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 hikethat 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.

Netflix’s chief executive officer apologized to subscribers for “arrogance based upon past success” in a remarkably frank mea culpa he posted on the Internet late Sunday while announcing plans to separate the company’s DVD and video streaming services.

“I messed up,” Reed Hastings, the company’s co-founder and CEO wrote in a blog post..”I owe everyone an explanation.”

A couple of months ago, Netflix split its streaming and DVD-by-mail services, raising prices by as much as 60 percent. The customer backlash was immediate and Netflix now says that it expects a total of 24 million subscribers in the third quarter, down from the 25 million it forecast in July.

Netflix’s stock price has fallen more than 40 percent below where it stood before the company unveiled the higher prices. The cost to shareholders so far: more than $6 billion in paper losses.

“In hindsight, I slid into arrogance based upon past success,” wrote Hastings, who went on to criticize the way the pricing change got communicated to subscribers.

“We have done very well for a long time by steadily improving our service, without doing much CEO communication. Inside Netflix I say, “Actions speak louder than words,” and we should just keep improving our service,” he said.

“But now I see that given the huge changes we have been recently making, I should have personally given a full justification to our members of why we are separating DVD and streaming, and charging for both,” he continued. “It wouldn’t have changed the price increase, but it would have been the right thing to do.”

The DVD-by-mail service will now be called Qwikster. The company said that its streaming service will continue to be offered under the Netflix brand. While customers can still subscribe to both, the sites will no longer be integrated. The websites will have separate billing and ratings systems. Hastings elaborated on the changes in the accompanying YouTube video.

A police officer in the United States has been reprimanded after he tried to download a copy of a pirate movie to his squad car.

The officer, who has not been named in line with department policy, tried to download ‘Hall Pass’, a comedy released this year starring Owen Wilson.

The date of the download was logged as May 18th but Hall Pass was only available on DVD from June 14th, meaning the officer must’ve tried to obtain either the TS or PPV rip versions already online.

The unfortunate officer was apparently caught when he infected his in-car laptop with a virus which he then went on to unsuccessfully remove.

He was suspended for 6 days.

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Now playing: Movies at Walmart.com.

The world’s largest retailer on Tuesday started streaming many movies the same day they come out on DVD, in a second bid for a share of popular movie rental and streaming website Netflix Inc.’s business and just two weeks after Netflix announced new price increases.

Wal-Mart Stores Inc. bought video-streaming service Vudu.com 18 months ago and now offers 20,000 titles that can be viewed on almost any device with Internet access, from computers to televisions to Sony’s PlayStation3 and other Blu-Ray disc players.

Movies are available at Walmart.com to rent for $1 to $5.99 or to purchase for $4.99 and up. Wal-Mart is not offering subscriptions, making its service more similar to Apple Inc.’s iTunes, which charges $3.99 to rent newly released movies and $14.99 to buy a movie.

In addition to Netflix, another competitor streaming movies and TV shows by subscription is Hulu.com, which now offers a premium service for $7.99 a month with more back-season shows and more movies. Without a subscription, Hulu viewers can watch shows and movies free in exchange for watching advertising.

The movie offering fits with the Wal-Mart website’s strategy of offering a “seamless continuous shopping service,” said Steve Nave, senior vice president and general manager of Walmart.com.

Wal-Mart’s announcement comes on the heels of Netflix saying it will raise rates and charge separately for streaming and rental DVDs. Its second price hike in eight months, Netflix’s planned increases could amount to 60 percent for existing customers, starting Sept. 1. New subscribers have to pay the new prices immediately.

Netflix plans to charge $16 a month for services that used to cost $10 a month when bundled together, for example. It’s still changing $8 a month for streaming, which it launched late last year. But instead of charging $2 more for a plan that includes one DVD at a time by mail, the company will charge $8 and up for DVD plans.

Customers have taken to social media sites Facebook and Twitter to vent their anger over Netflix’s increases, but executives said they anticipated the reaction. The company’s willingness to risk alienating subscribers signals it needs more revenue to cover rising costs.

As of March, Netflix had 22.8 million subscribers in the U.S. — about 34,000 more than the number of households subscribing to Comcast Corp.’s cable-TV service.

Wal-Mart, based in Bentonville, Ark., has tested the movie-rental waters before. It previously offered a DVD-by-mail service that cost $12.97 per month for two titles and $17.36 per month for three titles. But it ceded that program to Netflix in February 2010, letting customers continue their subscriptions with Los Gatos, Calif.-based Netflix without a rate hike. Apple is based in Cupertino, Calif.

In case you haven’t heard, Netflix just changed its pricing paradigm — and many in the movie-streaming world are outraged. Netflix is separating its streaming service from DVD shipping service and essentially charging 60 percent more to get what consumers got on Monday.

Specifically, Netflix on Tuesday announced it is launching new unlimited DVD-only plans in the U.S. at $7.99 a month for the one DVD out-at-a-time plan and $11.99 a month for the two DVDs out-at-a-time plan. The unlimited streaming plan will remain at $7.99 a month. The price for getting both unlimited streaming and unlimited DVDs will be $15.98 a month. The changes go into effect on Sept. 1 for existing members.

“Netflix members love watching instantly, but we’ve come to recognize there is still a very large continuing demand for DVDs by mail,” reasoned Andy Rendich, Netflix Chief Service and Operations Officer. “By better reflecting the underlying costs and offering our lowest prices ever for unlimited DVD, we hope to provide a great value to our current and future DVD-by-mail members.”

An Ugly Choice

Many Netflix consumers aren’t buying into Rendich’s reasoning. Upping a price by 10 percent may cause consumers to grumble, but they will typically pay the price, according to Rob Enderle, principal analyst at The Enderle Group. He said the 60 percent increase could cause viewers to look elsewhere,

“The reality is that a good chunk of Netflix’s customer base doesn’t want an either/or solution,” he said. “There is not enough content on the streaming side yet to live off streaming only, which means most folks will have to subscribe to a blended service if they want to see a certain type of content.”

As Enderle sees it, if the streaming and DVD services were nearly identical in terms of the content, then Netflix customers might be open to the change because they could choose one or the other without giving up any content or paying more money. But many old TV shows that stream aren’t available on DVD. And many movies on DVD may not be available for streaming this year.

“People see the change as a huge price increase or an ugly choice. Maybe Hulu is looking better, or they will just go back to cable,” Enderle said. “Until this move, Netflix was trending as one of the big beneficiaries of folks becoming unplugged and moving away from their cable television service. By making this pricing action, they have undoubtedly caused a lot of folks to rethink that move.”

NBC Content Renewal

Meanwhile, Netflix is still forging ahead with content deals. Netflix and NBC Universal have renewed a multi-year film and TV content agreement. Programming under the deal includes prior-season series across multiple NBC networks, including The Office, 30 Rock and Parenthood.

All future seasons of these shows will be available on Netflix on a one-season-delay basis. Under the deal, Netflix members will also be able to enjoy prior-season episodes of Law and Order: SVU and The Event. Also available to watch via instant streaming from Netflix will be shows from NBC Universal’s cable networks.

Netflix is raising its prices for the millions of subscribers who use the service to rent DVDs through the mail and watch video over the Internet.

Under rates introduced Tuesday, households that want both DVDs and Internet streaming will have to buy separate plans totaling at least $16 per month. It’s effective immediately for new members and Sept. 1 for existing subscribers.

Netflix Inc. had been including both options in a single package that started at $10 per month.

The $8 monthly price for only Internet streaming remains unchanged.

This marks the first time that Netflix hasn’t bundled online streaming with its DVD-rental plans since it began sending video over high-speed Internet connections in 2007. Internet streaming provides more immediate gratification, but typically doesn’t include the latest releases.