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Animal Logic acquisition is latest part of Netflix's shopping spree

Tim Baysinger
Jul 20, 2022
Illustration of a handshake, repeated backward several times.
Illustration: Brendan Lynch/Axios

Netflix's aversion to dealmaking has thawed over the last 12 months as the streaming giant focuses on adding new business lines like gaming and advertising.

Why it matters: Expanding into new areas is as important as ever for the streaming giant as it battles greater churn and stiff competition.

  • The company said during its Q2 earnings that it lost more than 1 million subscribers through the first half of 2022 after years of gains.

Driving the news: On Tuesday, the company announced it will be acquiring Animal Logic, an 800-person animation studio, to accelerate its development of animated productions to compete more head-on with rival Disney.

  • Animal Logic is best known as the studio behind animated films "The Lego Movie" and "Happy Feet." The studio has also done VFX work for "The Matrix" and "300."
  • Netflix and Animal Logic are already in business together, partnering on "The Magician's Elephant" and "The Shrinking of Treehorn."

The big picture: The acquisition of Animal Logic marks Netflix's fourth studio purchase in the past nine months.

  • It bought Night School, which is behind the popular "Oxenfree" franchise, last September. Then in March, the streamer acquired Next Games, a Finnish mobile game developer that has already produced a "Stranger Things"-inspired game and two others based on AMC's "Walking Dead" franchise, and Boss Fight Entertainment, a Texas-based independent gaming developer.
  • Earlier this month, Netflix said it would partner with Microsoft on its forthcoming advertising business, which is slated to debut early next year.

Yes, but: Don't expect Netflix to get that deal-happy all of a sudden, as all of its buys so far have been on the smaller side, even though it's hinting at more deals to come.

  • "The first priority for our cash is to reinvest in our core business and to fund new growth opportunities like gaming, followed by selective acquisitions," the company said in its letter to investors on Tuesday.
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