Disney Allies With Netflix – Is This the Start of a New Showbiz Paradigm?

Last week Netflix blew the minds of those who have always regarded it as being near death and bought exclusive U.S. rights to films from Disney Studios. Not only will Netflix be carrying new content, it also has non-exclusive streaming rights to older films such as DUMBO and POCAHONTAS.

According to the L.A. Times and New York Post, the 3 year deal will cost Netflix in the neighborhood of $350 million a year when it starts in 2016. (The streaming of older material starts immediately.)

This may sound like a lot of money, and a burden on Netflix, but investors responded by bringing the stock price up 14%, which we, who know next to nothing about the stock market, assume is a lot.

According to Netflix Chief Content Officer Ted Sarandos, the deal “is a bold leap forward for internet television,” and that certainly seems the case. The agreement gives Netflix the jump on Hulu Plus, Amazon, and Verizon/Redbox, and puts Netflix in direct competition with cable channels like HBO and Starz.

Netflix’s Sarandos, for example has told the NY Post that Netflix is already in talks with other studios to “accelrate the windows and get fresher content.”

Bottom line: This is a major victory in the war between interweb content providers and cable services, and we think it’s the sign of further battles, and bigger changes, to come.