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Summary:

Netflix (NSDQ: NFLX) has been accruing streaming rights steadily but until now has been unable to crack the pay window. A new deal with Rela…

Netflix

Netflix (NSDQ: NFLX) has been accruing streaming rights steadily but until now has been unable to crack the pay window. A new deal with Relativity Media changes that, giving the video subscription service exclusive access during a window that has been dominated by HBO, Showtime and Starz. During the window after DVD sales and before general broadcast or cable access, Netflix will have the exclusive streaming rights to major movies owned by Relativity. The deal, described by the companies in the announcement as long term, starts with 10 or so movies in the first 12 months. It was first reported by TheWrap.com.

The first batch includes The Fighter starring Christian Bale and Mark Wahlberg, Nicolas Cage’s Season of the Witch and Peter Farley’s Movie 43. In the past, those rights would have been tied up for years; now pay TV nets won’t have access. Netflix isn’t the first to challenge the established premium nets. New premium net Epix was founded by Viacom (NYSE: VIA), Paramount, Paramount, MGM and Lionsgate (NYSE: LGF) to do just that across multiple platforms; it will air and stream an increasing number of its partners’ movies during the pay window over the next few years.
Netlfix has its own deal with Starz for its Starz Play.

Does it change the game? Given that the vast majority of major releases are tied up by the premium nets for years, not so much. But it is a needed streaming win for Netflix, especially when competition for subscription dollars is heating up. Hulu Plus launched in preview last week with an emphasis on current and library broadcast television. Adding new movies fresh from the theaters and DVDs. Epix, with its mix of linear TV, VOD and online, is rolling out across major cable operators. Netflx has more than 13 million subscribers and is enjoying a wave of publicity from its availability on the iPad.

Sidenote: With all of the emphasis on streaming, don’t forget that Netflix is still primarily a DVD service. The company’s questionnaire after signing up for a trial is almost entirely about DVDs — even when the access point for signing up is an iPad. And, despite all the love from Steve Jobs, during the sign-up process the Netflix app doesn’t acknowledge that I signed up from an iPad or even mention the device three months after launch.

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  1. David Gadarian Tuesday, July 6, 2010

    Interesting to see what the movie windows will look like in 3 years…

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  3. DeVer Warner Thursday, July 8, 2010

    http://seedchange.wordpress.com/2010/07/08/netflixrelativity-a-watershed-moment/

    In my opinion, it is important to view this deal with regards to the different directions Netflix and pay-TV networks are headed in the long-term. While the premium networks are focused on attracting subscribers with exclusive original programming (supplemented by secondary pure movie channels and VOD), Netflix is striving to attract (and retain) subscribers with the deepest library of content to stream on-demand to their PCs, TVs, phones, tablets, and gaming consoles. The pay-TV guys, perhaps led by upstart Epix, will certainly close the distribution channel gap, but competing on library depth seems impractical for the foreseeable future. On the other hand, Netflix’s DVD service made its mark by combining popular new releases with an interminable long-tail of old and obscure titles. Netflix’s future as a streaming service will be no different.

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