Netflix has just struck a major deal in a coup that's sending shockwaves through the pay-cable establishment. Under a new multiyear agreement, Netflix will have the exclusive right to stream Disney movies starting in 2016, after an existing contract with Starz runs out.
As the AP reports:
Netflix will have exclusive U.S. rights to offer the first-run movies through its streaming service during the period normally reserved for premium TV network such as HBO, Starz and Showtime. That period starts about seven months after movies leave theaters. The exclusivity does not extend to DVDs, a service Netflix is trying to phase out.
The deal marks a watershed moment for Netflix and Hollywood, where for three decades premium cable channels have held exclusive rights for broadcasting movies within a certain timeframe after their theatrical runs. DreamWorks Animation SKG Inc. struck a similar deal with Netflix last year that begins in 2013, but the Disney deal not only shows Netflix strategic cornering of the family-film market, but could signal a shift in the way Hollywood treats streaming vs. broadcast licensing rights in the future.
As we know, Netflix has been trying since last year to phase out their DVD-by-mail program, focusing solely on the more efficient and cost-effective streaming service. (Remember that whole Qwikster debacle?)
Netflix's stock price shot up 12 percent on news of the deal, to $84.86 in afternoon trading.