Netflix Inc. has signed a agreement with Walt Disney Co. for exclusive rights to stream the new releases from Disney including Marvel and Pixar. This signals that online streaming of movies had now become commonplace and will now be a huge threat to what we now know as traditional pay TV.
Beginning in 2016, the streaming company will gain exclusive TV rights in the U.S. to Disney movies. Disney is the largest entertainment company in the world, according to yesterdays prepared statement. That gives Netflix the video service that is usually reserved for carriers such as Liberty Media Corp’s Starz, as short as seven months after the movies are first seen in movie theaters.
On-demand and subscription services like Netflix are now an important revenue source for studios that have had to cope with the shrinking sales of DVD.
The new accord underscores how a shift has taken place away from the model where studios prospered from the blockbuster films through DVD and cable pay channels like Starz.
Financial terms were undisclosed, but one analyst who follows the two companies projects that Netflix would have to pay over $350 million annually to Disney. It is estimated that Disney receives approximately $200 million annually now.
Netflix will get immediate access to classics like Dumbo and Alice in Wonderland. Next year, direct to video title will be added, while the new films will start at the beginning of 2016. Disney is planning to release Finding Nemo 2 from Pixar and Dr. Strange from Marvel in 2014.