Netflix (NSDQ: NFLX) is laying some content groundwork for its launch in the UK and Ireland, expected in early 2012: today it announced a deal with MGM to stream first-run feature films in the two countries. The deal, exclusive to Netflix for new releases, will mean that more established players in the UK market such as Amazon-owned Lovefilm and BSkyB’s Sky Movies — which have also staked a lot on streaming services — will be left out in the cold.
Netflix says the deal is a multiyear licensing agreement and will cover most of the first-runs for feature films from MGM and its distribution partners in the region. Financial terms of the deal were not disclosed.
The news comes as Sky Movies is widening access to its service: it’s just launched a new app for iOS devices — although for now this works more as a program guide for the channel’s TV service, rather than as a content service of its own.
The content, as with other films and TV programs that are streamed by Netflix, will be viewable by paying subscribers on connected TVs, tablets, game consoles, computers and mobile phones.
Netflix has not given a specific launch date for its UK and Ireland service except to say that it will launch in early 2012.
Before even opening for business the UK and Ireland, those operations have already taken a toll on the company’s balance sheet. In its earnings reported last month, Netflix said that the costs of taking the service to the two countries would push the company into global unprofitability, and that it would pause further expansion until got back into black.
The exclusive element of the deal announced today will cover MGM films streamed “within one year of their theatrical release,” the company said in a statement. Titles will include blockbusters the two Hobbit movies from Peter Jackson, Zookeeper, Hansel & Gretel: Witch Hunters, and the film version of 21 Jump Street.
The deal will also extend to a selection of titles from MGM’s back catalog: films such as Capote, Fargo, The Usual Suspects and West Side Story. It appears that these will not be exclusive to Netflix.
Netflix already has a deal with MGM covering its home market: in 2010, Netflix signed a $1 billion agreement with Epix to include movies from the studio (among others) in its streaming service.
It is still unclear what this deal will mean to Lovefilm, which had an existing deal with MGM covering its back catalog and new releases. We are reaching out to Lovefilm and will update this post as we learn more.