Wednesday, December 05, 2012

Netflix changes the streaming landscape with Disney deal

Netflix has scored a coup, signing a multi-year deal with Walt Disney Company that makes the online DVD and video streaming service the only U.S. subscription service with the ability to air first-run films from Mickey's studio. The biggest part of the deal, though, is the timing: Netflix is able to do so in the pay TV window.

That part of the deal -- which doesn't kick in until 2016 -- means that Netflix can show those titles as soon as they’re "available for anyone to watch in the first pay window, not just those with video on demand."

All of Netflix's platforms -- including mobile and desktop -- will support viewing. The deal includes a provision for separate "high-profile" direct-to-video releases (such as "Cinderella III") to stream from Netflix beginning in 2013.

The delay for the highest-profile portion of the deal comes due to Netflix's current contract with Starz, which runs through 2015. Starz currently distributes Disney films, but this new deal cuts out the middleman.

Netflix's deal with Disney places it in an enviable position. Traditionally, the timeline for a new film is as follows (with of course, some modification for individual films):
  • Theatrical release
  • 1 week later - airlines and hotels
  • 3 - 4 months later – DVD/Blu-ray
  • 4 - 5 months later – rental
  • 4.5 - 6 months later –Pay-Per-View
  • 6 - 7 months later – first pay window (cable, VOD, and Netflix in 2016 for Disney films)
  • 1 year later – second pay window (traditionally, this has been Netflix and other streaming services)
  • Eventually - regular TV
Netflix's deal changes the landscape, and we will have to wait to see what other streaming services do in response.

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