a hefty price hike that drove many of them to get rid of their long-term accounts for DVD-by-mail service. Netflix will also lose the rights to stream a lot of films in February, since it failed to renegotiate a deal with cable channel Starz. Netflix’s decision to spin off its DVD-by-mail service has also caused some backlash.

This quarter, about 1 million of Netflix’s 25 million consumers have dropped the service because of the price hike. And the company lost half its market value, or $8 billion, in two months. Netflix will begin streaming DreamWorks movies in 2013.

Filed under: deals, media

Netflix has taken a few hits lately with the reaction to its plans to split its streaming and DVD business, but now it is punching back. The company signed a deal with DreamWorks which will give it access to its movies and Tv shows for streaming over the Internet during the pay-TV window. Netflix won the deal over HBO, which currently is first in line among TV networks to show DreamWorks movies.

That’s right, Netflix outbid HBO. Estimates put the Netflix deal at $30 million per DreamWorks movie, versus the $20 million per movie that HBO is currently paying. This is exactly the kind move Netflix needs to be doing right now to bring streaming up to par with cable TV. Netflix will have to cut many more deals like this with other studios to make that happen, but this suggests it will be more aggressive in the future. Normally, Netflix purchases streaming rights for later time windows, usually after premium cable channels get to show the movies.

The deal doesn’t go into effect until 2013, however. And in the meantime, by early 2012, Netflix will lose the right to stream Disney and Sony movies as a result of its negotiations with Starz falling through.

Sony and Disney are much bigger studios which pump out many more films every year than DreamWorks. Netflix must win more streaming deals from the larger Hollywood studios as well if it wants to be considered a serious alternative to regular TV.