Netflix Looks a Lot More Like HBO Now
Netflix has just secured a big, juicy contract with Disney that gives the streamer exclusive first-dibs rights to new releases, something none of the biggest Hollywood studios have ever done before. The streaming site will get to show Disney's stuff during what's called a "first pay TV" window, which arrives about seven months after a movie stops running in theaters. The deal also puts some archival movies back on the site, starting right now. That might sound like a long time to wait, but the deal means that Netflix will be the first and only place to watch Disney's new releases — a privilege generally reserved for places like HBO, Starz, and Showtime. Netflix has said before that it wants to be a better version of HBO. This move certainly makes it look like that.
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The Internet television network has made deals like this before—last year it negotiated a similar agreement with DreamWorks Animation in a move showed content providers saw the web as a more lucrative place to sell their films. That in and of itself should sound kind of like alternate-universe crazy talk, because Internet-plus-Hollywood-plus-make-money don't usually go together. With that in mind, the fact that one of the Big Six studios has now forgone the traditional media guys... well, that definitely legitimizes Netflix a lot further. The burn must especially sting for Starz, which last year pulled its stuff, including Disney movies, from Netflix. Starz has these exclusive rights to Disney film through 2015. The Netflix deal will start in 2016.
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Of course, this is all about money. The terms of the deal were not disclosed in Tuesday's announcement, but Netflix must have offered something better than the $20 million per picture in licensing fees the The New York Times's Brooks Barnes says Starz, HBO, and Showtime usually pay. If Netflix wants to continue down this path, it will have to continue paying up, something it might not be able to sustain forever, especially with the internal issues at the company due to its sinking value. But the market does seem to like this recent move, pushing its stock up 14 percent for the day. As they say, you gotta spend money to make money.
