Wednesday, December 5, 2012

Netflix, Inc. (NASDAQ:NFLX) in exclusive arrangement with Disney for new releases

DVD rentals and video streaming services provider Netflix, Inc.(NASDAQ:NFLX) on Tuesday entered into a contract with Disney that gives the company exclusive first-dibs rights to new releases.

According to the contract between the companies, Netflix will get to show Disney's shows and movies during what's called a "first pay TV" window, which arrives about seven months after a movie stops running in theatres.

Some archival movies from the Disney stable will also go on the site - in fact it will be the only place where Disney’s new releases can be watched, under the terms of the contract.

So far such privileges have been reserved for broadcasters such as HBO, Starz and Showtime. Netflix has always maintained that it wants to compete with HBO in this segment.

This is not the first time that Netflix has negotiated such deals. Being the biggest player in the segment and a good subscriber base it can wangle lucrative deals. For instance, last year it entered into an agreement with DreamWorks Animation in a move that showed content providers that the web as a more lucrative place to sell their films.

Netflix deal with Disney will start in 2016, a year after Disney's deal with Starz expires.

The monetary terms of the deal were not disclosed, but according to the New York Times, it must be better than the $20 per picture that is usually the level Starz, HBO and Showtime pay in such deals.

Netflix shares rose more than 14 percent after the announcement of the deal.

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