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Netflix Puts Premium Cable Channels On Notice

by Sean P. Aune | July 6, 2010July 6, 2010 2:00 pm PDT

Ever since Netflix launched its Watch Instantly streaming video service, people have complained about how the vast majority of the movies are B-level movies or just horribly out of date.  With the exception of a deal with the Starz premium cable channel to run movies they have the rights to,  Netflix Watch Instantly has lacked new releases, but thanks to a new deal that was just announced, all of that is about to change.

netflix relativityNetflix and Relativity Media, LLC. announced a deal today that will the DVD-by-mail company getting films for its streaming service just a few months after the DVD release as opposed to years later.  Under the current agreements most studios have with premium cable channels such as HBO, Showtime, Epix and so on, the channels get the rights to air the films for nine years from their initial theatrical release, which is what has kept the films from showing up on Watch Instantly all this time.

“Our continued goal is to expand the breadth and timeliness of films and TV shows available to stream on Netflix,” said Ted Sarandos, chief content officer for Netflix.  “Historically, the rights to distribute these films are pre-sold to pay TV for as long as nine years after their theatrical release.  Through our partnership with Relativity, these films will start to become available to our members just months after their DVD release.”

“We have always been about finding new ways to grow and monetize our business,” said Ryan Kavanaugh, Relativity’s CEO. “This clearly is a natural step in the evolution of the movie business and opens up a whole new world of revenue and marketing opportunities. Netflix has certainly made its mark, with a service that reaches over 13 million people and allows consumers to have what they want, when they want it. We have a shared vision, and this deal marks a significant change in our industry.”

“Consumer demand and interest in new platforms are evolving nearly as quickly as the technology,” said Michael J. Joe, Relativity’s president.  “The growing number of Netflix subscribers streaming first run movies is very exciting and presents another viable option for us to maximize the long-term business behind our properties. We’re delighted to partner with them on this incredible new opportunity, which has great promise for our industry-reshaping Pay TV deals going forward.”

The first films covered under this new deal will include The Fighter, starringChristian BaleMark Wahlberg and Amy Adams and distributed by Paramount Pictures, and Skyline, co-directed by the Brothers Strause and released by Rogue Pictures and Universal Studios.  Both films are scheduled for theatrical release later this year and to be available at Netflix in early 2011.

So, why does this put the premium channels on notice?  While the details of the deal were not disclosed, the rumor is that they were very favorable in the direction of Relativity to the point that it may make other studios take notice.  As the cable channels seem to be getting more and more interested in producing original content that they own in full, a lucrative deal for the studios from Netflix may begin to seem that much more enticing.  If the cable channels don’t step up their game and at least match Netflix’s offers, you could see a lot more of these announcements in the coming months and years.

What say you?  Does this improve your perspective of what Netflix Watch Instantly has to offer you?


Sean P. Aune

Sean P. Aune has been a professional technology blogger since July 2007, but his love of tech dates back to at least 1976 when his parents bought...

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