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Netflix (NSDQ: NFLX) continues to add programming strength to its digital service. Starting next month Netflix subscribers will have instant access to hundreds of Miramax titles from Oscar winners like The English Patient and Shakespeare in Love to cult favorites and teen screamers. It’s the first major digital deal since Disney (NYSE: DIS) sold the studio to a group of investors for $660 million and the first time all of the titles will be available in a digital subscription service. The streaming access covers all platforms.
Netflix and Miramax aren’t talking details but my understanding is the multi-year package could be worth more than $100 million to the studio. Miramax CEO Mike Lang, in an interview from Cannes Sunday, would say only that “with this deal and the other deals we’ve done in home entertainment, international distribution and accounts receivable, we clearly have a path to pay back the investment.”
When he took the job as CEO in December, Lang told paidContent, “We’re at the precipice of working with everybody. We’re going to do it all.” In keeping with that idea, Miramax skipped what could have been a more lucrative exclusive deal with Netflix to keep its options open. Lang is betting he can make more money this way. “We felt it was important for the rest of the market to hopefully catch up … It may ultimately pay off. We may be wrong.” The deal leaves room for cloud and locker services as well.
It’s a major area of opportunity for Miramax, whose chief asset is its library. Under Disney, Miramax’s limited digital portfolio had electronic sell-thru with Apple and some streaming VOD with Amazon (NSDQ: AMZN) and Apple (NSDQ: AAPL). Lang says that with Disney, digital revenue barely totaled $1 million. “Either Disney didn’t value it the way it should have been or didn’t focus on it.”
Not all the titles will be available all the time. “We worked with them to have resting periods where titles are not up all the time, (for instance) resting around blu-ray releases, our partnership with Lionsgate,” said Lang.
Exclusivity and equity: Before Miramax, Lang was at News Corp. (NSDQ: NWS), where, among other projects and deals, he helped put together online video portal Hulu. Fox and NBC Universal (NSDQ: CMCSA) were the founding networks with equity; Disney bought in later. Last week, Disney CEO Bob Iger told investors he still supports Hulu but not to the exclusion of other opportunities.
Disney alum Lang sees it differently: “In the defense of Hulu, if Netflix would have been nice enough to offer me equity I might be exclusive.” The equity owners in Hulu agreed originally to mirror distribution on their own sites with Hulu.com and its distribution network; some other deals were grandfathered in.
Changes in the original agreement are under discussion now (MediaMemo has a detailed look); NBC Universal is no longer part of the conversation due to restrictions following the merger with Comcaat. For Lang, the concept of exclusivity shifts when it’s paired with ownership. “I think the conversation’s a lot different for us. We’re not an equity holder in Netflix.”