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Cable Technology Feature Article

December 07, 2012

Multiyear Accord to Allow Netflix Users Access to Disney Movies

By Mini Swamy, TMCnet Contributor

In 2010, Disney (News - Alert) extended its digital distribution deal with Liberty Media Corp’s Starz Entertainment through 2015. But there will be a subsequent change of guard, with a surging Netflix replacing a tumbling Liberty Media.

Disney, the world’s biggest entertainment company, remained stable.

The multiyear agreement to carry Walt Disney Co. animated, live-action films and movies released in 2016, will perhaps be a shot in the arm for Reed Hasting, CEO at Netflix, who is under pressure to sell the company and facing stiff competition from online video, said officials.

“It was a long slog, but ultimately we displayed enough sustainability that Netflix became a real and viable option for the pay-TV window,” noted Ted Sarandos, chief content officer of video service.

The agreement with Walt Disney is being viewed as a ‘big win’ for Netflix, as it will help combat the stiff competition it is facing from competing video services.

In addition to stealing a march over several bidders for Disney pictures, Sarandos also plans to bid for exclusive rights to Sony Corp. films after the studio’s contract with Starz ends in 2016.

Dream Works Animation SKG, Inc. also appears to have an agreement with the video service.

As a result of the accord, Netflix’s U.S. subscribers will be able to access movies from Pixar, Marvel and Disney. They can also view older classics, other exclusive programs and new direct-to-video releases in 2013.

Whether or not Lucasfilm Ltd., which is being purchased by Disney, will be included later is unknown.

It is stated that Netflix has about “$4.5 billion in streaming content obligations” due before the Disney films are available, and the losses incurred as it expands internationally. It has to either increase its subscriber count, or raise its $7.99-per-month price for unlimited viewing to remain viable long-term, according to officials.

According to Tony Wible, an analyst with Janney Montgomery Scott in Philadelphia, Netflix has probably agreed to pay in excess of $350 million a year for Disney’s movies – not a cheap deal by any means. Although Disney is a ‘big get’, there’s no way of saying how profitable the deal actually is, for the wind can blow in any direction.

Will the winds favor Netflix?

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO Miami 2013, Jan 29- Feb. 1 in Miami, Florida.  Stay in touch with everything happening at ITEXPO (News - Alert). Follow us on Twitter.

Edited by Braden Becker

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